Affin Bank anticipates business growth, special dividend from divestment

by ANIS HAZIM / pic by TMR FILE

AFFIN Bank Bhd expects its divestment activity to generate an additional income for the group over two years’ period. 

Its president and CEO Datuk Wan Razly Abdullah Wan Ali (picture) said the divestment of its interest in Affin Hwang Asset Management Bhd would result in a gain of RM1.06 billion for the group after the exercise is completed by the third quarter of the financial year 2022 (3Q22).

“We expect this deal to be on time as we have obtained the shareholders’ approval. We are selling at the top end of the valuation range (19.7 times price-earnings [PE] in financial year 2020 [FY20], 18.6 times PE FY21) to reinvest into our core banking business,” Wan Razly Abdullah told a press conference after Affin Bank’s 46th annual general meeting and extraordinary general meeting today.

The divestment involved seven million shares or 63% stake in Affin Hwang Asset Management by Affin Hwang Investment Bank Bhd to Starlight Asset Sdn Bhd for RM1.41 billion.

Wan Razly Abdullah added the exercise will allow Affin Bank to unlock and realise the value of its investment in Affin Hwang Asset Management at an attractive premium.

He noted the divestment will also accelerate Affin Bank’s organic growth in the core banking business. 

“Gains from the divestment will be invested into the bank and assuming at 10 times multiplier, will generate additional income of RM190 million of net interest income and profit after tax of RM142 million over two years,” he noted.

Additionally, the deal will support Affin Bank’s future growth and recalibration of market capitalisation supported by the improvement in Affin Bank’s common equity tier to circa 16% or 2.89% and total capital of circa 24% after the dividend.

Affin Bank also intends to pay its shareholders a special dividend before the end of FY22 after it obtains Bank Negara Malaysia’s (BNM) approval.

“We will submit an application to BNM and once we have BNM’s approval, we will announce to shareholders a special dividend,” he added.