Affin : RM84m in first 3 years post-merger

KUALA LUMPUR: The revenue and cost synergies that Affin Holdings Bhd's acquisition of Hwang-DBS (Malaysia) Bhd's businesses will bring translate to an additional RM84 million profit before tax over the first three years (2015-2017) for the group, and an annual pre-tax profit of RM43 million from 2018, when the combined operations mature.

"This excludes any transformational synergies that Affin works towards transforming its business, now that it has a much larger franchise," Affin Investment Bank Bhd (AffinIB) managing director Maimoonah Hussain told a press conference here yesterday.
She explained that the benefits of operating on a bigger platform as a result of the merger have not been quantified.
Affin, which will undertake the merger of AffinIB and Hwang-DBS Investment Bank Bhd (HwangIB), expects to spend up to RM54 million on one-off integration costs in the next 12 to 18 months to complete the integration.
These costs are predominantly related to setting up a combined IT infrastructure and systems platform, rebranding exercise and integration advisory support.
The merger will see the use of the AffinHwang brand across its businesses, where Affin has three years to utilise Hwang's branding.
Meanwhile, Maimoonah said it hopes to kick start its wealth management business next year and integrate Affin Fund Management Bhd, Hwang Investment Management Bhd (HwangIM) and Asian Islamic Investment Management Sdn Bhd under the wealth management arm.
"We believe the development of wealth management is definitely in store for us. We're discussing how best to develop this and certainly, it will be in our five-year plan."
She said wealth management is the fastest growing market in the financial industry and Malaysia is still in its infancy in this area.
"In the wealth management space, what we like to develop is the capability to provide advisory business to individuals to help them manage their private wealth. It's slightly different from what they (HwangIM) is doing. They (HwangIM) have the platform and infrastructure and coupled with the IB network, that we have, and Affin's customer base, wealth management should be something that we must go for."
On concerns that there will be dilution in Affin's earnings per share due to its rights issue of new Affin shares to raise up to RM1.25 billion, Maimoonah said although there will be immediate dilution effects, the HwangIB acquisition is strategic in nature and will create a stronghold for Affin in the IB space.
Meanwhile, when asked whether Affin is interested to bid for Bank Mutiara Tbk in Indonesia, which the Indonesian government is ready to sell for less than the 2008 bailout cost, Affin deputy chairman Tan Sri Lodin Wok Kamaruddin said Affin remains interested in the Indonesian market.
In February, Bank Negara Malaysia gave the nod for Affin to commence negotiations with the shareholders of Bank Panin Syariah.