3QFY24 Results Overview

AFFIN delivered a solid set of results for 3QFY24, with net profit after zakat and taxation rising 45.1% YoY to RM145.8 million, bringing the cumulative 9MFY24 net profit to RM374.6 million (+3.3% YoY). The performance was supported by higher net interest income, improved income from Islamic banking, and stronger fee-based income.

Key highlights:

1. Net Interest Margin (NIM): AFFIN reported an improvement in NIM for 3QFY24, driven by better funding cost management and asset repricing efforts. This is a positive recovery after the compression seen in previous quarters.
2. Loan Growth: Loans, advances, and financing grew by 5.9% YoY to RM70.6 billion, underpinned by robust demand for housing loans (+6.4% YoY) and SME financing (+3.1% YoY).
3. Asset Quality: The gross impaired loans (GIL) ratio improved slightly to 1.74% from 1.90% at end-2023. Credit costs were well-managed, reflecting a write-back of RM54.8 million in credit impairments during the quarter.
4. Non-Interest Income (NII): Strong fee and commission income growth (+31.0% YoY) was supplemented by gains in financial instruments. The Group's initiatives in wealth management and bancassurance are bearing fruit.
5. Cost Management: Operating expenses increased by 21.8% YoY to RM455.9 million due to strategic investments in digitalization and compliance. However, the cost-to-income ratio (CIR) remains manageable at 74.4%.

Intrinsic Value of RM3.03

AFFIN's profitability should gain further traction in FY25 as margin stabilization continues and cost rationalization measures bear fruit. The Group's focus on SME and consumer banking is aligned with its strategic priorities, which are expected to drive sustainable growth.

AFFIN intrinsic value is RM3.03, based on a 0.66x FY25E P/B multiple. The valuation reflects AFFIN's improving ROE trajectory and is also at premium against its 1-year average P/B. AFFIN remains an attractive play for investors seeking exposure to a growth-focused mid-tier bank with potential upside from non-interest income growth and digital initiatives.

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