Stronger Affin Bank in the making post-restructuring

New structure will enhance growth while simplifying work process

By P PREM KUMAR / Pic By ISMAIL CHE RUS

Affin Bank Bhd is aiming to position itself as a stronger banking institution with greater assets and product offerings, as it assumes the listing status of Affin Holdings Bhd by mid-2018.

The proposal to change the listing status and restructuring of Affin Holdings received shareholders’ approval in an EGM in Kuala Lumpur yesterday.

“The new structure will enhance the company’s growth while simplifying work process of the Affin Group,” Affin Holdings chairman Gen (R) Tan Sri Dr Mohd Zahidi Zainuddin told a media conference after the EGM.

The restructuring process, which started last year, will see Affin Holdings transferring its listing status to Affin Bank, which in turn would be the group’s holding company.

The exercise also entails an exchange of Affin Holdings shares with the shares of its wholly owned subsidiary, Affin Bank, on a one-to-one basis.

Under the exercise, Affin Holdings will transfer its stake in Affin Hwang Investment Bank Bhd, Affin Moneybrokers Sdn Bhd, AXA Affin Life Insurance Bhd and AXA Affin General Insurance Bhd to Affin Bank.

Affin Holdings and Affin Bank had on Oct 2 submitted a joint application to Bursa Malaysia to seek approval for the proposed transfer of listing status.

There would be some changes at the board level too, where not all of Affin Holdings’ current directors would be sitting in Affin Bank’s board. Mohd Zahidi said that the new board is expected to consist of nine to 10 members, where only half would be from the current Affin Holdings directors. Affin Holdings currently has eight directors, consisting of four each as independents and non-independents.

“Some will be brought down to Affin Bank, while others would be offered positions in the subsidiaries — subject to regulatory approvals from Bank Negara Malaysia,” he said.

Affin Holdings group CEO Kamarul Ariffin Mohd Jamil said the capital enhancement arising from the corporate exercise would enable the bank to give out bigger loans to corporate and retail clients.

“The immediate impact of the restructuring is the improvement of capital in our commercial bank and the group, which would enhance our capability to provide bigger loans,” he said.

Kamarul Ariffin said Affin Bank will enlarge its focus in the consumer banking segment as it sees immense business opportunities there, despite it being a competitive environment.

“Our business used to be 55% corporate banking and 45% retail banking, but now we want to move the focus to retail banking and work on our asset composition, so that the retail banking asset would grow,” he said.

Kamarul Ariffin added the bank’s current size and the reorganisation exercise will also help this endeavour.

“We are keen on consumer banking because we see there are a lot of opportunities to grow and the risk factors, when it comes to non-performing loans, is also lower as opposed to corporate banking,” he said.

He added that Affin Bank’s smaller size would allow more freedom to tailor its offerings to retail clients, something that bigger banks are not able to do.

For the first half of 2017, the bank saw its loan books growing by 2.5%. The bank expects full-year loans to grow between 5%-6%.

“The growth will be mainly from our consumer banking and small and medium enterprise segment,” said Kamarul Ariffin.

Kamarul Ariffin said the re-organisation will simplify the shareholding structure of Affin Group, as well as reduce the layers of the corporate structure.

“It is imperative that we improve our efficiency, adaptability, as well as productivity in order for us to thrive in the highly competitive and dynamic banking sector.

“This corporate exercise will enhance group-wide synergy and allow us to move forward in achieving our next phase of growth,” he said.

Affin Group’s capital position will also be strengthened while the returns would be enhanced by the corporate exercise, said Kamarul Ariffin.

He said both entities involved in the restructuring are optimistic of unlocking more values for the shareholders and provide better returns in the future.