ANALYSIS ON FINANCIAL STATEMENT.doc

8/11/2019 ANALYSIS ON FINANCIAL STATEMENT.doc

http://slidepdf.com/reader/full/analysis-on-financial-statementdoc 1/21



1

1.0 INTRODUCTION............................................................................................2

2.0 ANALYSIS ON FINANCIAL STATEMENT...........................................................3

2.1 EVALUATION OF INCOME STATEMENT.....................................................3

2.2 EVALUATION ON BALANCE SHEET........................................................13

2.3 EVALUATION OF FINANCIAL RATIO........................................................16

3.0 CONCLUSION..............................................................................................18

4.0 REFERENCES..............................................................................................19



2

1.0 ,(&-/3C&,(ffin Bank Berhad, also known as AFFINBANK is a wholly-owned

subsidiary of Affin Holdings Berhad which is listed on the Kuala

Lumur !tock "#change $KL!" or Bursa %alaysia&'A(n )* (ctober +., AFFINBANK was incororated with /erwira Habib

Bank %alaysia Berhad $/HB& and followed by emergence of Affin Holdings Berhad

as biggest shareholder of /HB in year +)' In year +0, AFFINBANK became

/erwira Affin Bank $/AB& from /erwira Habib Bank %alaysia Berhad $/HB& since

Affin Holdings Berhad has +11 ercent of /AB and lastly in year )111, /erwira Affin

Bank has changed the name to Affin Bank Berhad' In year )11+, AFFINBANK has

commenced oerations with ++1 branches nationwide' AFFINBANK has merged with

Affin-A2F Finance Berhad and introduced to the new logo and tagline - 3Banking

4ithout Barriers5 in 6une )11.'

AFFINBANK ro7ides a suite of financial roducts and ser7ices that is

catered to both retail and cororate customers' 8he target business segments are

categori9ed under the ortfolio of customers under key business units such as

Business Banking, 2onsumer Banking and 8reasury' Business Banking offers ser7ices

in cororate banking, contract financing and trade finance to cororations,

institutional clients and !%"s' 2onsumer Banking ro7ides credit cards, ersonal

loans, mortgages, sa7ings:current and deosit taking ser7ices as well as hire urchase

loans to indi7iduals'



3

2.0 A(A4!S,S ( +,(A(C,A4 S&A&EME(&

2.1 E5A43A&,( + ,(CME S&A&EME(&

2.1.1 NET PROFIT

8o e7aluate erformance of Affin Bank Berhad, we ha7e take a look on the

financial statements of Affin Bank Berhad' 8hrough the fi7e years financial

statements of Affin Bank Berhad, we get more information about the bank'

%anagement team of Affin Bank Berhad has shown their talent and ability in

management the funds and assets of bank' Although now the economic is not 7ery

stable and the technology was growing raidly, Affin Bank Berhad still able to

continue their oeration and grows with healthy in its business oeration' In year

)11, the net rofit decreased +'.;, from <%), *=, 111'11 to <%)., )01,

111'11' Net rofit was increased after year )11' In year )1++, net rofit increased

from <% *0=, 1., 111'11 to <% *>, 0=, 111'11, rise +);' %oreo7er, it was rose

+.'+; in year )1+)' 8herefore, we need to find out the reason about the change of

net rofit'



4

2.1.2 SUMMARY OF INTEREST INCOME, INTEREST EXPENSES, AND NET

INTEREST MARGIN



5

YEAR 2008

(RM’000)

2009

(RM’000)

2010

(RM’000)

2011

(RM’000)

2012

(RM’000)

INTEREST

INCOME+,0.,*0+ +,*0+,1>> +,.++,>*. +,.,==) ),1+),*

INTEREST

EXPENSES+,>1> =1.,+++ =1,>0> +,1)1,>0 +,+=,)>>

PROFIT ==.,.** *., .1,> 0,>+. >+=,=0

TOTAL

ASSET),*1,00 *1,***,++= *.,0.*,== 01,11,1) 0+,==,1.0

INTEREST

EXPENSES/

INTEREST

INCOME

1'.0 1'0. 1'.1 1'. 1'.

NET

INTEREST

MARGIN

1'1)01 1'1)0* 1'1)+) 1'1+* 1'1+=



6

8hrough net interest margin, we found that the sread between interest income

and interest e#enses become larger in year )11, but it become smaller from year

)11 to )1+)' 8his is shows management team is unable to achie7e by close control

o7er the bank?s earning assets and the ursuit of the cheaest sources of funding'

4e can found the efficiency of Affin Bank Berhad to generate income and manage

e#enses' Interest incomes of Affin Bank Berhad droed '>=; from years )11> to

)11' 8his was due to the global crisis haen in )11 and customers of bank were

affected' 8o make sure the situation in under control and maintain rofit, Affin Bank

Berhad reduces the ratio of interest incomes and interest e#enses' 8he ratio

reduced from 1'.0 to 1'0.' 8his means that e7ery <% 1'0. can earn <% + interest

incomes' 8his was shows management team are able to control the e#enses well' In

year )11>, they are able to earn <% 1'1)0 interest rofit from e7ery <% + of total

asset' It is increase to <% 1'1)0* in year )11'

In year )1+1, deosit and loan increased' In )11, interest incomes

decreased =';' 4ith increase in loan, interest incomes increased ++'>;' Although

loans increased can generate more incomes, deosits increased also will increase the



7

interest e#enses' Interest e#enses increased )*'>; in )1+1' 4e can say they are

unable to control the e#enses as )11' 8his was due to the interest e#enses to

interest incomes has risen to 1'.1, increased 1'1.' 8his means that management

send more <% 1'1. to generate <% + interest incomes' In year )1+1, management

were unable to earn more interest rofit from total assets as year )11' It was only

earn <% 1'1)+) interest rofit for e7ery <% + of total assets'

In year )1++, the ratio of interest e#enses to interest incomes increased'

8his situation continues until year )1+)' 8his was due to Affin Bank Berhad

increased the interest e#enses to attract customers lace more deosits' 8he ratio is

1'. for year )1++' 8his means that we need <% 1'. of interest e#enses to

generate e7ery <% + interest incomes' At the same time, the net interest margin was

also decreased' It droed from 1'1)+) to 1'1+*'

In year )1+), interest incomes increased +1'>;' It was good news to Affin

Bank Berhad' %oreo7er, management teams try to control the interest e#enses' But

for attract customers, they forced to increase the interest rate, and interest e#enses

increased +');' @ue to the increasing in interest e#enses, they were also force to

ay more <% 1'1) to generate e7ery <% + interest incomes' 8he net interest margin

also decreased to 1'1+1 in year )1+)'

2.1.3 OPERATING INCOMES, OPERATING EXPENSES, OPERATING PROFIT, AND

NET BANK OPERATING MARGIN

2007-M8000

9

2007-M8000

9

20107-M8000

9

20117-M8000

9

20127-M8000

9

OPERATIN INCOMES 201!416 221!928 226!904 185!407 255!890

OPERATIN E"PENSES 491!248 506!487 440!145 442!001 473!673PROFIT FORM OPERATIN

ACTIVITIES #289!832 #284!559 #213!241 #256!594 #217!783

TOTAL ASSET

27!730!4

74

30!333!1

16

35!453!6

67

40!070!0

29

41!676!0

54NET BAN$ OPERATIN MARIN #0.0105 #0.0094 #0.0060 #0.0064 #0.0052



8

4e found that the net bank oerating margin is negati7e from year )11> to

year )1+)' 8his means the oerating e#enses outstri oerating incomes' 8his was

due to the oerating e#enses of bank is 7ery high' (erating e#enses are used to

suort the ser7ices ro7ided to customers, such as salaries and wages, rental fees,



9

loan loss e#enses and others' Bank is able to control the e#enses well from year to

year' 8he ratio is decreased from year )11> to )1+)'

As mentioned before, in year )11> to )11, global crisis haen and

influenced bank?s erformance' 8o a7oid the situation become worst, management

team of Affin Bank Berhad forced to cut off the administrati7e general e#enses to

o7ercome the droed in interest incomes' 8hey decreased almost )); of e#enses,

droed from <% =*,>.,111 to <% 0,,111' 8hey also decreased rental fees,

euiment rental decreased <% +,.1>,111 and dataline decreased <% +,)0,111'

Howe7er, not all the e#enses are able to control in technology and economic

fluctuation condition' Allowance of bad and doubtful debts increased sharly in )11'

It increased ).;, from <% .),.1),111 to <% +>,.*0,111' In )11, the global

crisis haen, many eole suffer from financial loss' 2onseuently, the bank

assumed many eole are unable to ay back loan' I8 consultancy fee also increase

); in )11, form <% *,.>,111 to <% .+,)),111' "stablishment cost also

increased <% *,1),111' 8o co7er the increased of e#enses, the board of director

forced to sacrifice' @irector?s remuneration decreased' @irector only recei7e <%

,.10,111, decreased )0'0.; comare with the amount in year )11>, <% ,**,111'

!alaries of director decreased +)')0; and fees non- e#ecuti7e director decreased

.>'+=;'

4ith the efficiency of management team to maintain the business oeration

and sacrifice of director, Affin Bank Berhad was able to cometiti7e with others when

the economic collase' Affin Bank Berhad earn rofit amounted <% 0>0,=>,111'

%anagement team do their work well and able to generate more +>'.; rofit'



10

In year )1+1, go7ernment runs many strategies to stimulate economic'

%anagement team of Affin Bank Berhad took the ad7antages on the strategies' As

2hief "#ecuti7e (fficer of Affin Bank Berhad, @ato? ulkiflee Abbas Bin Abdul

Hamid said the year )1+1 was a year of stability and erformance across all boards

for %alaysia in light of its olitical de7eloments and economic e#ansion lan by

the Co7ernment for its eole' Affin Bank Berhad has done many marketing

strategies to stimulate the sales and re7enue' 8hese marketing strategies include

internal de7eloment and e#ternal de7eloment' In year )1+1, Affin Bank Berhad not

only emhasis on efficiency to reduce oerating fees, the bank also try to enhance

financial osition of Affin Bank Berhad'

As a bank, we know that the emloyee lays an imortant role in

management and imro7e the reutation' <eutation is a key factor that can increases

the customers confidence to the bank' !o, in year )1+1, Affin Bank Berhad was

started emhasis on human caital de7eloment to increase customer ser7ice

enhancement' 8he bank was imro7ed their credit and risk management, continuous

branding rocess of the reDu7enation rogram for the e#isting branches, do the

roduct inno7ation and camaigns, identification of new sites for resence, and also

securing new business inclusi7e of Affin Bank Berhad o7erseas acuisition and

cororate initiati7es 7ia cororate resonsibility rogram'

In year )11, the deosit only increased =;' But in year )1+1, we found that

the deosit has raised +.';' %anagement team did well in year )1+1' 8hey de7elo

marketing strategies to grow deosits ortfolio' (h %y CoshhE was a key success

factors towards the significant growth in the bank customer of deosit' @eosit is a

main source of funds' Bank will loan it to customers to earn more interest' In year



11

)11, loan only increased >'*;' 8hey generate more oerating incomes in year )1+1'

Howe7er, in )1+1, loan increased )+'0;' Increase in loan can leads to the increases in

interest income' Furthermore, wages, salaries and bonuses was increased +0;, from

<% +=*,=1.,111 to <% +>=,.+=,111' 8his was due to Affin Bank Berhad focused on

comrehensi7e human caital de7eloment, and also talent recruitment strategies

imro7ement worker and organisational culture'

(erating incomes increased not only because of the interest incomes

increased, it was also because of allowance for losses on loans, ad7ances and

financing' As mention before, year )1+1 was a year of stability and erformance'

"conomic condition was reco7ered slowly' 8herefore, Affin Bank Berhad redicted

the allowance for losses on loans, ad7ances and financing should be reduced' In

incomes statement of Affin Bank Berhad )1+1, we can found the allowance for losses

on loans, ad7ances and financing was reduced 0'0;, <% .,*0,111 in year )1+1

comare with <% +>,.*0,111 in year )11' 8his was due to the allowance for losses

on loans, ad7ances and financing in year )11 too high and bank successful reco7ered

loan amounted to <% +),)=,111 in year )1+1'

Fee incomes reduced ='); in )1+1' It has an imact to Affin Bank Berhad'

Howe7er, net rofit has increased from <% ),.01,111 to <% *0=,1.,111' 8his was

due to interest incomes increased from year to year' Besides that, management team

shows their talent in manage deri7ati7es' 8he gain from deri7ati7es increased +; in

year )1+1' 8hey also gain from in7esting funds in financial statements a7ailable for

sales' It was increased almost )*)'.; in year )1+1'

In year )1++, marketing e#enses was also rose because the bank does a lot of

marketing strategies' It increased .+;, from <% ,=**,111 to <% +0,...,111' Affin



12

Bank Berhad was unable to manage the financial in7estment as year )1+1, the

incomes droed to <% .*,111 comare with <% +,*.0,111 in year )1+1'

Although the margin interest decreased and some e#enses increased, but

Affin Bank Berhad was able to earn more oerating incomes in year )1++' 8he fee

incomes in year )1++ rose until <% 1,***,111, it increased *;' In year )1++,

Affin Bank Berhad earns more in in7esting financial in7estment held to maturity' It

was increased +.>;, <% ,>0,111' Financial in7estment is a high risk in7estment'

Affin Bank Berhad enhances risk management and always sensiti7e toward risk'

8hus, they are able to gain huge rofit in year )1++'

Allowances for losses on loans, ad7ances and financing reduced again in year

)1++' It reduced almost ;' 8his show the bank was belie7ed to their customer' 8he

bank also confident that they will be able to face all the challenges and oortunities

ahead in order to ser7e and ro7ide continued suort to 7alued customers'

Imairment losses on security are decreased to <% ,+),111 from to <% 0.,111,

almost >>;'

In year )1+), the situation became worst when imairment losses on security

increased sharly' It was increased almost +111;, from <% 0.,111 to <%

+1,01),111' 8he bank e#ected more loan declared to be uncollectible' Besides that,

the cometition between banks become high, Affin Bank Berhad forced to do more

marketing strategies and the marketing e#enses was increased from <% ,=**,111 to

<% +0,...,111, almost .+;'

8o o7ercome the e#enses of bank increase raid, management team forced to

increase the incomes' In year )1+), management team make great efforts to increase



13

the oerating incomes' (erating incomes has increased *>;' 8his was due to the

bank able to control the deri7ati7es well comared with year )1++' In year )1++, they

fail to in7est in deri7ati7es and loss <% +1,=*1,111' Howe7er, in year )1+), they gain

<% +.,=*=,111' %oreo7er, allowances for losses on loans, ad7ances and financing

ha7e reduced' %anagement team e#ected credit risk will lower and ro7ision for

loan losses is enough' Furthermore, they are successfully reco7ered bad debts and

financing amount to <% )+*,*).,111 comared with <% +1.,>>1,111 in year )1++'

8his makes the allowances for losses on loans, ad7ances and financing become

negati7e <% ,1+,111, and it was rofit for banks' Bank is able to work efficiency

with the lower costs'

2.2 E5A43A&,( ( BA4A(CE SEE&



14



15

200 200 2010 2011 2012

L%&'(RM)000* 17!054!062 19!108!595 22!419!251 25!318!061 28!339!269

C+&',- 'P-/-'&,-

12.05 17.33 12.93 11.93

C&+(RM)000* 4!318!934 4!176!945 6!102!307 5!527!439 3!633!842

C+&',- 'P-/-'&,-

#3.29 46.09 #9.42 #34.26

D-%(RM000* 20!979!568 21!825!054 25!313!874 29!072!424 32!224!817

C+&',- 'P-/-'&,-

4.03 15.99 33.21 10.84

E(RM)000* 2!580!142 2!810!766 3!112!800 3!351!398 3!794!454

C+&',- '

P-/-'&,- 8.94 10.75 7.67 13.22

N%'#-/%/',L%&'

(RM)000*

637!390 499!390 512!360 697!405 623!403

C+&',- 'P-/-'&,-

#21.65 2.60 36.12 #10.61

From the grah, we can found that the loan has increased from year )11> to year

)1+)' 8he change of the loan was the highest in year )1+1' 8his was due to the economic

growth stability in year )1+1' 8he loan maintain increased in the smaller ercentage in year

)1++ and )1+)'

2ash is a most liuidity asset in bank' 4e need to reser7e some cash to re7ent bank

run' 4e found that the cash didn?t follow the trend' 8his was because the account of bank

reduces a lot of amount of allowance of bad and doubtful debts, esecially in )1+1' <educing

in allowance of bad and doubtful debts will makes rofit increase, but it did not affect the

cash inflows' 2ash has decreased in year )11 due to the comany increases their in7estment

after year )11' !o, cash outflows haen' Furthermore, cash outflow also due to the bank

faced global crisis and eole tend to withdrawal money' 8he bank was able to manage their

daily oerations and generated cash from oerating acti7ities, from <% >+ =>= 111 to <% )

*) +=. 111' 8he bank started recei7es money from their in7estment'



16

Howe7er, in year )1++, cash decreased and it kee decreased sharly in )1+)'

Normally, eole will think that the more the cash in the bank, the better the erformance of

bank' Howe7er from the bank ersecti7e, if they hold more cash in hand, they need to

sacrifice more rofit gain' 8hus, if the bank left the funds as reser7e and do not gi7e out it as

loan' 8he bank will lose the bank rofit' /rofit of bank kees increase from year to year

because management team buy a lot of financial in7estment'

As mention before this, Affin Bank Berhad had done many romotions and camaign,

such as (%C' !o, deosits were increased sharly in year )1+1 and )1++' 8his shows the

successful of the marketing strategies' Howe7er, in year )1+) the deosit increased in small

ercentage' 8his was due to the natural roduct of banks' It was easily to coy and almost

same as others banks' !o, Affin Bank Berhad need comete with others banks and difficult to

find new customers or attract old customers lace more deosits'

"uity increase from year to year' 8his was due to the reser7es increase e7ery year'

For in7estor, increasing reser7es was good news to them because they are rotected'

Non-erforming loan of Affin Bank Berhad has been fluctuated in these . years' In

year )11, it was decreased )+'=.;' 8his means that the sum of borrowed money uon

which the debtor has not made his or her scheduled ayments for at least 1 days was

decreased' But, it was increased to )'=;' 8his means the default or close to being in default

was increased' Increasing in non-erforming loan will cause the credit risk of bank increases'

8his is 7ery danger to the bank' 8he situation become worst in year )1++, the ercentage

change *='+);' 8his was due to allowances for losses on loans, ad7ances and financing in

year )1++ reduced sharly' 8he situation became better in year )1+)' 8he ercentage of non-

erforming loan was decreased by +1'=+;'



17

2008 2009 2010 2011 2012

8otal liabilities ).+.1**) ).))*.1 *)*01>= *=+>>) *>>+=11

8otal asset )*100 *1***++= *.0.*== 01111) 0+==1.0

<atio of total

asset to totalliabilities

1'11 1'1* 1'+)) 1'+=0 1'11

8he table shows ratio of total liabilities to total assets are higher and almost 1;

e7ery year' 8his shows the bank was deends on the liabilities than euity' Bank is highly

le7eraged comany' 8herefore, the bank need to follow many rule and laws to ensure the

bank is highly regulated and rotect customers' High le7erage makes bank may be collase if

it face roblem in liuidity and default risk'

2.# E5A43A&,( + +,(A(C,A4 -A&,

200 200 2010 2011 2012

NET PROFITRM299!936.0

0 RM295!240.00RM346!705.0

0RM388!496.0

0RM450!307.

0 TOTALASSET(RM)000*

RM27!730!474.00

RM30!333!116.00

RM35!453!667.00

RM40!070!029.00

RM41!676!4.00

ROA 0.0108 0.0097 0.0098 0.0097 0.0108 TOTALE:UITY(RM)000*

RM2!580!142.00

RM2!810!766.00

RM3!112!800.00

RM3!351!398.00

RM3!794!4500

ROE 0.1162 0.1050 0.1114 0.1159 0.1187

EPS (CENT* 20.80 20.50 24.10 27.00 30.00



18

2.3.1 ROA AND ROE

First of all, we need to e7aluate return on asset $<(A&' <(A is an indicator of

managerial efficiency' Because of the global crisis, <(A decreased in year )11'

%anagement team was able to con7ert asset stable after year )11 and in small

ercentage' 8his was due to the cometiti7e of banking institutions become high'

%oreo7er, Affin Bank Berhad e#anded the business globally and locally' It oens

new branches' 8herefore, the return on asset was only increase a bit e7ery year' In

year )1+), management team was generating <% 1'1+1> from <% + of asset'

<eturn on euity $<("& is measure of the rate of return flowing to

shareholders' !hareholders recei7ed more after year )11' Affin Bank Berhad was

able to earn <% 1'++=) to shareholders for e7ery <% + share hold in year )11>' It

was decreased to <% 1'+1.1 in year )11' After economic condition become stable,

shareholders earn more, the ratio continue increases' In year )1++, e7ery <% + share

hold can generate <% 1'+++0 to shareholders and increase to <% 1'++. in year )1++'

Finally, in year )1+), the return was highest for shareholders where e7ery <% + share

hold can generate <% 1'++> to shareholders'



19

"arnings er share of stocks were direct measure of the returns flowing to the

bank?s owner' 4e can found that the shareholders will feel satisfy because return was

increase after year )11' Bank was able to allocate rofit to each outstanding share'

!hareholders recei7e )0'+1 cents for each share in year )1+1, and become )'11 cents

in year )1++' In year )1+), earnings er share record the highest 7alue, which was *1

cents'

#.0 C(C43S,(In conclusion, Affin Bank Berhad has done well in recently years' 8he bank

always faced many challenges from cometitor, economic and regulation' Affin Bank

Berhad is a local bank in %alaysia and de7elos business from year to year'

%anagement teams of Affin Bank Berhad always try to do the best and ro7ide the

better roduct to customers'

8hey are not only emhasis on the incomes, but they are also emhasis on the

e#enses which can generate incomes in future, such as human caital, I8 fees and



20

@ataline fees' Affin Bank Berhad will become more indeendent and imro7e their

ser7ices in future'

Nowadays marketing is 7ery imortant to bank' /roducts of bank are almost

the same' !o, romoting roduct and attracting customer are 7ery challenge for bank'

From the finding we done, we can say that Affin Bank was successfully romote their

roduct to customer and bring rofit to bank'

Howe7er, the successful does not means fore7er' 8hey still need ut more

effort in marketing so the bank can hit a higher target in future'

'.0 -E+E-E(CES ANNUAL REPORT . (2009! MARCH 27*. R-/-;-< OCTOBER 20! 2013! /% BURSA

SAHAM= +=>>???.@/&&&&.%>&/->-<#

%&'->%&'#&''%'--'>557800

ANNUAL REPORT . (2010! APRIL 12*. R-/-;-< OCTOBER 20! 2013! /% BURSASAHAM= +=>>???.@/&&&&.%>&/->-<#

%&'->%&'#&''%'--'>171924

ANNUAL REPORT . (2011! MARCH 25*. R-/-;-< OCTOBER 20! 2013 ! /% BURSA

SAHAM= +=>>???.@/&&&&.%>&/->-<#

%&'->%&'#&''%'--'>916953

annual report . (2012! MARCH 23*. R-/-;-< OCTOBER 20! 2013! /% @/&

&+&= +=>>???.@/&&&&.%>&/->-<#%&'->%&'#

&''%'--'>745116

annual report . (2013! &/+ 29*. R-/-;-< %%@-/ 20! 2013! /% @/&

&&&= +=>>???.@/&&&&.%>&/->-<#

%&'->%&'#&''%'--'>1241713

Nonperforming Loan - NPL. ('.<.*. R-/-;-< '%;-@-/ 22! 2013! /%

';-%-<&=

+=>>???.';-%-<&.%>-/>'>'%'-/%/',%&'.&

ANALYSIS ON FINANCIAL STATEMENT.doc

Documents

Transcript of ANALYSIS ON FINANCIAL STATEMENT.doc