Period 4Q12/FY12
Actual vs. Expectations The
FY12 PAT of RM628.9m was marginally above the consensus forecast (107%) and
that of ours (105%) due to an allowance write-back.
Dividends No
dividend was proposed.
Key Result Highlights
The 4Q12 net interest income was flat with a marginal
increase of 1.9% QoQ and +4.0% YoY, supported by the positive growth in gross
loans of 3.1% QoQ. Its 11.7% YoY loan
growth was slightly better than our forecast of 10%. Meanwhile, the total deposits rose by 1.9%
QoQ (2.8% YoY). The estimated NIM was higher by 2bps to 1.79% in 4Q12 from
1.77% in 3Q12 on a reasonable leverage with the L/D ratio at 79.6%.
The 4Q12 non-interest
income of RM156.2m was softer after a strong performance in the 3Q, declining
6.8% and 14.1% QoQ and YoY respectively. On a whole, total revenue came in encouragingly
at RM388.6m (-1.8% QoQ).
The write-back of
RM10.1m was in line with the decline in the gross impaired loans to RM790.4m (from
3Q12’s RM818.7m) with the gross impaired ratio falling to 2.88% (from 2.43% in
3Q12).
Cost was higher with
a cost-to-income ratio of 47.5% during the quarter (vs. 43.0% in 3Q12) due to
the increase in staff cost.
The achieved
full-year ROE of 10.8% was above our previous expectation of 10.0%.
Outlook With
the share price trading below its book value, we believe that AFFIN’s
potentially higher credit risks have already been priced in by the existing discount
in its valuation and hence, there is room for its trading multiple to improve
with its M&A news.
Change to Forecasts
There are no changes in our earnings
estimates.
Rating Maintain
OUTPERFORM
With the strong
result performance, its current valuation at 0.8x FY13 P/BV with an estimated ROE
of 10.3% is undemanding in our view and offers a favourable risk-to-reward
proposition.
Valuation We are maintaining our TP of RM4.40, which is based
on a targeted 1.0x FY13 BV.
Risks Tighter lending rules and a margin squeeze.
Source: Kenanga
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