Affin Bank Berhad - 4QFY24 results: No Cash Dividends
Wed, 26-Feb-2025 07:33 am
by Samuel Woo • Apex Research

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AFFIN (5185)

Target Price (RM)

2.540

Recommendation

Hold

Summary

  • AFFIN’s 4QFY24 core net profit jumped +242% yoy and fell -7% qoq to RM135m, bringing FY24 core net profit at RM510m, which was deemed within expectations, accounting for 103% and 105% of ours and consensus expectations, respectively.

  • Management’s tone: Optimistic.

  • Re-iterate our HOLD recommendation with a lower target price of RM2.54, based on FY25F GGM-PBV of 0.52x.

 

Results within expectations. FY24 core net profit at RM510m (+27% yoy) came within expectations, accounting for 103% of our core net profit forecast at RM494m and was at 105% of consensus forecasted net profit of RM484m.

 

YoY. 4QFY24 core net profit jumped +242% yoy to RM135m, driven by improved NII, lower provisions and improved Associate income, which offset higher tax and OPEX expenses. FY24’s core net profit rose +27% yoy, as improved NII, NOII and provisioning profile offset much higher OPEX and tax.

 

QoQ. 4QFY24 core net profit fell -7% qoq, as weaker NOII performance offset improved NII, provisions and improved Associate income.

 

Outlook. We were slightly disappointed by AFFIN’s decision to issue bonus shares (1 new share for every 18 existing shares) in favour of cash dividends (there were no cash dividends for the entirety of FY24). The Group intends to amass capital despite an already healthy CET1 ratio of 13.2%, to fuel their high FY25F 12% loan growth target and for possible M&A opportunities. Regardless, their fee income outlook remains intact, while they claim to be at the tail end of their investment phase – which bodes well for further CIR outlook. Minor concern on GIL ratio uptick – particularly in the residential mortgage portfolio.

 

Earnings Revision. We increase our FY25F and FY26F earnings forecasts by +0.3%/+0.6% respectively, to account for wider NIM expansion.

 

Valuation. Re-iterate our HOLD recommendation on AFFIN with a lowered target price of RM2.54, based on an FY25F P/BV of 0.52x GGM-PBV valuation and 1% ESG factored premium based on 4-star ESG rating. Despite slightly higher earnings forecasts, we set a lowered target price due to the dilution from bonus share issue proposed by AFFIN.

 

Risks. (1) Further NIM compression, (2) Volatile NOII conditions, (3) Higher-than-expected NCC.

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