Affin Bank expects loan growth to ease this year at 10-11%

Affin Bank president and group chief executive officer Datuk Wan Razly Abdullah

KUALA LUMPUR: Affin Bank Bhd expects its loan growth to ease at 10 to 11 per cent for the fiscal year 2023 versus the 15 per cent growth recorded last year, citing a cautious outlook for the whole banking sector.

President and group chief executive officer Datuk Wan Razly Abdullah Wan Ali said the year could be challenging due to strong economic headwinds in the United States (US) and the slowdown in Europe, with both markets likely to experience a recession.

"This will have a knock-on effect on Asia and also Malaysia. (Despite this), we still see a lot of business opportunities in Malaysia.

"(However), we will taper down our growth target from 15 per cent last year, and this depends on how severe the slowdown or recession would impact the US and Europe.

"We will remain focused on expanding our customer franchise and growing our high-margin business while at the same time maintaining and improving our asset quality,” he told reporters after the bank’s annual general meeting here today.

For 2023, Wan Razly Abdullah said two main business focus areas for the loan growth would continue to come from community banking, namely the retail banking book as well as the small and medium enterprise banking, both of which registered a strong growth of about 11 to 13 per cent last year.

He said that its Islamic banking was also the fastest-growing business within the bank, recording a higher loan growth last year, surpassing that of the group at 17 per cent and contributing about 40 to 45 per cent of earnings to the bank.

He said that Affin Bank was also on a journey of increasing its current account and savings accounts ratio as the bank was one of the laggards in growing this ratio.

Moving forward, Wan Razly Abdullah said the bank would remain focused on building its key systems and technologies that will make it more resilient and strong to support the growth of its customer base.

For this year, the group had allocated RM400 million in capital expenditure, 80 per cent of which is targeted for digitalisation initiatives, particularly to enhance its front office, middle office and back office applications, he said.

"We will remain focused on our business plan. We will continue to invest in technology and improve our customer service while continuing to learn and expand our environmental, social and governance activities.

"The market ahead will be getting tougher with the slowdown amid high-interest rates and high inflation, and hence there is a need for the bank to be agile to manoeuvre all the risks.

"There could be some spikes in bad loan suits, but we must be guarded against that and are tightening our underwriting standards,” he added. - Bernama

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