Affin Bank Berhad | Annual Report 2020

REVIEW OF GROUP’S FINANCIAL PERFORMANCE AFFIN BANK (“the Group”) recorded a consolidated profit before tax (PBT) of RM386.7 million for the financial year ended 31 December 2020 (FY2020), a decrease of RM290.3 million or 42.9% compared to the previous financial year, while profit after tax (PAT) for the financial year stood at RM272.8 million. Net income expanded by RM350.5 million, mainly attributable to higher gains on sale of financial instruments of RM217.5 million, higher net fee income of RM108.3 million, higher income from Islamic Banking of RM70.5 million and higher net interest income of RM29.0 million. For FY2020, basic earnings per share was 11.43 Sen compared to 24.59 Sen in the previous financial year, while net return on equity was 2.44%. The total assets of the Group increased by RM1.2 billion or 1.7% to RM69.5 billion mainly attributable to the increase in cash and short-term funds, financial investments at FVOCI, trade receivables and net loans, advances and financing. Gross loans, advances and financing increased by RM310.8 million or 0.7% to RM46.3 billion as at 31 December 2020 due to rebalancing of portfolios. Total customer deposits, however decreased by RM1.2 billion or 2.4% to RM49.9 billion, with a 7.1% reduction in high cost long term fixed deposits. During the financial year, CASA ratio improved to 22.22% as compared to 19.09% in FY2019. On asset quality, the gross impaired loan ratio was at 3.52% [2019: 3.00%] while loan loss reserve remained at a healthy level of 98.2% [2019: 96.9%]. As at 31 December 2020, the Common Equity Tier 1 (“CET 1”), Tier 1 and Total Capital ratios of all the banking entities within the Group remained sturdy and well above regulatory requirements, a testament to the Group’s financial strength. The Group maintained Total Capital Ratio of 22.24%, while its CET 1 and Tier 1 ratios stood at 14.52% and 16.29%, respectively. At the Bank’s level, AFFIN BANK recorded a lower PBT of RM93.1 million for FY2020, from RM460.1 million previously, attributable to higher allowance for credit impairment losses and higher operating expenses. Amid the challenging capital market environment and the impact of COVID-19 pandemic, AFFIN ISLAMIC, recorded a higher PBT of RM97.2 million in 2020 as compared to RM93.2 million in 2019, mainly attributable to higher net profit income and higher net gain on sales of financial instruments. Affin Hwang Capital performed remarkably well; its PBT surged to RM351.1 million in FY2020, an increase of RM176.6 million of 101.2% year on year. Higher net gain on sales of financial instruments, fee and commission income and other income totalling RM758.8 million contributed to the sterling performance. Its 63%-owned subsidiary, Affin Hwang Asset Management’s PBT increased by 25.1% to RM137.3 million for FY2020, attributable to higher net fee and commission income. Affin Moneybrokers Sdn Bhd contributed a PBT of RM1.9 million in FY2020 compared to RM2.5 million in FY2019, in line with its net brokerage income. As for its 51%-owned Joint Venture Company, AXA AFFIN Life Insurance Berhad, the Group shared a lower net loss of RM0.4 million compared to a net loss of RM3.9 million in FY2019. The Company reported a lower loss after tax of RM0.8 million for FY2020 compared to a loss after tax of RM7.6 million in the previous year, mainly due to higher investment income and lower reserves for future policyholders’ liabilities. The 49.95%-associated company, AXA AFFIN General Insurance Berhad, contributed a higher share of RM41.9 million in FY2020 compared to RM33.6 million in FY2019. The Company reported a higher profit after tax of RM83.8 million in FY2020 as compared to RM67.2 million in the previous year, mainly attributable to the improved underwriting results. 54 MANAGEMENT DISCUSSION & ANALYSIS ORGANISATION EXECUTIVE SUMMARY CORPORATE GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION RM350.5 million Ne t i ncome expanded by RM69.5 billion The Group To t a l Asse t s