Presentation to Analysts/Fund Managers on 1H2019 results · Presentation to Analysts/Fund Managers...
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Presentation to Analysts/Fund Managers on 1H2019 results 30 August 2019 Group CEO Kamarul Ariffin bin Mohd Jamil
Transcript of Presentation to Analysts/Fund Managers on 1H2019 results · Presentation to Analysts/Fund Managers...
Presentation to Analysts/Fund Managerson 1H2019 results
30 August 2019
Group CEOKamarul Ariffin bin Mohd Jamil
CONTENTS
1H2019 Key Performance Highlights
Strategic Initiatives
Overview of Financial Performance
Guidance & 2H2019 Economic Outlook
1
2
3
4
Page 2
1H2019 Key Performance Highlights
Profitability
❑ Achieved a PBT after Zakat of RM400.0 million for 1H2019 as compared to RM300.7 million for 1H2018.
❑ Write back for credit impairment allowance of RM36.1 million in 1H2019 vs a charge of RM82.6 million in 1H2018
❑ Net income was RM970.4 million in 1H2019 vs RM970.8 million in 1H2018.
❑ Overhead expenses was RM615.1 million for 1H2019 as compared to RM617.5 million for 1H2018.
Asset Quality
❑ Gross Impaired Loans ratio was at 3.49% (31 Dec 2018:3.25%).
❑ Net impaired loan ratio was at 2.80% (31 Dec 2018 : 2.59%).
❑ Loan Loss Reserve was at 95.58% as at 30 June 2019 (31 Dec 2018 : 97.08%)
Capital Adequacy
❑ Total Capital Ratio, Common Equity Tier-1 Capital Ratio and Tier 1 Capital Ratio of all banking entities within the Groupremained at above the minimum regulatory requirements.
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Total Capital CET 1 Tier - 1
ABBGroup 21.15% 12.68% 14.37%
Bank 19.56% 10.57% 12.17%
AiBB Bank 19.38% 10.82% 12.84%
AHIBGroup 33.69% 32.27% 32.86%
Bank 37.58% 36.69% 36.69%
1H2019 Key Performance Highlights
Loans & Deposits Growth
❑ Gross loans, advances and financing reduced by RM1.3 billion or 2.8% in 1H2019 to RM47.6 billion.
❑ Customer deposits grew by RM1.9 billion or 3.3% in 1H2019 to RM59.2 billion.
Liquidity & other regulatory requirements
❑ As at 30 June 2019, LCR (Group level) was at 146.79%, well above the BNM requirements.(Dec 2018: 169.32%).
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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’s strategic program launched in 2016 with the objective to enable achievement through operational
enhancements and performance management.
▪ As at 30 June 2019, out of the 33 projects, 25 projects of the Program had been completed.
▪ Six (6) 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.
Strategic Initiatives (On-going)
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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.
▪ As at 30 June 2019, the PIP achieved the target of 40% of total Islamic Financing Portfolios against total
Affin Bank’s and Affin Islamic Bank’s Portfolio ahead of the target by year 2020.
Strategic Initiatives (On-going)
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CAPITAL MANAGEMENT
▪ Establishment of Dividend Reinvestment Plan
▪ Establishment of a Medium-Term Notes Programme of up to RM6.0 billion in nominal value for the issuance of
subordinated MTN and/or Senior MTN by Affin Bank
▪ Establishment of Additional Tier 1 Capital Securities (AT1CS) Programme of RM3.0 billion in nominal value by Affin Bank
▪ Establishment of Senior Sukuk Murabahah, Tier 2 Sukuk Murabahah and/or Additional Tier 1 Capital Sukuk Wakalah
Programme of up to RM5.0 billion in nominal value by Affin Islamic Bank
Digital year for the Group, new system capabilities
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Overview of financial performance by entities
Highlights of financial performance by entities - Profit Before Tax after Zakat (PBT)
Entity1H2018
(RM’ million)
1H2019
(RM’ million)
Variance
(RM’ million)Commentary
AFFINBANK
(Bank Level)315.4 227.5 (87.9)
Higher PBT for 1H2018 was mainly attributed to
dividend of RM178.0 million received from
subsidiaries.
AFFIN ISLAMIC 85.6 68.2 (17.4)
Lower PBT due to lower net financing income and
higher overhead expenses, net of higher gain on
financial instruments and lower allowance for credit
impairment losses.
Affin Hwang Capital 83.0 96.8 13.8
Higher PBT was mainly due to higher net gain on
financial instruments and write back of credit
impairment losses offset by lower net interest
income and net fee and commission income
AXA Affin Life Insurance
Berhad(1.9) 3.0 4.9
High PBT was mainly due to growth in new
business and higher investment income offset by
higher provision for reserves for future
policyholders’ liabilities.
AXA Affin General
Insurance Berhad86.4 30.8 (55.6)
Lower PBT mainly contributed by higher net claims
incurred in Motor and Personal Accident segments
and lower gain on disposal of investments
Affin Moneybrokers
Sdn Bhd0.6 1.3 0.7
Higher PBT mainly due to higher net brokerage
income, net of higher overhead expenses.
AFFINBANK Group 300.7 400.0 99.3
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300.7315.4
85.6 83.0
(0.7) 31.3
0.6
400.0
227.5
68.2
96.8
0.3 12.6 1.3
Affin Bank (Group) Affin Bank (Banklevel)
Affin Islamic Bank Affin Hwang Capital AXA Affin Life AXA Affin General Affin Moneybrokers
1H2018 1H2019
Group PBT and contribution by Subsidiaries, Joint Venture
and Associate Company
Contribution of PBT by Entities (RM’ million)
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137.4
178.0
Dividend from
subsidiaries
PBT without
dividend from
subsidiaries
Key drivers for improvement in Operating Performance
Profitability FY2018 (%) 1HQ2019 (%)Increase/(decrease)
(%)
Return on Equity (After Tax) 5.94 5.81 (0.13)
Net Interest Margin 1.83 1.63 (0.20)
Cost to Income Ratio 63.39 63.39 -
Liquidity 4Q2018 (%) 2Q2019 (%)Increase/(decrease)
(%)
Liquidity Coverage Ratio (LCR) 169.32 146.79 (22.53)
Loan to Fund (LTF) 81.08 75.70 (5.38)
Loan to Fund and Equity (LTFE) 72.00 67.21 (4.79)
Asset Quality 4Q2018 (%) 2Q2019 (%)Increase/(decrease)
(%)
Gross Impaired Loans Ratio 3.25 3.49 0.24
Net Impaired Loans Ratio 2.59 2.80 0.21
Loans Loss Reserve Ratio 97.08 95.58 (1.50)
Capital Adequacy 4Q2018 (%) 2Q2019 (%)Increase/(decrease)
(%)
CET 1 Capital Ratio 11.92 12.68 0.76
Tier 1 Capital Ratio 13.56 14.36 0.80
Total Capital Ratio 19.00 21.15 2.15
Page 12
Gross Credit Cost (bps)
Key drivers for improvement in Operating Performance
1.98 1.84 1.831.63
2016 2017 2018 1H2019
Net Interest Margin (%)
17.0
25.0 23.0
12.0
2016 2017 2018 1H2019
Net Credit Cost (bps)
5.0
16.0
8.0
(15.0)
2016 2017 2018 1H2019
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Group Income Statement at a glance
Profit Before Tax after Zakat
(RM’ million)
400.0737.7 693.2 675.0
400.0
2016 2017 2018 1H2019
Profit After Tax
(RM’ million)
306.8579.8 534.9 527.4
306.8
2016 2017 2018 1H2019
Operating Expenses
(RM’ million)
615.11,142.9 1,223.5 1,217.5
615.1
2016 2017 2018 1H2019
Earnings Per Share (sen)
14.829.0 26.5 25.9
14.8
2016 2017 2018 1H2019
Net Fee and Commission Income
(RM’ million)
212.3496.1 451.6 456.9
212.3
2016 2017 2018 1H2019
Net Interest Income
(RM’ million)
375.4
Share of Profit in Joint Ventures /Associate
(RM’ million)
12.9
892.9 895.7 845.4
375.4
2016 2017 2018 1H2019
48.9 40.9 46.9
12.9
2016 2017 2018 1H2019
Note : Comparative results for 2016 and 2017 are for Affin Holdings Berhad’s Group
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RM’000ABB GROUP
1H2018
ABB GROUP
1H2019Variance
Net interest income 426,321 375,368 (50,953)
Islamic banking income 203,222 202,117 (1,105)
Net fee and commission income 235,277 212,302 (22,975)
Net gains on financial instruments 67,085 155,377 88,292
Other income 38,890 25,279 (13,611)
Net income 970,795 970,443 (352)
Operating expenses (617,501) (615,116) 2,385
Operating profit before allowances 353,294 355,327 2,033
Writeback/(Allowances) for impairment losses (82,570) 36,128 118,698
Operating profit 270,724 391,455 120,731
Share of results of a joint venture and associate 30,569 12,871 (17,698)
Profit before zakat and taxation 301,293 404,326 103,033
Zakat (643) (4,310) (3,667)
Profit before taxation 300,650 400,016 99,366
Taxation (75,662) (93,193) 17,531
Net profit for the financial period 224,988 306,823 81,835
Summary of Group Profit & Loss
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RM’000ABB Group
1H2018
ABB Group
1H2019
Increase/
(Decrease)
Personnel cost 403,223 400,127 (3,096)
Promotion & marketing related expenses 30,119 31,229 1,110
Establishment-related expenses 128,835 131,212 2,377
General & administrative expenses 55,324 52,548 (2,776)
TOTAL 617,501 615,116 (2,385)
Cost to Income ratio (%) 63.61 63.39 (0.22)
Summary of Group Operating Expenses
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RM’000ABB GROUP
1H2018
ABB GROUP
1H2019
Increase/
(Decrease)
Net brokerage 42,167 34,459 (7,708)
Underwriting fees - 2,117 2,117
Portfolio management fees 151,639 144,076 (7,563)
Corporate advisory fees 5,292 5,738 446
Commission 13,580 12,372 (1,208)
Service charges and fees 36,886 25,892 (10,994)
Guarantee fees 11,392 16,055 4,663
Arrangement fees 1,425 1,070 (355)
Agency fees 2,014 1,045 (969)
Initial service charges 61,699 33,168 (28,531)
Other fee income 8,303 3,504 (4,799)
Subtotal 334,397 279,496 (54,901)
Fee and commission expense (99,120) (67,194) 31,926
NET FEE AND COMMISSION INCOME 235,277 212,302 (22,975)
Summary of Net Fee And Commission Income
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Group Balance Sheet at a glance
Total Equity (RM’ billion)
9.3 8.7 9.1 8.7 9.3
2016 2017 2018 1H2019
Gross Loans, Advances and Financing
(RM’ billion)
47.6
Total Deposits from Customers
(RM’ billion)
59.2
Total Assets (RM’ billion)
76.3
44.2 46.1 49.0 47.6
2016 2017 2018 1H2019
51.5 50.9 57.3 59.2
2016 2017 2018 1H2019
68.9 70.8 76.0 76.3
2016 2017 2018 1H2019
Total Liabilities (RM’ billion)
67.0
Net Loans, Advances and Financing
(RM’ billion)
47.1
60.2 61.7 67.2 67.0
2016 2017 2018 1H2019
43.7 45.7 48.4 47.1
2016 2017 2018 1H2019
Net Assets Per Share
(RM)
4.704.47 4.67 4.46 4.70
2016 2017 2018 1H2019
Note : Comparative Results for 2016 and 2017 are for Affin Holdings Berhad’s Group
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94.3 98.5 97.1 95.6
2016 2017 2018 1H2019
Loans Portfolio
20.8 22.4 25.0 25.1
19.7 20.1 19.9 18.5
3.7 3.6 4.1 4.0
2016 2017 2018 1H2019
Consumer Corporate SMEs
Mortgage45.2%
Hire Purchase46.6%
Credit Card0.6%
Overdraft & personal loans
7.6%
44.2 46.1 49.0
Term Loans61.7%
Overdrafts5.5%
Revolving Credit22.5%
Trade Products10.3%
Term Loans66.8%
Overdrafts18.8%
Revolving Credit1.5%
Trade Products12.9%
47.6
Gross Loans by Composition (RM’ billion) Loan Loss Reserve (%)
Composition of
Consumer Loans
1H2019
Composition of
Corporate Loans
1H2019
Composition of
SME Loans
1H2019
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52.7%
38.9%
8.4%8.4%
40.6%
51.0%
7.8%
43.6%
48.6%
8.4%
44.6%
47.0%
*706.2
2015
Gross Impaired Loans
700.3 1,143.1
1,578.7 1,614.5 37.0
24.2
11.2 49.2
2016 2017 2018 1H2019
R&R Loans
Impaired Loans
1.901.67
2.53
3.253.49
1.53
2.48
3.22 3.39
2015 2016 2017 2018 1H2019
Gross Impaired Loan Ratio
Gross Impaired Loan Ratio - Excluding R&R
0.95 1.03
2.10
2.592.80
0.95
2.05
2.562.70
2015 2016 2017 2018 1H2019
Net Impaired Loan Ratio
Net Impaired Loan Ratio - Excluding R&R
Gross Impaired Loans (RM’ million)
Net Impaired Loans Ratio (%)Gross Impaired Loans Ratio (%)
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1,663.71,589.9
1,167.3
737.3
GROSS LOAN BY ECONOMIC PURPOSE 30/06/2019 (%)
GROSS LOAN BY ECONOMIC PURPOSE 31/12/2018 (%)
Gross Loans Portfolio by Economic Purpose
30/6/2019
RM ‘000
Construction 3,069,265
Purchase of residential properties 11,146,909
Purchase of non-residential properties 6,493,801
Purchase of securities 1,502,606
Purchase of transport vehicles 12,197,319
Working Capital 10,621,886
Personal use 844,613
Others 1,741,902
TOTAL 47,618,301
31/12/2018
RM ‘000
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
6.4
23.4
13.6
3.2
25.6
22.3
1.8
3.7
Construction Purchase ofresidentialproperties
Purchase ofnon
residentialproperties
Purchase ofsecurities
Purchase oftransportvehicles
Workingcapital
Personal use Others
7.1
21.3
13.6
3.3
26.1
23.2
1.6 3.8
Construction Purchase ofresidentialproperties
Purchase ofnon
residentialproperties
Purchase ofsecurities
Purchase oftransportvehicles
Workingcapital
Personal use Others
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51.5 50.9
57.3 59.2
2016 2017 2018 1H2019
35.2
16.6
5.5
33.1
20.5
5.6
Corporate Consumer SME
2018 1H2019
Customers Deposits
Deposits (RM’ billion)
Y-o-Y - 6.0%
Y-o-Y 23.5%
Y-o-Y 1.8%
Deposits by Sector (RM’ billion)
Y-o-Y - 1.2% Y-o-Y 12.6%
Industry LTF
2018 82.71H2019 82.8
Industry LTFE
2018 72.41H2019 72.4
Y-o-Y 3.3%
81.1 72.0 75.7
67.2
Loans to Fund Ratio (LTF) Loan to Funds and EquityRatio (LTFE)
2018 1H2019
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6.5 13.9
79.6
Money Marketand OtherDeposits
CASA Fixed Deposits
Deposits from Customers (%)
RM59.2 billion
30 June 2019
30/06/201931/12/2018
Deposits from Customers (RM’ billion)
RM59.2 billionDeposits from Customers (RM’ billion)
RM57.3 billion
Customers Deposits by Segments
5.6
- -
2.6
2.9 3.4
27.2
2.4
13.2
Corporate SME Consumer Banking
Money Market and Other Deposits CASA Fixed Deposits
3.8 - -
2.0
2.7 3.5
27.3
2.9
17.0
Corporate SME Consumer Banking
Money Market and Other Deposits CASA Fixed Deposits
35.4
5.3
16.6
33.1
5.6
20.5
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Economic Outlook for 2H2019
❑ The Malaysian economy recorded a stronger growth of 4.9% in 2Q2019 (1Q2019 : 4.5%), supported by higher household
spending and private investment, higher than the market expectation of 4.7% yoy. This was mainly supported by the expansion in
domestic demand, led by the private sector, especially from private consumption and private investment.
❑ Growth in the domestic demand rose by 4.6% yoy in 2Q2019 (4.4% in 1Q2019), led mainly by stronger household spending.
Private consumption also rose strongly by 7.8% yoy in 2Q2019 (7.6% in 1Q2019) driven by steady income growth as well as
higher festive spending during the 2Q2019.
❑ For the 2Q2019, headline inflation averaged higher mainly reflecting the lapse in the impact of the Goods and Services Tax (GST)
zerorisation that was implemented in June 2018. The inflation, excluding the impact of consumption tax policy changes, was
unchanged at 1.6%.
❑ Due to the better-than-expected real GDP growth in 2Q2019, the 2019 GDP growth is now forecasted higher by 0.2% from
previously 4.5% to 4.7%. This also takes into account some slowdown in quarterly growth for 2H2019, from 4.9% in 2Q2019 to an
estimated 4.7%. It is believed that the sustainability of real GDP growth in the quarters ahead hinges importantly on developments
in the global environment, and there are caution of the downside risk from the trade war between US and China. The real GDP
growth for 2020 is forecasted to be maintained at 4.5%.
❑ Overall financing conditions are consistent with the economic expansion, with demand for financing showing some signs of
improvement given higher loan applications during the 2Q2019. Steady loan disbursements across segments, including for SMEs
and purchase of houses will continue to support the economic activity.
Source : AFFIN Hwang Capital Daily Insight ,19 August 2019 & Economic and Financial Developments in Malaysia in the 2Q2019
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2019 Group Guidance
Loan Growth 1% to 2%
Deposit Growth 3% to 5%
Cost to Income Ratio 60%
Gross Credit Cost 30 to 40 bps
Non interest income to
total income40.0%
2019 Guidance for AFFIN Bank Group 2019 Guidance for Malaysia
GDP
4.7%
CPI
0.7% - 1.7%
OPR
3.00%
RM/USD
4.20
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Shareholding statistics as at 30 June 2019
LTAT 35.41
BHB20.73
BEA23.56
EPF 6.54
OTHERS13.76
Substantial Shareholders (%) Foreign Shareholdings (%)
JAN 2019
FEB2019
MAR2019
APRIL2019
MAY2019
JUNE2019
JULY2019
26.61 26.57 26.55 26.56 26.53 26.52 26.52
23.56 23.56 23.56 23.56 23.56 23.56 23.56
3.05 3.01 2.99 3.00 2.97 2.96 2.96
J F M A M J J
BEA Others
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THANK YOUFor any enquiries, please email [email protected] or call us at
+603-20285441 (Investor Relations Department)
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 itsfinancial 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 doesnot 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 decisionor 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.
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