KUALA LUMPUR (May 25): Affin Bank Bhd expects a slowdown in loan growth to between 10% and 11% for the financial year ending Dec 31, 2023 (FY2023), amid headwinds from the slowdown in the US and European markets caused by the higher interest rate environment, its chief executive officer Datuk Wan Razly Abdullah Wan Ali said.
He projects Affin Bank's loan growth to slow this year from the 15.4% growth in FY2022. In FY2021, the bank achieved an 11.1% loan growth.
"We see a lot of headwinds coming this financial year. The slowdown in the US and European markets will have a knock on effect on Asia as well as Malaysia. Therefore, we forecast a slowdown in our loan growth,” he told a press conference after the banking group's 47th annual general meeting on Thursday (May 25).
"Although we still see a lot of business opportunities in Malaysia, we are cautious [about our outlook]. We see that people want to preserve their cash and therefore will spend less. Disposable income is shrinking, our customers are in trouble. They seek assistance from the bank, we will see how we can restructure the facilities and support them in these tough times,” Wan Razly said.
Affin Bank will release its financial results for the first quarter ended March 31, 2023 (1QFY2023) on Friday.
According to Wan Razly, the bank is striving to expand its net interest margin (NIM) from 2.01% last year. Return on equity (ROE) is expected to increase to 7% from 5.4%.
"We are working hard to expand our NIM and I think it is too early to make a forecast now. I know it is tough, but we continue to focus on growing our business while improving the asset quality," he added.
On capital expenditure (capex), the CEO said the bank is allocating some RM400 million, of which 80% will be used for digitalisation initiatives, including the launch of a new mobile app next month.
In FY2022, Affin Bank's cumulative net profit more than doubled to RM1.3 billion from RM526.93 million in the previous year, driven by higher net interest income and the divestment of Affin Hwang Asset Management Bhd (AHAM). Cumulative revenue increased to RM3.3 billion from RM2.24 billion.
Gross impaired loan ratio improved to 1.97% from 2.54% in the previous year, while net impaired loans stood at 1.27% versus 1.89% in FY2021. The current savings account and investment account (CASA) ratio increased to 23.50% from 23.04%.
At the time of writing, Affin Bank’s share price was trading up one sen or 0.5% to RM2.02, giving it a market capitalisation of RM4.59 billion.
Source: TheEdge - 26 May 2023
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