Affin Bank Upgraded To Buy On Higher Adjusted FY26 ROE
CIMB Investment Bank Bhd (CIMB Securities) has upgraded Affin Bank Bhd to BUY from Hold, raising its target price to RM3.10 from RM2.50, citing a higher adjusted FY26 return on equity (ROE) of 7.2% and an improved risk-reward profile.
The research house highlighted that Affin’s growth prospects are underpinned by its digital-at-core platform, new wealth management capabilities and capital optimisation plans.
CIMB Securities expects FY25 net profit to rise 8.0% year-on-year to RM550.7 million, while 4Q25 net profit is projected at RM138.2 million, representing a 4.7% sequential decline.
Affin maintained its FY25 financial targets, including a ROE of 4.8%, loan growth of 8% year-on-year, net interest margin of 1.45% and gross credit cost of 12 basis points.
The bank is executing a strategic shift to accelerate deposits through a CASA-focused “payroll-attack” strategy in Sarawak and Sabah, alongside growth in Islamic term investment accounts, which reduce effective funding costs and enhance capital efficiency.
Loan growth is expected to remain in the high single-digit to low double-digit range, supported by strong expansion in East Malaysian states and capital buffers.
CIMB Securities noted that Affin’s recent acquisition of Pheim Asset Management for RM50 million will broaden its wealth management capabilities and provide additional fee income streams.
Its new digital platform, Möbius, is designed to enable rapid product configuration, multi-partner onboarding and operational agility, positioning the bank for banking-as-a-service and further CASA growth.
Longer-term plans include addressing structural capital inefficiencies in its investment banking arm and transitioning to the internal ratings-based framework by 2029, which is expected to boost ROE.
Trading at a FY25–26 price-to-book value multiple of 0.53 times, Affin remains one of the most undervalued banks in CIMB Securities’ coverage, with the upgrade reflecting increased confidence in execution, structural growth opportunities in Sarawak and potential re-rating as the bank’s capital and digital initiatives take effect.
As of 10.45 am, the stock price is up 0.40% to RM2.53.
