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www.affin.com.my
ANALYSTS/FUND MANAGERS BRIEFING1H FY2016 RESULTS
1 SEPTEMBER 2016
www.affin.com.my
KEY HIGHLIGHTS & RATIOS
PROFIT BEFORE TAX BY SEGMENTS
STRATEGIC DIRECTION – AFFINITY PROGRAM
www.affin.com.my
Key Highlights
Income Statement ( RM’mil ) 1H2015 1H2016 Change (%)Profit Before Tax and Zakat 226.6 338.7 49.5Net Profit 177.3 258.5 45.8Earnings per share ( sen ) 8.72 13.02 49.3
Balance Sheet ( RM’ bil ) 1H2015 1H2016 Change (%)Total Assets 65.0 68.3 5.1Gross Loans, advances & financing 42.2 43.3 2.6Deposits from customers 49.7 46.5 (6.4)
Key Financial Indicators 1H2015 1H2016 Change (%)Cost-to-income ratio 60.44 61.97 1.53Gross impaired loans ratio 2.04 1.98 (0.06)Loan Loss Reserve(including regulatory reserve)
79.40 93.60 14.20
Loan to deposits ratio 84.87 93.15 8.28
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CET 1 / Tier 1 / CCR1H2015 1H2016
Industry average (1H2016)
AFFIN Bank Berhad 12.20 12.07 12.70AFFIN Islamic Bank Berhad 11.84 12.28 12.15AFFIN Hwang Investment Bank Berhad
31.04 34.73 34.44
Total Capital Ratio1H2015 1H2016
Industry average (1H2016)
AFFIN Bank Berhad 13.44 14.87 16.18AFFIN Islamic Bank Berhad 13.34 13.42 15.98AFFIN Hwang Investment Bank Berhad
31.04 34.73 34.82
Key Highlights – Capital Adequacy
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156.4 159.6
72.7 54.0
94.558.7
Total Income Composition
1,251.2
111.1 241.9
24.9 41.4
1,291.1
124.3 228.2
40.8 33.4
Gross Interest income Islamic Bankingincome
Fees & brokerageincome
Income from financialinstruments
Other income
RM M
illio
n
Income Composition (RM Million)
1H2015 1H2016
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Key Ratios
1.88 1.93
1H2015 1H2016
Net Interest Margin (%)
2.94 2.97
1H2015 1H2016
Cost of funds (%)
46.0 47.054.8 60.4 62.0
2012 2013 2014 2015 1H2016
Cost to income ratio (%)
39
15
1H2015 1H2016
Credit Cost (bps)
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Loans, advances & financing growth
* Inclusive of regulatory reserve
11.7%
7.9%9.6%
6.9%
-1.4%
10.4% 10.6%
8.7%
7.9%
2.8%
2012 2013 2014 2015 1H2016
Loan Growth
AFFIN Industry
39.8
16.7 17.6
16.8 12.8
8.7 12.9
1H2015 1H2016
RM b
illion
Loans by business segment
Consumer Corporate SMEs
40.7%
29.5%
29.8%
39.7%
39.8%
20.5%
42.2 43.334.7 37.541.1 43.9 43.3
2012 2013 2014 2015 1H2016
Total Loans
79.4 93.6
1H2015 1H2016
Loan Loss Reserve (%)
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Deposits
2012 2013 2014 2015 1H2016AFFIN 79.6 79.1 82.6 86.8 93.2Industry 82.1 84.6 86.2 86.5 87.8
- 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0 90.0
100.0
%
Gross Loan/Deposit from customers ratioAFFIN vs Industry
14.3 12.9
28.2 27.2
7.2 6.4
1H2015 1H2016RM
billi
on
Deposits
Consumer Corporate SMEs
27.7%
58.5%
13.8%
28.6%
56.9%
14.5%
49.7 46.5
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Impaired Loans
790.0 741.0 748.0 834.0 859.6
2012 2013 2014 2015 1H2016
Gross NPL/Impaired Loans
2.28 1.98 1.82 1.90 1.98
2.00 1.85 1.66 1.60 1.66
2012 2013 2014 2015 1H2016
Gross Impaired Loan ratio
Gross Impaired Loan ratio (%)Gross Impaired Loan ratio - industry (%)
1.13 0.92 0.84
1.02 1.06
1.40 1.30 1.20 1.20 1.20
2012 2013 2014 2015 1H2016
Net Impaired Loan ratio
Net Impaired Loan ratio (%)Net Impaired Loan ratio - industry (%)
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KEY HIGHLIGHTS & RATIOS
PROFIT BEFORE TAX BY SEGMENTS
STRATEGIC DIRECTION – AFFINITY PROGRAM
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AFFIN BANK BERHAD
Profit Before Tax (RM million) Net Income (RM million)
• The Bank registered a profit before tax of RM198.8mln for the 1HFY16 as compared to the previous year's corresponding period of RM125.3mln, an increase of RM73.5mln or 58.7% due to higher net interest income, other operating income and lower allowance for impairment losses on loans, advances and financing.
• The Bank has recently opened two more branches in Denai Alam and Tabuan Jaya, expanding our branch network to 108 branches. Separately, our Digitalization Initiatives is currently on track and we will be coming to the market soon.
Key Highlights
0
50
100
150
200
250
1H15 1H16
PBT
0
100
200
300
400
500
600
1H15 1H16
Net Income
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AFFIN ISLAMIC BANK BERHAD
Profit Before Tax (RM million) Net Income (RM million)
Key Highlights
• The Bank registered a profit before tax of RM68.5mln as compared to the previous year's correponding period of RM51.9mln, an increase of RM16.6mln or 32.0% due to higher net financing income mainly due to growth in average financing, higher other operating income mainly from higher gain on sale of AFS, higher forex gain and non-operating income and higher write-back on allowances for losses on financing and advances.
• Our Strategic Thrust going forward will be to expand products offering, increase smart partnership business, maximizing resources, target new customer segment and promote our Priority Islamic Policy.
0
20
40
60
80
1H15 1H16
PBT
0
30
60
90
120
150
1H15 1H16
Net income
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AFFIN HWANG INVESTMENT BANK GROUP
Profit Before Tax (RM million) Operating Income (RM million)
1H 2016 PBT of RM55.6m is slightly lower than 1H 2015 at RM57.1m Significant improvement in operating expenses offset by lower income contribution mainly from
initial service charge on sale of unit trust in 1Q 2016 Fee income continued to dominate No. 1 Bursa ranking for Value & Volume traded No. 3 Unit Trust industry ranking with RM21.9 billion in AUM Total Assets Under Administration at RM34.0 billion
Key Highlights
186.1
41.1 37.1
172.6
40.6 35.5
0
50
100
150
200
Fee income Net int income Other income
1H2015 1H2016
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AXA AFFIN GENERAL INSURANCE BERHAD
Operating Income (RM million)Profit Before Tax (RM million)
41.4 47.1
0
10
20
30
40
50
1H2015 1H2016
1H2015 1H2016
71.5
92.9
0
20
40
60
80
100
1H2015 1H2016
1H2015 1H2016
1H2016 PBT of RM92.9 million is significantly higher than 1H2015 of RM71.5 million Growth in health and motor insurance businesses Improvement in net underwriting results and higher investment income GWP increased by RM99.4 million (14.6%) in 1H2016 vs 1H2015 NWP increased by RM78.7 million (13.7%) in 1H2016 vs 1H2015
Key highlights
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AXA AFFIN Life Insurance Berhad
Gross Premium (RM Million) Loss Before Tax (RM Million)
1H 2016 results affected by movement in MGS rates and change in treatment of expense allocationfollowing interpretation of BNM Guideline. Protection and health gross premium growth accelerated, +16% vs. 1H 2015. Value of new business +13% vs. 1H 2015 on comparable basis.
Single Premium Single Premium
First Year Premium
First Year Premium
Renewal Premium
Renewal Premium
1H 2015 1H 2016
Gross Premium grew 9% to RM166m
+21% (5.4)
(16.4)
1H2015 1H2016
Higher pre-tax loss amidst low interest rate
Key highlights
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KEY HIGHLIGHTS & RATIOS
PROFIT BEFORE TAX BY SEGMENTS
STRATEGIC DIRECTION – AFFINITY PROGRAM
www.affin.com.my
AFFIN Bank Group is addressing its current challenges and opportunities through a comprehensive transformation program
Regulatory and Compliance
Risks
Costs
Delivery
Human Capital
Technology
Challenging Operating
Environment
Business Model Focus &
Positioning
Digital BankingInnovation and
Models
CURRENT & IMMEDIATE FUTURE & EMERGING
AFFIN BANK’S CHALLENGES & OPPORTUNITIES
Compliance Complexity
Management
System Loan and Deposit
Growth
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The blueprint for the Bank’s transformation comprises seven key pillars covering business scope, operations enablers and performance management
Pillar 6 People & Organization
Pillar 5 Technology
Pillar 2Delivery
Channels
Pillar 3Products & Solutions
Pillar 4Operations
Pillar 7 PerformanceManagement
Pillar 1Target
Customer Segments
Business Scope Components:Addresses strategic questions on who are our customers, what do they need and how do we reach them
Operations Enablers: Links and supports the execution and delivery capability with the business model goals around Operations, Technology and People
Performance Management Components:Ensures goals and model discipline through a comprehensive set of metrics
Target Transformation Blueprint- 7 Pillars to Address
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Implementation Complexity/Risk
Benefit Impact
Capabilities building projects and Quick Wins are analysed against benefit impact and complexity and risk of implementation to stage out the implementation roadmap
Financial Impact
o Revenue Lift
o Cost Savings
Elapsed Time
Dependencies
Expertise/ Skillsets
Effort
Cost
Transformation Implementation Framework
Strategic Foundation
Operational Foundation
Low Complexity 1 to 6 months
Moderate Complexity 1 to 12 monthsSignificant Complexity 12 to 24 months
Strategic Foundation Building Projects
Operational Foundation Building Projects
Direct Financial Improvement ProjectsQ
uick
Win
s
• 32 Transformation Projects• 9 QuickWins• 5 BAU IT• 27 BAU Compliance
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PHASE 1
PROGRAM ANALYSIS & PLANNING
PHASE 2
DETAIL DESIGN & QUICK WINS
IMPLEMENTATION
PHASE 3
CAPABILITIES BUILDING & IMPLEMENTATION
• Establish a robust foundation for the Program based on requisite analyses and validation of aspirational targets and parameters.
• Create a comprehensive plan for the Program including governance, resources and schedule.
• Detail identified capabilities and capability changes to the required level for building.
• Undertake capability building and implementation planning.
• Build, Test and Deploy planned capabilities. Based on established prioritized schedule, capabilities building will be initiated.
• Continuously track and monitor progress and accomplishment.
• Create and implement benefits realization plan.
Phase Objectives
Estimated Duration
January to June 2016 April 2016- June 2019
Execution of identified capability building projects- detail design and implementation, is expected to take up to 36 months.
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THANK YOU