AFG's net profit was in line with consensus and our expectations, representing48%-50% of the respective full-year forecasts. Core net profit increased by 1.8% y-o-y, after excluding the gain in the disposal of PPE and taking into account the slightly higher restated 1HFY12 net profit, reflecting changes in loan loss provisioning post-MFRS139. Gross loans growth remained aggressive at 13.2% y-o-y, spurred by purchases of securities and property loans. The loans-to-deposit ratio remained healthy at 82.8%, while gross NPL ratio improved to 2.3%. Maintain BUY and FV at RM4.68.
In line. AFG’s 1HFY13 core net profit represented about 48.1% and 49.7% of our and consensus' full-year forecasts respectively. Our YTD core net profit growth forecast of 1.8% excludes the one-off gain on disposal of property, plant and equipment (PPE) amounting to RM7.4m, compared against a restated 1HFY12 net profit of RM341m post-MFRS-139. Without the restatement and including the exceptional item, AFG's YTD net profit growth would stand at 6.2%. Main drivers to net profit growth were: i) net interest income, which grew 9.7% q-o-q on the back of the increase in loans base to RM26.6bn, and ii) the positive write-back of loan loss provisions from better recovery of bad debts.
Costs display signs of normalization. Overhead expenses (+9.8% y-o-y) remained high, due to investments in labour and technology. We noticed an improvement in the cost-to-income (CIR) ratio from 50.5% in 1QFY13 to 45.5%, bringing the YTD CIR to 47.9% which is slightly higher than the 46.3% in 1HFY12. However, this was offset by the loss-making investment banking division, which reported a segmental pre-tax loss of RM5.4m.
Loans growth still strong. Overall loans growth was strong at 13.2% y-o-y, driven by securities (+96.0% y-o-y), residential mortgages (+17.6% y-o-y), non-residential loans (+24.1% y-o-y) and business loans for other purposes (+31.9% y-o-y). Nearly 90% of the loans are of variable rates.
Slower deposit growth. Loans growth outpaced customer deposits growth at mere 5.7% y-o-y. In absolute terms, customer deposits shrunk slightly by RM66k. This resulted in the loans-to-deposit ratio inching up slightly to 82.8%, in line with the
management's guidance of 85% for more effective asset liability management.
No foreseeable issues in asset quality. Gross impaired loans ratio improved to 2.3% from 2.4% q-o-q. The credit charge in relation to collective assessments over gross loans was slightly reduced to 1.38%, also in line with the management's forecasts.
In line. AFG’s 1HFY13 core net profit represented about 48.1% and 49.7% of our and consensus' full-year forecasts respectively. Our YTD core net profit growth forecast of 1.8% excludes the one-off gain on disposal of property, plant and equipment (PPE) amounting to RM7.4m, compared against a restated 1HFY12 net profit of RM341m post-MFRS-139. Without the restatement and including the exceptional item, AFG's YTD net profit growth would stand at 6.2%. Main drivers to net profit growth were: i) net interest income, which grew 9.7% q-o-q on the back of the increase in loans base to RM26.6bn, and ii) the positive write-back of loan loss provisions from better recovery of bad debts.
Costs display signs of normalization. Overhead expenses (+9.8% y-o-y) remained high, due to investments in labour and technology. We noticed an improvement in the cost-to-income (CIR) ratio from 50.5% in 1QFY13 to 45.5%, bringing the YTD CIR to 47.9% which is slightly higher than the 46.3% in 1HFY12. However, this was offset by the loss-making investment banking division, which reported a segmental pre-tax loss of RM5.4m.
Loans growth still strong. Overall loans growth was strong at 13.2% y-o-y, driven by securities (+96.0% y-o-y), residential mortgages (+17.6% y-o-y), non-residential loans (+24.1% y-o-y) and business loans for other purposes (+31.9% y-o-y). Nearly 90% of the loans are of variable rates.
Slower deposit growth. Loans growth outpaced customer deposits growth at mere 5.7% y-o-y. In absolute terms, customer deposits shrunk slightly by RM66k. This resulted in the loans-to-deposit ratio inching up slightly to 82.8%, in line with the
management's guidance of 85% for more effective asset liability management.
No foreseeable issues in asset quality. Gross impaired loans ratio improved to 2.3% from 2.4% q-o-q. The credit charge in relation to collective assessments over gross loans was slightly reduced to 1.38%, also in line with the management's forecasts.
Source: OSK
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