KUALA LUMPUR (May 25): Affin Bank Bhd's net profit for the first quarter ended March 31, 2021 (1QFY21) fell 44.21% to RM68.94 million from RM123.57 million, largely on lower net gain on sales of financial instruments.

Quarterly earnings per share fell to 3.31 sen from 6.22 sen, Affin Bank said in its results filing. Also contributing to the weaker results were higher other operating expenses.

In its statement, Affin Bank attributed the weakness largely to “lower gains from treasury assets compared to the previous year and additional provision overlays due to the prolonged Covid-19 pandemic”.

While operating expenses fell on cost rationalisation efforts, cost to income ratio increased to 63.33% in 1Q21 against 52.25% in 1Q20 due to the lower revenue from capital markets, Affin Bank said.

At group revenue or net income level, Affin Bank saw a 13.95% decline to RM537.63 million from RM624.77 million.

The weaker results came despite an 11.1% increase in net interest income, a 7.7% increase in Islamic banking income, and higher net fee and commission income. The group also recorded lower allowances for impairment losses and lower taxation, the filing showed.

On net interest income, Affin Bank attributed the improvement to the better net interest margin (NIM) backed by higher overall CASA composition and reduction of cost of funds, it said.

“At the end of March 2021, the CASA ratio improved to 23.11% as compared to 17.95% a year ago, an increase of 5.16%,” it added. This as its CASA grew 28% to RM11.7 billion, with the group’s customer deposit at RM50.6 billion.

As at end-1QFY21, the group’s total loans, advances and financing grew by 3.3% y-o-y to RM47 billion, contributed mainly from 7.4% growth in the community banking segment. “Mortgages grew by 9.0%, while hire purchase loans rose by 4.9%,” it said. On-quarter, total loans grew 1.57%.

Meanwhile, the group’s gross impaired loan ratio stood at 3.41%, compared with 3.11% at end-March 2020, although an improvement from 3.52% at end-2020.

Shares of Affin Bank rose one sen or 0.58% to RM1.72 at noon market break, valuing the local banking group at RM3.65 billion.