KUALA LUMPUR: Affin Bank Bhd anticipates the normalisation of net interest margins (NIM) by the first half of 2025, underpinned by the expectation of a 50-75 basis points cut by the US Federal Reserve and improving economic conditions in Malaysia.
President and group CEO Datuk Wan Razly Abdullah said, however, that NIM is expected to compress in the
short-term as the bank focuses on higher credit quality clients given the soft economic conditions.
In line with the outlook, he said the group will be continuing with its digital transformation with Phase 2 of its digital core developments, including enhancements to current account savings account (Casa), deposits and e-wallet capabilities.
Additionally, he said the new mobile banking platform is
progressing well, with a target Go-Live in December 2024, which is expected to further strengthen the group’s deposit franchise.
"The group aims to optimise our operational cost structure and cost of funds while delivering innovative customer solutions to meet evolving expectations," he said in a statement announcing the bank's latest quarterly result.
In the second quarter ended June 30, 2024, Affin Bank recorded a net profit of RM118.58mil, up from RM113.23mil in the year-ago quarter, translating to an earnings per share of 5.04 sen against 4.98 sen previously.
The bank reported revenue of RM494.77mil, down from RM504.86mil in the previous comparative quarter.
For the first half of 2024, however, Affin Bank posted a lower net profit of RM228.79mil as compared to RM262.21mil in the same period in 2023, while revenue was flat at RM999.31mil compared to RM999.15mil in 1HFY23.
The group said its net interest income (NII) for the period was RM386mil, or 11.5% lower compared to RM436.2mil in 1HFY23.
Non-interest income for the period under review was RM284.2mil, an increase of 7.8% from RM263.6mil registered in the previous corresponding period.
Affin islamic Bank Bhd, the group's Islamic banking arm, recorded a 12% increase in pre-tax profit to RM148.8mil, due to higher gross financing growth of 13.9% year-on-year (y-o-y).
The group reported higher operating expenses of RM746.7mil in 1HFY24 as compared to RM646.4mil in the previous year, raising its cost-to-income ratio to 74.7% from 64.7% in 1HFY23.
In 1HFY24, the group’s total loans, advances and financing grew by 10.5% y-o-y to RM69bil, contributed mainly by 13.6% growth in the community banking segment.
On deposits, Casa recorded at RM18.4bil for the period
ended June 30, 2024, and Casa ratio stood at 25.89%.
The group’s customer deposits decreased 0.4% y-o-y to RM71.2bil in 1HFY24.
