Issuer Flash: AFFIN Bank Berhad - 1Q2026 Results

Report date: 2026-05-20 Event date: 2026-05-18 Event title: Q1 2026 Results

1. Flash Conclusion

AFFIN Bank Berhad's 1Q2026 results do not materially change the view set out in the most recent issuer_summary: AFFIN is a mid-sized Malaysian bank that is improving, but it should not yet be viewed as having a funding franchise comparable to the top-tier banks. Net profit increased 9.2% year on year to RM135.5m, with net income, NII, and fee-related income all growing. However, PBT increased only 1.5% year on year to RM180.9m, as much of the revenue growth was absorbed by credit impairment allowances, higher expenses, and lower profit contribution from associates. It is too early to upgrade the credit view based only on the headline increase in net profit.

From a credit perspective, the results are modestly positive but still call for caution. Loans and financing expanded 12.6% year on year to RM82.1bn, while total assets increased to RM125.7bn. The GIL ratio improved to 1.75% from 1.84% a year earlier, and the LCR was adequate at 164.2%. However, customer deposits grew only 3.5% to RM78.1bn, well below loan growth. The CASA ratio recovered to 27.11% from 25.0% at end-FY2025, but remained below 32.21% a year earlier, indicating that funding quality is still in the process of repair.

The results should be read as a continued confirmation of the improvement story, not as a re-rating toward a high-quality top-tier bank profile. There is no major change to the credit strength level, direction, or the likelihood of a rapid change in credit standing set out in the most recent summary. The assessment from here will depend on CASA recovery, the balance between deposit and loan growth, normalisation of credit impairment allowances, and the maintenance of adequate CET1 headroom.

2. What Was Announced

On 18 May 2026, AFFIN posted its 1Q2026 quarterly report and press release for the quarter ended 31 March 2026 on its IR website. The key metrics are as follows.

On the revenue side, net fee and commission income increased substantially to RM115.7m from RM59.1m a year earlier. By business segment, Affin Hwang Investment Bank Berhad was strong, with PBT of RM45.0m, up 124.1% year on year, while Affin Islamic Bank Berhad recorded PBT of RM58.3m, down 33.1%, due to higher impairment allowances.

3. Credit Read-Through

First, the revenue direction is not negative. NII, fee income, and net income all increased, so the improvement observed in FY2025 should not be viewed as having stalled in 1Q2026. However, PBT rose only 1.5%, and credit impairment allowances increased materially from the year-earlier period. Based on 1Q alone, it is not possible to determine whether the RM68.9m allowance was a conservative front-loaded provision or an early signal of rising credit costs in the growth portfolio.

Second, asset quality remains a support, but it should be viewed more cautiously than at end-FY2025. The GIL ratio improved year on year, but rose to 1.75% from 1.64% at end-FY2025. LLC of 71.62% and LLR of 118.15% provide practical buffers, but both declined from end-FY2025.

Third, the funding mix remains the most important credit issue. The CASA ratio improved to 27.11% from 25.0% at end-FY2025, but it is still below 32.21% a year earlier. The fact that customer deposit growth lagged loans and financing growth is also not something to overlook for a mid-sized bank. In the short term, there is some indication that the deterioration has bottomed, but it is too early to confirm a medium-term recovery in funding quality.

Fourth, capital and liquidity are adequate, but headroom has narrowed somewhat. At end-March 2026, the CET1 ratio of 12.5%, Tier 1 ratio of 13.8%, and Total capital ratio of 16.3% were above BNM minimum requirements, while the LCR of 164.2% also provides comfort. However, these ratios declined from 13.4%, 14.8%, and 17.3%, respectively, at end-FY2025. The RM500m AT1CS issuance in May 2026 will improve the Total capital ratio by around 50bp, but it does not directly strengthen CET1.

4. What To Watch Next

• CASA ratio and customer deposit growth. If CASA recovers further from end-FY2025, it would increase the likelihood that the deterioration in the funding mix was temporary. Conversely, if loan growth continues to outpace deposit growth, reliance on higher-cost funding should be questioned.
• Credit impairment allowance and the GIL ratio. The key question is whether the increase in provisions in 1Q2026 ends as a conservative front-loaded item, or whether it spreads into higher credit costs in Islamic Banking, Enterprise Banking, and retail.
• CET1 ratio. The improvement in the Total capital ratio after the AT1CS issuance is positive, but whether the CET1 ratio itself recovers is a separate issue.
• The impact of Middle East tensions, energy prices, and customer monitoring. Given that AFFIN's growth area is Enterprise Banking, the trajectory of credit costs under macro stress will be the central issue over the next few quarters.

5. Sources

• AFFIN Bank Berhad, ABB_Quarterly_Report_Q1_2026.pdf, 2026-05-18: https://affin.listedcompany.com/newsroom/ABB_Quarterly_Report_Q1_2026.pdf
• AFFIN Group, Media_Release_-_AFFINBANK_Q1_2026.pdf, 2026-05-18: https://affin.listedcompany.com/newsroom/Media_Release_-_AFFINBANK_Q1_2026.pdf
• AFFIN Bank Berhad issuer_summary, 2026-05-04, internal current report.

6. Unverified / Pending

• The official announcement date for Q2 2026 has not been confirmed. The next step is to recheck the quarterly results and financial calendar on IR from mid-August 2026 onward.
• It has not been confirmed whether the RM68.9m credit impairment allowance in this period was a one-off conservative provision for specific exposures or a normalisation across the overall growth portfolio.
• The terms of individual bonds, including non-viability, coupon stopper, and call conditions for AT1CS / Tier 2 instruments, have not been reviewed in this flash.