Affin Holdings | 3QFY08: Weak capital markets take a toll

November 25, 2008 at 7:39 am Leave a comment

Affin Holdings | 3QFY08: Weak capital markets take a toll

• Below expecation
The group reported a net profit of RM53.9m for the current quarter, for a cumulative 3QFY08 net profit of RM209.7m and falling short of consensus and our expectation by 4.3% and 7.5% respectively, on an annualised basis.
• Weak capital markets take a toll
The investment banking unit registered a pre-tax loss of RM22.6m for 3QFY08, an additional RM3.7m loss as compared to the halfway point in June, a result of higher loan loss provisioning for its legacy NPLs and a
drop in other operating income. During the current quarter, the Group also reported a RM13.3m unrealised loss on revaluation of derivatives.
• Loans growth decent
Lending activities picked up pace to 9.0% y-o-y during the quarter, the bulk of which was spurred by business lending. Consumer lending was noticeably weak, with mortgage loans registering a weak +1.5% y-o-y growth, while hire purchase and credit card financing grew at an equally anaemic +3.7% and +3.1% respectively. Loans for working capital grew at an astounding +134.5% y-o-y to RM7.1bn from RM3.0bn just a year ago.
• Asset quality continues to improve
While RWCAR stands at a comfortable 14.1%, net NPLs continue to be high at 4.8%, relative to the industry average of 2.4%. It is certainly an improvement from 7.9% as at end-07 however. Loan loss coverage is only
at 55.0%, one of (if not the) lowest amongst the banking institutions domestically.
• Ceasing coverage
Although share price has weakened significantly in the recent months along with that of the other banking groups, we are however ceasing official coverage on Affin Holdings given the relative illiquidity of the
company’s shares. We will nevertheless continue to monitor and evaluate the performance of the group as part of our on-going coverage of Boustead Holdings.

Entry filed under: Business, Finance, Stock Market. Tags: , , , , .

19 November 2008 Newz Bits TM International | Higher risks and debt weigh on valuations

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