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AFFIN BANK BERHAD 43RD ANNUAL GENERAL MEETING
Kuala Lumpur 29 April 2019
Overview of Financial Performance
AFFIN BANK BERHAD Affin Bank Group reported a higher PBT of RM675.0 million in 2018 as compared to RM550.7 million achieved in 2017 driven by the increase in net fee and commission income, Islamic banking income, net gain on financial instruments and other operating income. Comparing the results of Affin Bank Group in financial year 2018 and Affin Holdings Group in financial year 2017, the PBT was lower by RM18.2 million from RM693.2 million to RM675.0 million, mainly due to lower net gains on financial instruments during the financial year. At the Bank level, Affin Bank also recorded a PBT of RM675.0 million in 2018 as compared to RM374.4 million mainly due to higher dividend income, higher other income and lower allowance for credit impairment losses, offset by lower net interest income.
AFFIN ISLAMIC BANK BERHAD Affin Islamic Bank reported higher PBT of RM155.4 million in 2018 as compared to RM118.0 million in 2017 mainly due to increase in operating income in line with the increase in financing growth of 21.3%, net of higher overhead expenses.
AFFIN HWANG CAPITAL Affin Hwang Capital recorded a consolidated PBT of RM160.5 million, compared to a higher result of RM182.3 million in 2017. For the year under review, the Bank increased its Bursa trading market share to 12.6% from 11.9% in the previous year, maintaining its pole position in the local domestic market for the 5th year running, and launched two new innovative products to further diversify its offering to clients and expanded its presence in the market. Affin Hwang Asset Management achieved a PBT of RM107.3 million in 2018 and grew its Asset Under Administration, albeit marginally by 0.8% to RM47.8 billion from RM47.4 billion in 2017. Page 3
Overview of Financial Performance
AXA AFFIN LIFE INSURANCE BERHAD (51% Joint venture)
AXA Affin Life reported a lower pre-tax loss of RM7.3 million in 2018 as compared to a pre-tax loss of RM26.1 million in 2017 mainly due to lower reserve for future policy holders' liabilities and better operating earnings. Affin Bank’s share of loss in 2018 was RM3.1 million During the financial year, there was an improvement in new business margin from 42% to 47%, driven by focus on higher margin protection, health protection, health products and effective cost management, despite lower annualised new business premium.
AXA AFFIN GENERAL INSURANCE BERHAD (49.95% Associate)
AXA Affin General reported a PBT of RM140.0 million mainly attributable to higher investment income, stable underwriting results and capital gains on disposal of investments, net of higher claims incurred. Affin Bank’s share of profit in 2018 was RM50.0 million. The gross written premium grew by 4.8% backed by momentum in Motor, Health and Retail businesses.
Page 4
Group PBT (after zakat) and contribution by Subsidiaries, Joint Venture and Associate Company
Contribution of PBT (after zakat) (RM million)
Page 5
Group Income Statement Snapshots
Profit Before Tax after Zakat (RM million)
675.0 737.7 693.2 675.0
2016 2017 2018
Profit After Tax (RM million)
527.4 579.8 534.9 527.4
2016 2017 2018
Operating Expenses (RM million)
1,217.5 1142.9 1223.5 1217.5
2016 2017 2018
Earnings Per Share (sen)
25.89 29.03 26.54 25.89
2016 2017 2018
Net Fee and Commission Income (RM million)
456.9 496.1 451.6 456.9
2016 2017 2018
Net Interest Income (RM million)
845.4
Share of Profit in Joint Ventures/Associate (RM million)
46.9
892.9 895.7 845.4
2016 2017 2018
48.9 40.9
46.9
2016 2017 2018
Note : Comparative results for 2016 and 2017 are for Affin Holdings Berhad’s Group
Page 6
RM’000 AHB GROUP
2017 ABB GROUP
2017 * ABB GROUP
2018
ABB Group 2018 vs AHB Group
2017
Net interest income 895,702 850,897 845,400 (50,302)
Islamic banking income 334,267 334,267 398,190 63,923
Net Fee and commission income 451,612 212,244 456,865 5,253
Net gains on financial instruments 187,299 98,698 146,037 (41,262)
Other income 96,415 64,349 74,110 (22,305)
Net Income 1,965,295 1,560,455 1,920,602 (44,693)
Operating expenses (1,223,469) (934,289) (1,217,509) 5,960
Operating profit before allowances 741,826 626,166 703,093 (38,733)
Allowances for impairment losses (85,015) (85,166) (70,911) 14,104
Operating profit 656,811 541,000 632,182 (24,629)
Share of results of a joint venture and
associates 40,868 13,070 46,927 6,059
Profit before zakat and taxation 697,679 554,070 679,109 (18,570)
Zakat (4,502) (3,371) (4,113) 389
Profit before taxation after zakat 693,177 550,699 674,996 (18,181)
Taxation (158,239) (126,261) (147,576) 10,663
Net Profit for the financial year 534,938 424,438 527,420 (7,518)
Group Profit & Loss Summary
* Inclusive of the results of Affin Hwang Investment Bank Group, Affin Moneybrokers, AXA Affin-Life and AXA-Affin General post re-organisation of the Group for the 3 months ended 31 December 2017
Page 7
RM’000 AHB Group
2017 ABB Group*
2017 ABB Group
2018
ABB Group 2018 vs AHB Group 2017
(%)
Personnel cost 808,034 606,345 782,765 (3.1)
Promotion & marketing related expenses
52,701 37,334 59,995 13.8
Establishment-related expenses 254,914 217,097 262,276 2.9
General & administrative expenses 107,820 73,513 112,473 4.3
TOTAL 1,223,469 934,289 1,217,509 (0.5)
Cost to Income ratio (%) 60.8 59.9 63.4 2.6
No of staff 5,346 5,326 5,604 4.8
Summary of Group Operating Expenses
* Inclusive of the operating expenses of Affin Hwang Investment Bank Group and Affin Moneybrokers post re-organisation of the Group for the 3 months ended 31 December 2017
Page 8
Group Balance Sheet Snapshots
Total Equity (RM billion)
8.7 8.7 9.1 8.7
2016 2017 2018
Gross Loans, Advances and Financing (RM billion)
48.9
Total Deposits from Customers (RM billion)
57.3
Total Assets (RM billion)
76.0
44.2 46.1 48.9
2016 2017 2018
51.5 50.9 57.3
2016 2017 2018
68.9 70.8 76.0
2016 2017 2018
Total Liabilities (RM billion)
67.2
Net Loans, Advances and Financing (RM billion)
48.4
60.2 61.7 67.2
2016 2017 2018
43.7 45.7 48.4
2016 2017 2018
Net Assets Per Share (Sen)
4.46 4.47 4.67 4.46
2016 2017 2018
Note : Comparative Results for 2016 and 2017 are for Affin Holdings Berhad’s Group
Page 9
GROSS LOAN BY ECONOMIC PURPOSE (2017) GROSS LOAN BY ECONOMIC PURPOSE (2018)
Gross Loans Portfolio by Economic Purpose
Construction
7.1%
Purchase of
residential properties
21.3%
Purchase of
non
residential properties
13.6%
Purchase of
securities
3.3%
Purchase of
transport
vehicles 26.1%
Working
capital
23.2%
Personal
use
1.6%
[CATEGORY
NAME]
3.8%
2017 RM Million
Construction 3,451,504
Purchase of residential properties 8,465,547
Purchase of non-residential properties 6,383,585
Purchase of securities 1,448,427
Purchase of transport vehicles 12,689,074
Working Capital 11,402,100
Personal use 702,599
Others 1,511,722
TOTAL 46,054,558
2018 RM Million
Construction 3,459,827
Purchase of residential properties 10,435,105
Purchase of non-residential properties 6,654,767
Purchase of securities 1,615,833
Purchase of transport vehicles 12,799,056
Working Capital 11,354,983
Personal use 776,714
Others 1,876,519
TOTAL 48,972,804
Construction
7.5% Purchase of
residential
properties 18.4%
Purchase of
non
residential properties
13.9% Purchase of securities
3.1%
Purchase of
transport
vehicles 27.6%
Working
capital
24.8%
Personal
use 1.5%
[CATEGORY
NAME]
3.2%
Page 10
51.5 50.9
57.3
2016 2017 2018
28.3
18.3
4.3
31.2
20.6
5.5
Corporate Consumer SME
2017 2018
Continued Momentum in Customers Deposits
Deposits (RM’ billion)
Y-o-Y 10.2%
Y-o-Y 12.6%
Y-o-Y 27.9%
Deposits by Sector (RM’ billion)
Y-o-Y - 1.2% Y-o-Y 12.6%
86.9
75.3 81.1
72.0
Loans to Fund Ratio (LTF) Loan to Funds and Equity Ratio(LTFE)
2017 2018
Industry LTF 2017 83.9 2018 82.7
Industry LTFE
2017 73.5 2018 72.4
Page 11
2018 2017
Total Deposits from Customers
RM57.3 billion Total Deposits from Customers
RM50.9 billion
9.7% 15.6%
74.7%
Money Market andOther Deposits
CASA Fixed Deposits
13.7% 18.9%
67.4%
Money Market andOther Deposits
CASA Fixed Deposits
Customers Deposits by Segments
Page 12
AFFINITY TRANSFORMATION PROGRAM
STRATEGIC RISK PROGRAM
The Bank has commenced a Strategic Risk Program early 2018, of which a total of 24 initiatives and 36 projects will be undertaken over a three-year period. The risk transformation journey is an evolvement from current “traditionalist” role which focused on regulatory compliance, controls and risk mitigation, to the desired target state of “specialist” role for the Bank’s Risk Management.
The target state of “specialist role” is envisaged to have a more advanced capabilities in terms of sophistication, analytics and systems and focused on enabling risk-reward decision making as well as more proactive risk management and business advisory / strategic function across the Group.
Affinity is the Bank Strategic program launched in 2016 with the objective to enable achievement through operational enhancements and performance management. As at 31 March 2019, out of the 33 projects, 24 projects of the Program had been completed.
Seven (7) projects are currently on track with improvements seen in turnaround time (~20% average reduction) for retail portfolios, loan stock, establishment of new departments/policies and growth in total income. Two (2) projects are yet to begin.
Key Achievements in 2018 (On Going)
Page 14
PRIORITY ISLAMIC POLICY
The Group has adopted a Priority Islamic Policy (PIP) approach to tap into the faster growing Islamic banking segment within the industry which had contributed to good performance. In 2018, the Priority Islamic Policy achieved 39% of total Islamic Financing Portfolios against total Affin Bank’s and Affin Islamic Bank’s Portfolio target of 40% by year 2020.
Key Achievements in 2018 (On Going)
DIVIDEND REINVESTMENT PLAN
A Dividend Reinvestment Plan (DRP) had been established by the Bank following the approval of the Shareholders at the EGM held on 15 May 2018. The DRP gives the shareholders of the Company the option to reinvest their whole of portion of the Dividend for which the reinvestment option applies in new Affin Bank shares.
Affin Bank had declared and paid a single-tier dividend of 5.0 sen per share for financial year ended 31 December 2018. The 1st Dividend Reinvestment Plan had been applied to the interim dividend and the take up rate was 92.7% of the total interim dividend.
The DRP will also made available for any dividend to be declared in future, which the Board may in its absolute discretion, determine whether the DRP will be applied to the dividend and the portion of the dividend that can be reinvested into new Affin Bank shares.
Page 15
Key Achievements for 2018 (Completed)
CAPITAL MANAGEMENT PLAN OF AFFIN BANK / AFFIN ISLAMIC BANK
The capital management initiatives completed in 2018 are as follows: Establishment of Additional Tier 1 Capital Securities (ATICS) Programme up to RM3 billion in
nominal value during the year by Affin Bank. On 31 July 2018, the Bank had issued RM500 million in nominal value of ATICS under the said programme.
Establishment of sukuk programme by Affin Islamic Bank of up to RM5.0 billion in nominal value for the issuance of Senior Sukuk Murabahah, Tier 2 Sukuk Murabahah and/or Additional Tier 1 Sukuk Wakalah from time to time.
Affin Islamic had in October 2018 issued RM300million in nominal value of Additional Tier 1 Sukuk Wakalah and RM800 million in nominal value of Tier 2 Sukuk Murabahah under the said Programme.
Page 16
Key Achievements for 2018 (Completed)
AFFIN HWANG INVESTMENT BANK
Increased its Bursa trading market share to 12.6% from 11.9% in the previous
year, maintaining pole position in the local domestic market, for 5 consecutive
years.
Assisted in the listing of Mi Equipment Holdings Berhad on the main market of
Bursa Malaysia Securities Berhad, the largest IPO in 2018.
The Bank approved by Bursa to market “Islamic Securities Selling and Buying
Negotiated Transaction” (ISSBNT), tapping into the Islamic capital market
Ended the year as the No. 1 ranked equity broker in trading value in Malaysia as
reported by Bursa Malaysia, for 5 consecutive years.
AFFIN HWANG ASSET MANAGEMENT
Grew its Asset Under Management (AuA), by 0.8% to RM47.8 billion from
RM47.4 billion in the previous financial year.
Launched 14 new funds to capitalise on opportunities for high yielding stocks
locally and abroad.
Page 17
AXA-AFFIN LIFE
AXA-Affin Life launched Malaysia’s first in-the-market online health medical card “eMedic” on 5 April 2018, with further coverage for children and expatriates. Customers can get a quote
instantly and signup for a plan with in ten minutes with no intermediaries involved. The medical
plan does not require any medical check-up and provides instant approval.
AXA-AFFIN GENERAL
AXA-Affin General once again outgrew the market with 4.8% growth in Gross Written Premium gainst the industry’s growth of 1.5% amidst the phased liberalisation of motor and fire premium tariffs. There were also commendable growth in the preferred segments of lifestyle
(8.5%) and individual health (7.6%) through initiatives such as cross-selling and marketing
campaigns to drive online sales.
Key Achievements for 2018 (Completed)
Page 18
Acquired 100%
equity interest in
HWANG DBS
Investment Bank
Berhad
AFFINITY
PROGRAM
PRIORITY
ISLAMIC POLICY
2014 2016 2017 2018
AFFINITY
PROGRAM
STRATEGIC
RISK PROGRAM
PRIORITY ISLAMIC
POLICY
AFFINITY
PROGRAM
DIGITAL
LIFESTYLE
BANKING
CAPITAL PLAN
STRATEGIC RISK
PROGRAM
GROUP
SYNERGY
2019
AFFINITY
PROGRAM
STRATEGIC
RISK PROGRAM
PRIORITY ISLAMIC
POLICY
NEW APEX ENTITY
OF THE GROUP
AFFINITY Journey
Page 20
BUSINESS & ENABLERS
- Target Customer
Segment
- Delivery Channels
- Product & Solutions
- Operations
- Technology
- People
- Performance
Management
TO BE
AGILE
INNOVATIVE
DIGITAL TO THE CORE
ICONIC EXPERIENCE
BANK OF CHOICE
RISK SPECIALIST
RISK & COMPLIANCE
GOVERNANCE
- Liquidity Optimization
- Fund Transfer
Pricing
- Stress Testing
- Budget Planning
- Risk Adjusted
Performance
Management
- Risk Informed Pricing
- Integrated Planning
- ALM System
Enhancement
- Enhancement of Risk
Appetite Statement
Governance
CAPITAL PLAN
MTN Program, Sukuk, AT1CS,
Dividend Re-Investment Plan
Transformation Initiatives
AFFINITY PROGRAM
Page 21
Transformation Outcome
9 New Methodologies
Affin Customer Experience
New RM Model for Biz Banking
Branch-Hub Management
Product Economics
Product Development & Innovation
New Credit Management Model
Affin IT Architecture
Data Governance
Ethics, Risk & Compliance
4 New Forums
Branch/Hub/BC Monthly Collaboration Meeting
Quarterly Digital Forum
Data Governance Council
Product Development & Innovation Committee
7 New Departments
Customer Experience
SME & Commercial Sector
Corporate & Public Sector
Islamic Client Solution
IT Retained Organization
Data Governance
Affin Digital PMO
The AFFINITY Transformation Program has introduced various changes to the Bank’s core
operating structure.
Page 22
New Retail Internet Banking
Page 23
New Retail Internet Banking
Page 24
Affin Pay
Page 25
New Transaction Banking System
Page 26
Competing by better efficiency
Strong liquidity
management through sustainable deposits profile
Risk Based Approach
Towards Growing Business
Enhanced
Capital Management
Infusion of IT
& Efficiency
Investing in People &
Technology
Build a strong brand
franchise & scale
BUILDING LONG TERM SUSTAINABILITY
Page 27
Affin Bank Berhad
Champion for the Best Customer Relationship Management for Contact Centre and runner up
for Best New Contact Centre and Best New Campaign Award at the 19th Malaysia Contact
Centre Awards & Gala Dinner 2018;
Winner for the Achievement in Liquidity Risk Management for 2018 awarded by The Asian
Banker Trust for the Asia Pacific Region;
Winner of CX Pioneer Best New Customer - Breaking Silos with a Fast Deployment (Small) at
2018 Genesys Customer Innovation Award;
ASNB Award for the overall top performing financial advisor;
NONA Preferred Bank Award by NONA Superwoman Award 2018;
ICT Organisation Excellence Award from PIKOM, The National ICT Association of Malaysia
Winner of Best Recruitment Programme for Non-Degree Holders at Human Resources Asia
Recruitment Award 2018;
Payment Card Industry Data Security Standard Certification
Awards and Recognitions in 2018
Page 28
Champion for Best Overall Equities Participating Organisation - Bursa Excellence Awards 2017
Best Securities Houses in Southeast Asia 2018: Malaysia - The Asiamoney Awards 2018
Best Deal in Malaysia: Tadau Energy - Islamic Finance Award 2018
Project Finance Benchmark Deal of the Year for Tadau Energy Sdn Bhd - RAM League Awards 2018 by RAM Ratings Services Berhad
Most Innovative Deal of the Year, Malaysia: Tadau Energy - Asia Infrastructure Awards 2018, The Asset Triple A
Awards and Recognitions in 2018
Affin Hwang Investment Bank
Affin Hwang Asset Management
Best Asset Management, Malaysia - Euromoney Private Banking & Wealth Management Survey 2018
Best Institutional House, Malaysia - Asia Asset Management 2018 Best of the Best Awards
Asset Manager of the Year, Malaysia - The Asset Triple A Islamic Finance Awards 2018
Best Equity Award, Malaysia - The Edge Thomson Reuters Lipper Malaysia Fund Awards 2018
Most Innovative ETF Product Awards, Malaysia: TradePlus Shariah Gold Tracker - The Asset Triple A Private Banking, Wealth Management, Investment and ETF Awards 2018
Page 29
For the 3rd consecutive year, AXA-Affin General received the International General Insurer of the Year, Malaysia and New Insurance Product of the Year, Malaysia, in addition to the inaugural Claims Initiatives of the Year, Malaysia at the Asian Banking and Finance Insurance Asia Awards 2018.
The awards recognised its focus and conviction to deliver their commitment to empower people with innovative and customer centric solutions. Organised by Asian Banking and Finance Magazine, the Insurance Asia Awards 2018 is an acclaimed industry award that recognises Asia’s most outstanding financial institutions. The Asian Banking and Finance Magazine is the leading publication serving Asia’s dynamic financial services industry.
AXA Affin Life Insurance Berhad
Awards and Recognitions in 2018
AXA Affin General Insurance Berhad
Gold Award for Excellence in Direct Marketing at the 6th edition of Marketing Excellence Awards
2018
Finalist - Excellence in Brand Awareness and Excellence in Public Relations/Marketing
Communication as well as finalist for the Best eCommerce Merchant – Financial Services for the
Asia eCommerce Awards
One of the 3 winners for the AXA Group Innovation Award which was held amongst 60 countries
and 120 entries.
Page 30
THANK YOU
Investor Relations Department:
19th Floor, Menara Affin 80, Jalan Raja Chulan 50200 Kuala Lumpur
For any enquiries, please email to [email protected] or call us at
+603-2055-9005 (Investor Relations Department) Website: www.affinbank.com.my
Disclaimer. This presentation has been prepared by AFFIN Bank Berhad (the “Company”) for information purposes only and does not purport to contain all the information that may be required to evaluate the Company or its financial position. No representation or warranty, express or implied, is given by or on behalf of the Company as to the accuracy or completeness of the information or opinions contained in this presentation. The presentation does not constitute or form part of an offer, solicitation or invitation of any offer, to buy or subscribe for any securities, nor should it or any part of it form the basis of, or be relied in any connection with, any contract, investment decision or commitment whatsoever. The Company does not accept any liability whatsoever for any loss howsoever arising from any use of this presentation or their contents or otherwise arising in connection therewith.
