Loan moratorium costs Affin Bank RM80m

by ASILA JALIL/ pic by BLOOMBERG

THE six-month loan moratorium imposed by Bank Negara Malaysia (BNM) has cost Affin Bank Bhd a total loss of RM80 million for not charging its customers for six months under the moratorium.

Its president and group CEO Wan Razly Abdullah Wan Ali said 63% of its RM45 billion loan book is currently inactive under the moratorium.

“The cost of the moratorium to the bank is about RM80 million. That is how much it cost the bank to not charge our customers for the six months,” he said in a press conference after Affin Bank’s 44th AGM in Kuala Lumpur yesterday.

He said those who undertake the moratorium are from its consumer banking customers, who automatically fall under the initiative as well as its small and medium enterprises customers who make up about half of the amount.

Affin Bank is in talks with the government and BNM regarding calls for the loan moratorium extension, he added.

He said lenders are engaging with the government to look into ways to assist customers who need help with the repayments.

“The Malaysian public needs more than six months to recover. The government and the banks are talking to each other because we want to see what is the plan and the next step.

“We do not want to call it a moratorium as it is expensive for everybody. I think we are looking at some sort of financial assistance programme,” said Wan Razly.

The bank is also anticipating a flat loan growth for the full financial year as the market is still weak, he said.

Affin Bank also announced its metamorphosis plan called “Affinity in Motion” (AIM22) for the financial year 2020 until 2022.

Its key focus areas include return on equity (ROE), lowering the overall cost of funds by reengineering the balance sheet; digital transformation to reduce the bank’s gap with its peers; people and productivity as well as improved risk management through enhanced asset quality management, liquidity, risk and capital management initiatives.

The bank has upgraded its digital technology to offer user-friendly financial products and services that address its customers’ needs.

It has implemented the newly revamped Retail Internet Banking this month and soft launched its Corporate Internet Banking platform called AffinMax.

He said the bank is targeting 8% ROE from its current 5% in three years, which is to be achieved by the end of 2022 or early 2022 under its AIM22 initiative.

“All these initiatives go towards inculcating a cost-conscious culture and high performance culture within the group,” he said.

He added that in light of the effects of the Covid-19 pandemic, the directors’ fees have been reduced by 10%, while the senior management salary has a reduction of up to 10%.

The banking group’s net profit declined 10% year-on-year to RM123.57 million in the first quarter of 2020 (1Q20) due to credit impairment losses amounting to RM117.1 million compared to a write-back of RM9.9 million in 1Q19, along with higher overhead expenses.