KUALA LUMPUR: Affin Bank Bhd will put its focus on retail community banking and SME enterprise banking as they see pockets of opportunities for growth in that sector.
Its president and group CEO Datuk Wan Razly Abdullah Wan Ali said that at a press briefing after the company’s EGM on Nov 15.
“Despite headwinds such as inflation coming in and the tightening of disposable income with the hikes in overnight policy rates (OPR), we still see pockets of opportunities for growth in retail community banking and SME enterprise banking,” he shared.
In the first half of 2022 (H1), Affin Bank’s loan growth in community banking increased 21.6% year-on-year (y-o-y) to RM32.5 billion, while enterprise banking grew 7.7% y-o-y to RM5.6 billion.
In addition, Wan Razly shared that Affin Bank’s Islamic banking business now constitutes 44.5% of the total business of the group.
The income from Islamic banking rose 22.6% y-o-y to RM313.3 million in H1 from RM255.6 million last year, making it the fastest-growing business in the group.
“The RM1 billion capital (from the Affin Hwang Asset Management divestment) is shared between three banks within the group and we put RM150 million into Affin Islamic. It is growing at a compounded rate of 16-17% y-o-y. We will push our retail community banking and SME business within Affin Islamic and have more offerings in this space,” he said.
While all segments continue to grow CASA, the growth is currently at 23%, slightly lower than the target of 25%.
“With the hike in OPR, to extract value we need a bigger CASA growth. We are a low CASA bank, we strive to be a higher CASA bank, our target in our A25 plan is 30%. The strategy to achieve this is via our digitalisation plan,” he said.
Affin Bank is paying the highest dividend ever to shareholders this year totalling RM500 million (2021: RM265.5 million, 2020: RM72.8 million) with the approval of the special dividend amounting to RM400.21 million alongside interim dividend of RM100.2 million.
The special dividend follows the completion of the bank’s divestment of its 63% equity interest in Affin Hwang Asset Management Bhd which resulted in a gain of RM1.063 billion for the group.
The dividend payment will be made by the end of December 2022. 60% of the special dividend is to be paid in cash while the other 40% to be paid in cash or be reinvested via the bank’s dividend reinvestment plan (DRP). The interim dividend is to be paid in cash or reinvested via the DRP.
Affin Bank is raising its information technology capital expenditure to RM400 million next year from RM300 million this year in its push towards digitalisation.
“We want to be a leader in digital banking. We want 1.4 million cu
stomers using our digital platforms whether internet banking, mobile banking app, loan origination system and so forth,” he said.
RAM Ratings has revised the outlook on the group’s AA3 ratings and its banking subsidiaries to stable from negative, reflecting its asset quality trends having weathered the recent pandemic relatively well.