Affin focusing on strengthening local operations

KUALA LUMPUR: Affin Holdings Bhd is focusing on strengthening its local franchise but remains open to opportunities in the region, such as in Thailand, if a potential deal makes sense, group CEO Kamarul Ariffin Mohd Jamil said.
However, he said Affin is not in formal negotiations with Indonesia’s Bank Bukopin to acquire the latter’s syariah unit, Bank Syariah Bukopin, citing “nothing substantive” from their discussions.
Over the past few years, Affin has tried to acquire an Islamic bank in Indonesia, including PT Bank Ina Perdana and Bank Panin Syariah, but its efforts have been futile due to the Indonesian central bank’s regulation that limits financial institutions to owning only up to 40% of local banks. Affin, however, wants a controlling stake.

“At the moment, we’re not looking at it (Indonesia) because the shareholding percentage does not make sense,” Kamarul Ariffin told a media briefing after the group’s AGM here yesterday.
Affin has also been eyeing Islamic banking operations in China since submitting a proposal to the China Banking Regulation Authority to open China’s first Islamic bank seven years ago, but to no avail.
“If there is something that we can afford, we are open to it. It’s about returns, the primary driver,” Kamarul Ariffin said on merger and acquisitions.
Moving forward, the group is developing the bank to focus on income and capability to generate solid returns to shareholders. The group has embark on a transformation plan known as Affinity, focusing on customer centricity where it will compete on service and delivery instead of price.
Affin is targeting a loan growth of 8% this year, from 6-8% last year, while maintaining a return on equity of 10%. It is expecting a cost-to-income ratio of 55% this year, from 60% last year, while expecting net interest margin to be flat in a challenging 2017.
On improving its fee-based income, Affin wants to increase its gross product holding ratio to 2% this year, from 1.2%.
Meanwhile, Kamarul Ariffin said AXA Affin General Insurance Bhd (AAGI) is a profitable company and the group would like conclude negotiations with Felda Marketing Services Sdn Bhd to buy the latter’s stake in AAGI within the stipulated time frame.
In February, the central bank gave Affin six more months (up to Aug 5) to conclude negotiations with Felda for the stake acquisition. This was extended from October 2016 after Affin secured three more months from Oct 28 from Bank Negara Malaysia to reach a deal with Felda. Affin, which already holds a 34.51% stake in AAGI, had in March last year received the go-ahead to start negotiations to acquire the additional AAGI shares.