Affin's 9-month results beat expectations

Affin Holdings Bhd's nine-month 2013 financial results were above analysts' expectations, mainly due to lower than expected credit cost and writebacks of loan impairment in the past three
quarters.

Kenanga Research said Affin's net profit of RM483.1 million accounted for 78.2 per cent of consensus estimates and 74.5 per cent of its expectations, despite a flattish total income growth of only one per cent year-on-year.

On outlook for the group, the research house believes Affin's growth will be mainly driven by net writebacks for the year.

"However, we notice that its loan loss reserve of 75.4 per cent is still lower than the industry average of 100 per cent as at end of September 2013.

"As such, this underlying trend of writebacks could be vulnerable if and when interest rates start rising or the economy's direction turns volatile from extreme external factors," it said in a research note today.

Kenanga Research maintained a 'market perform' call on Affin with an unchanged target price of RM4.60.

Meanwhile, HLIB Research said Affin's third quarter results were boosted by writeback od provisions and low effective tax rate, complemented by sustained net interest income growth and sustained non-interest income.

It said loans growth continued to slow to 8.1 per cent year-on-year.

"While it was a conscious effort to ensure decent growth without comprising asset quality, the trend is contrary to management guidance of slight acceleration to match the industry average by year-end.

"This is slightly below HLIB's nine per cent assumption for the industry and Affin," it added.

HLIB research maintained a 'sell' call on Affin with an unchanged target price of RM3.81.

On another note, RHB Research said Affin's nine months 2013 results beat its and consensus estimates, as a RM35 million loan impairment writeback more than offset its lacklustre operating income growth.

"Dividends were also ahead of expectations, due to stronger than expected earnings and a higher than expected payout.

"Thus, our fair value of RM4.40 and 'neutral' call on Affin are retained," it added.-