Alliance Financial Group Bhd is the the country
KUALA LUMPUR: AmInvestment Research is maintaining its Hold rating on Alliance Financial Group Bhd (AFG) with an unchanged fair value of RM4 a share.
It said on Tuesday this was based on a return on equity (ROE) of 10.7% for FY17F, leading to unchanged fair price-to-book value (P/BV) of 1.2 times.
“AFG reported a net profit of RM132mil (+2.0% on-quarter; +8.6% on-year) in 1QFY17 which was within expectations, accounting for 24.7% and 24.3% of our and consensus full-year net earnings, respectively, for FY17F,” it said.
AmInvestment Research said AFG’s loan growth moderated to +3.0% on-year due to its focus on growing higher risk adjusted return (RAR) loans as well as due to corporate loan repayments. NIM improved 10bps on-quarter to 2.22% in 1QFY17 (4Q16 NIM: 2.12%).
Meanwhile, AFG group’s loan yield also rose by 8bp on-quarter to 5.27% contributed by its focus on higher RAR loans and better risk based pricing for loans.
“We expect its NIM to ease in 2QFY17 due to the reduction in OPR by 25bps. The reduction in OPR will reduce its lending rates for its floating rate loans immediately while there will be a lagged impact from the adjustment of deposit rates.
“This will offset the positive impact on its asset yield from the improvement of its loan mix towards higher RAR loans,” it said.
Limited time offer:
Just RM5 per month.
