Email This Print This Financials

Quarterly Report For The Third Quarter Ended 30 September 2017

Financials Archive

Get Adobe Reader Note: Files are in Adobe (PDF) format.
Please download the free Adobe Acrobat Reader to view these documents.

Unaudited Consolidated Statements Of Comprehensive Income

Income Statement

The interim financial statements should be read in conjunction with the audited financial statements for the year ended 31 December 2016.

Unaudited Consolidated Statement Of Financial Position

Balance Sheets

The interim financial statements should be read in conjunction with the audited financial statements for the year ended 31 December 2016.

Performance Review

Current Year-to-Date vs Previous Year-to-Date
Income Statement

Group revenue for the 9 months ended 30 September 2017 of RM2.441 billion is at par with the revenue recorded for the previous year corresponding period. Group profit before tax for the financial period ended 30 September 2017 of RM372.437 million increased by RM184.902 million or 98.60% as compared to the previous year corresponding period profit before tax of RM187.535 million. The increase was mainly due to higher net operating income and lower allowances for impairment losses on loans, advances and financing. Net profit attributable to ordinary equity holders grew by RM137.373 million or 88.19% over the same period to RM293.144 million.

The Group cost to income ratio improved from the previous year corresponding period standing of 22.8% to currently stand at 21.9%. Total personnel expenses for the financial period ended 30 September 2017 of RM119.87 million were higher by RM5.40 million or 4.50% as compared to the previous year corresponding period mainly due to higher wages and salaries expenses as total number of staff increased from 1,526 to 1,586. Finance costs for the financial period ended 30 September 2017 of RM149.57 million were lower by RM43.03 million or 22.34% as compared to the previous year corresponding period mainly due to lower cost of deposits.

The Group embarked on a "Closing the Gaps" exercise since 2010 to bridge its frameworks to be in line with banking standards and best practices. The impairment programme, which is in line with the recommendation by Bank Negara Malaysia, is in addition to the existing impairment provision that is in compliance with current accounting standards. The Group financing and loan loss coverage ratio increased to 109.82% for the financial period ended 30 September 2017 from 107.09% recorded over the same period last year.

The Group's gross loans and financing grew by RM800.857 million or 2.27% to RM36.085 billion as at 30 September 2017 as compared to RM35.285 billion as at 31 December 2016. This was mainly driven by growth in corporate loans and financing, partially set off by contraction in the retail segment. Fair value of financial investments available-for-sale increased by RM678.900 million as compared to 31 December 2016 position due to improved yields from favourable market sentiments.

Total deposits from customers increased by RM2.531 billion or 8.27% to stand at RM33.142 billion as at 30 September 2017.

The performance of the respective operating business segments for the current period under review as compared to the previous year corresponding period is analysed as follows:

Personal financing – The gross income from personal financing in the current period was lower compared to the previous year corresponding period due to lower disbursements and decreasing portfolio base.

Corporate loans and financing – The gross income from corporate loans and financing in the current period was higher compared to the previous year corresponding period due to the continued growth of corporate loans and financing assets base.

Property financing and Mortgage loans – The gross income from property financing was higher in the current period compared to the previous corresponding period due to growth in its financing assets base. This was partly set off by lower income from mortgage loans as its assets base decrease due to declining disbursements.

Auto financing – TThe gross income from auto financing was lower compared to the previous year corresponding period due to lower disbursements and decreasing portfolio base.

Current Quarter vs Previous Year Corresponding Quarter

The Group registered a profit before tax of RM130.038 million, an improvement of RM56.322 million of 76.40% compared to the previous year corresponding quarter. The improved profit before tax was mainly due to higher operating profit and lower allowances for impairment losses on loans, advances and financing. Net profit attributable to ordinary equity holders grew by RM42.809 million or 73.90% over the same period to RM100.736 million.

The performance of the respective operating business segments for the current quarter under review as compared to the previous year corresponding quarter is analysed as follows:

Personal financing – The gross income from personal financing in the current quarter was lower compared to the previous year corresponding period due to lower disbursements and decreasing portfolio base.

Corporate loans and financing – The gross income from corporate loans and financing in the current quarter was higher compared to the previous year corresponding quarter due to the continued growth of corporate loans and financing assets base.

Property financing and mortgage loans – The gross income from property financing was higher in the current quarter compared to the previous corresponding quarter due to growth in its financing assets base. This was partly set off by lower income from mortgage loans as its assets base decrease due to declining disbursements.

Auto financing – The gross income from auto financing in the current quarter was lower compared to the previous year corresponding quarter due to lower disbursements and decreasing portfolio base.

Prospects

Brief Overview and Outlook of the Malaysian Economy

The Malaysian economy recorded a stronger growth of 5.8% in the second quarter of 2017 (1Q 2017: 5.6%). Private sector spending continued to be the main driver of growth. On the external front, growth was further supported by the robust expansion in real exports of goods and services (9.6%; 1Q 2017: 9.8%) following strong demand for manufactured and commodity products. Real imports moderated slightly to 10.7% (1Q 2017: 12.9%) following more moderate expansion in investment. On a quarter-on-quarter seasonally adjusted basis, the economy recorded a growth of 1.3% (1Q 2017: 1.8%).

Domestic demand grew by 5.7% in the second quarter of the year (1Q 2017: 7.7%), supported by continued expansion in both private sector expenditure (7.2%; 1Q 2017: 8.2%) and public sector spending (0.2%; 1Q 2017: 5.8%). Private consumption recorded a growth of 7.1% (1Q 2017: 6.6%), supported by the improvement in private sector wages amid continued strength in employment growth. During the quarter, consumer sentiments continued to improve, providing further impetus to household spending.

Public consumption growth moderated to 3.3% (1Q 2017: 7.5%) following slower growth in the spending on emoluments, and supplies and services. Public investment declined by 5.0% in the second quarter (1Q 2017: 3.2%). This was attributable to the lower spending on fixed assets by public corporations, which more than offset the higher expenditure by the Federal Government.

(Source: Extracted from the latest BNM Quarterly Bulletin - Developments in the Malaysian Economy, Second Quarter 2017)

Banking system remains strong

The banking system remained strong and was well-capitalised during the second quarter of 2017. As at end-June 2017, the common equity tier 1 capital ratio; tier 1 capital ratio; and the total capital ratio stood at 12.9%, 13.8% and 17%, respectively (end-June 2016:13.4%;14.3%; 16.8%). The banking sector recorded a pre-tax profit of RM9.2 billion due to higher dividend income from subsidiaries and net interest income from financing activities. The quality of loans in the banking system remained stable with the net impaired loans ratio stood at 1.2% as at end-June 2017 (end-June 2016: 1.2%).

(Source: Extracted from the latest Quarterly Update on the Malaysian Economy – Second Quarter 2017, Ministry of Finance)

Overall liquidity conditions remained sufficient for financial intermediation

In the banking system, liquidity conditions remained sufficient at both the institutional and system-wide levels. The level of surplus liquidity placed with BNM moderated slightly, reflecting the lower use of liquidity injection operations amid net inflows during the quarter. At the institutional level, most banks continued to maintain surplus liquidity positions.

The growth of net financing increased to 7.0% in the second quarter of 2017 (1Q 2017: 6.8%), mainly reflecting the improvement in the growth of net outstanding issuances of corporate bonds (2Q 2017: 11.8%; 1Q 2017: 9.8%) amid a moderation in the growth of loans extended by the banking system and development financial institutions (DFIs) (2Q 2017: 5.6%; 1Q 2017: 6.0%).

The growth of outstanding business loans extended by the banking system and DFIs moderated to 6.6% (1Q 2017: 7.1%) during the quarter. Loans to SMEs recorded an annual growth of 7.0% (1Q 2017:9.3%), with the level of loan disbursed sustained at RM69.3 billion (1Q 2017: RM71.8 billion). The growth of outstanding household loans extended by the banking system and DFIs continued to moderate to 5.1% (1Q 2017: 5.4%), mainly reflecting the moderation in loans for the purchase of non-residential property; purchase of residential property and personal financing.

(Source: Extracted from the latest BNM, Quarterly Bulletin - Monetary and Financial Developments in the Malaysian Economy, Second Quarter 2017)

Group Prospect

The Group will focus on continued expansion of corporate business segment as it has shown positive contribution for the nine (9) months period in 2017, in terms of growth in corporate portfolio assets and earnings. The Group will continue to strengthen, adapt and sustain its corporate and retail business activities to compete in the challenging environment. These activities include collection efforts, continued improvement in compliant operational workflows, efficient workflows, enhancing assets quality based on risk management and credit frameworks and improving data management with business analytics.

In respect of the proposed acquisition of 100% equity interest in Asian Finance Bank Berhad, the Group has started pre-integration activities to ensure smooth integration of operations after completion of the proposed acquisition. Barring any unforeseen circumstances, the Group expects its performance for 2017 to be satisfactory.