KUALA LUMPUR: Affin Bank Bhd's net profit of RM149 million in the first quarter ended March 31, 2023 (1QFY23) represented 24 per cent and 27 per cent of RHB Research's and the consensus full-year expectations respectively.
The investment bank said in a note today that Affin's 1QFY23 results matched expectations, with negative credit costs offsetting stronger-than-expected net interest margin (NIM) compression.
Nonetheless, Affin has established initiatives to increase NIM in the next quarters, according to the report.
"At 0.4 times price-to-book value (P/BV), we think its market valuation is attractive, as Affin is on a fast-paced, well managed growth trajectory. Further out, its new Sarawak-based shareholder could bring growth opportunities in new areas," it said.
Affin posted a higher net profit of RM148.98 million in 1QFY23 versus RM142.68 million recorded in 1QFY22.
Revenue, however, slipped to RM494.29 million from RM528.82 million previously, according to its filing with Bursa Malaysia.
The bank's NIM dropped by 25 basis points (bps) quarter-on-quarter (q-o-q) on higher interest expense as deposit competition was rampant in 1QFY23.
Affin's management has reiterated its ambition of achieving a 2.11 per cent NIM in FY23, which is an increase of 10 basis points year-on-year (y-o-y), banking on growth in higher-margin loan products (credit cards, personal financing, and SME loans) as well as an improving current account savings account (CASA) mix.
Meanwhile, gross loans rose by 14 per cent y-o-y and three per cent q-o-q, driven by the bank's consumer and enterprise banking segments.
Affin kept its FY23 loan growth target of 10-12 per cent, with growth primarily coming from the aforementioned areas.
The bank's liquidity is also ample, with the launch of Affin's mobile application in June expected to contribute positively to its CASA franchise.
RHB Research lowered Affin's FY23 to FY25 estimates by five to 10 per cent as it factored in lower NIM assumptions, offset by lower FY23F credit costs.
It also maintained a "Buy" call on Affin, with a lower target price of RM2.30 from RM2.50 previously.