Affin banks on consumer loans

Affin AGM: (from left) Affin Holdings Bhd chairman Tan Sri Mohd Zahidi Zainuddin, deputy chairman Tan Sri Lodin Wok Kamaruddin, group CEO Kamarul Ariffin Mohd Jamil and Axa-Affin General Insurance Bhd CEO Emmanuel Nivet at the AGM in Kuala Lumpur.

It plans to derive most growth from this segment

KUALA LUMPUR: Affin Holdings Bhd plans to optimise the loan mix of its retail banking division by shifting away from corporate to consumer loans within three years as part of its strategy to achieve growth.

“We want to rebalance our portfolio more towards the consumer segment from 42% to eventually 50% of our loans over the medium term,” Affin’s newly-appointed group chief executive officer Kamarul Ariffin Mohd Jamil (pic) said.

CEO Kamarul Ariffin Mohd Jamil reply to media at the company AGM in Kuala Lumpur on April 20,2015, Looking on is Tan SriROHAIZAT MD DARUS/STAR.

“We hope to derive most of the loan growth from the consumer space moving forward. Now we are operating towards the heavy corporate segment while in the consumer space we are quite strong in hire purchase but we see potential in the mortgage area,” he added at a press conference after its AGM yesterday.

Chairman Tan Sri Mohd Zahidi Zainuddin said that despite the challenging circumstances, it would strive to deliver earnings growth to its shareholders.

It is targeting a loans growth of 8% in financial year 2015 (FY15) ending Dec 31, lower from the 8.5% achieved in FY14.

“Undoubetedly, we think that this year will be very challenging but we will harness all our energy and resources to ensure it will be a profitable year for the group,” Zahidi said.

In the financial year 2014 (FY14) ended Dec 31, the bank recorded a drop in its net profit to RM605.27mil from RM650mil in the previous year but revenue rose to RM1.82bil from RM1.53bil.

He said Affin which saw a contraction of 14 to 20 basis points in the net interest margin to 2.5% in FY14, hoped the figure would be maintained “within this range”.

“We still see liquidity challenges in the year especially with the competition for deposits. We will put in measures to ensure if there is any contraction it will remain at present levels,” Kamarul Ariffin said.

He said the cost-to-income ratio which had spiked in FY14 was expected to eventually “normalise” to about 45%, noting that costs last year had risen due to the one-off acquisition of Hwang-DBS.

On another matter, Kamarul Ariffin said Affin might raise fresh capital to meet its Basel III requirements for the banking industry.

“We have no choice but to comply with it and it is not an option for us. We have to look at our capital structure and capital requirements. We are looking at the overall capital ratio of the group to see how we can bolster it moving forward,” he said.

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