analysts/fund managers briefing fy2016 results 1 …final).pdfabg’spbt after zakat increase 31.1%...
TRANSCRIPT
www.affin.com.my
ANALYSTS/FUND MANAGERS BRIEFINGFY2016 RESULTS
1 March 2017
www.affin.com.my
KEY HIGHLIGHTS & RATIOS
PROFIT BEFORE TAX BY SEGMENTS
STRATEGIC DIRECTION – AFFINITY PROGRAM
PROPOSED REORGANIZATION
www.affin.com.my
GROSS LOANS INCREASED TO
RM44.2 BILLION
0.62% YoY increase
TOTAL ASSETS INCREASED TO
RM68.9 BILLION
2.2% YoY increase
PROFIT BEFORE TAX & AFTER ZAKAT INCREASED TO
RM737.7 MILLION
43.4% YoY increase
TOTAL DEPOSIT INCREASED
MARGINALLY TO
RM55.4 BILLION
2.7% YoY increase
TOTAL EQUITY INCREASED TO
RM8.7 BILLION
4.9% YoY increase
TOTAL CAPITAL RATIO INCREASED TO
14.23%
2015:14.01%
GROSS IMPAIRED LOAN RATIO
DECREASED TO
1.67%
2015:1.90%
NET INTEREST MARGIN INCREASED
MARGINALLY TO
1.98%
2015:1.92%
Summary of Key Highlights
Page 1
www.affin.com.my
Key Highlights
Income Statement ( RM’mil ) FY2015 FY2016 Change (%)
Profit Before Tax and After Zakat 514.4 737.7 43.4
Net Profit 382.2 579.8 51.7
Earnings per share ( sen ) 19.01 29.03 52.7
Balance Sheet ( RM’ mil) FY2015 FY2016 Change (%)
Total Assets 67,413.9 68,886.3 2.2
Gross Loans, advances & financing 43,879.4 44,153.1 0.6
Deposits from customers 50,548.7 51,505.6 1.9
Key Financial Indicators FY2015 FY2016 Change (%)
Cost-to-income ratio 60.23 59.04 (1.19)
Gross impaired loans ratio 1.90 1.67 (0.23)
Loan Loss Reserve(including regulatory reserve)
98.09 94.34 (3.75)
Loan to deposits ratio 86.81 85.72 (1.09)
Page 2
www.affin.com.my
CET 1 / Tier 1 / CCRFY2015* FY2016
Industry average (4Q2016)
AFFIN Bank Berhad 11.93 12.59 12.92
AFFIN Islamic Bank Berhad 13.20 12.42 12.33
AFFIN Hwang Investment Bank Berhad
32.07 35.66 33.21
Total Capital RatioFY2015* FY2016
Industry average (4Q2016)
AFFIN Bank Berhad 14.33 16.20 16.17
AFFIN Islamic Bank Berhad 14.41 13.59 16.00
AFFIN Hwang Investment Bank Berhad
32.07 35.66 33.55
Key Highlights – Capital Adequacy (%)
* After Proposed Dividend
Page 3
www.affin.com.my
AFFIN Bank places strong emphasis on the quality of its capital in order to support business growth and risksundertaken.
The Bank holds a significant amount of its capital in the form of common equity which is permanent and has thehighest loss absorption capability on a going concern basis.
Page 4
Steady Increase in Regulatory Capital (Affin Bank)
• Proforma After RM1bln Sub MTN’s Program• Before Proposed Dividend
11.3% 11.0%
12.3% 11.9%12.6% 12.2%
13.3%12.6%
13.6%14.3%
16.2%
18.3%
2012 2013 2014 2015 2016 Proforma*
CET1 Total Capital Ratio
www.affin.com.my
156.4 159.6
72.7 54.0
94.558.7
Total Income Composition
2,534.7
238.9
460.3
61.2 94.3
2,553.1
272.8
496.1
109.6 86.8
Gross Interestincome
Islamic Bankingincome
Fees & brokerageincome
Income fromfinancial
instruments
Other income
RM
Mil
lio
n
FY2015 FY2016
Total Income (RM million)
Page 5
www.affin.com.my
Key Ratios
Net Interest Margin (%) Net Credit Cost (bps)*
Cost of funds (%)
44.4
4.2
2015 2016
1.92 1.98
2015 2016
Page 6
* Gross Credit Cost 15bps (FY16) vs 64bps (FY15)
www.affin.com.my
Operating Expenses
RM ‘000 FY2015 FY2016Percentage Growth (%)
Personnel cost 595,735 603,640 1.3
Promotion & marketing related expenses 132,951 157,019 18.1
Establishment-related expenses 255,827 270,493 5.7
General & administrative expenses 101,205 111,769 10.4
TOTAL 1,085,718 1,142,921 5.3
Cost to Income Ratio (%)
46.0 47.0
54.860.2 59.0
2012 2013 2014 2015 2016
Page 7
www.affin.com.myPage 8
Gross Loans Advances & Financing Growth
Gross Loans by Customer Type (FY16)Total Gross Loans (RM bil)*
Loan Loss Reserve (%) Loans by Business Segment (RM bil)
4%
52%
3%
39%
0% 2%Domestic non-banking institution
Domestic business enterprise
Government & statutory bodies
Individuals
Other domestic entities
Foreign entities
* Inclusive of Regulatory Reserves
69.72 76.27
100.70 98.10 94.34
2012 2013 2014 2015 2016
17.4 18.3
13.4 13.3
13.0 12.6
2015 2016Consumer Corporate SMEs
44.243.8
28.5%429.7%
* Rebalancing of Loan Portfolio in FY16
30.6%
39.7%
30.1%
41.4%
www.affin.com.myPage 9
Deposits from Customers
Type of Deposits (FY16)Deposits from Customers (RM Bil)
Gross Loans/Deposit Ratio (%)
16%
4%
61%
1%
3%
14%
Demand deposits
Savings deposits
Fixed deposits
Commodity Murabahah
Money market deposits
Negotiable instruments ofdeposits ("NID")
80.9 79.1 81.1
86.8 85.7
82.1 84.6
86.2 86.5
89.8
2012 2013 2014 2015 2016
AFFIN Industry
Deposits ( RM Bil)
12.9 13.6
37.6 37.9
2015 2016
Consumer Corporate & SMEs
50.5
25.6% 26.5%
51.5
74.4% 73.5%
42.9 47.4
50.6 50.5 51.5
2012 2013 2014 2015 2016
www.affin.com.myPage 10
Timely Monitoring Impaired Loans
Gross Impaired Loan by Purpose (FY16) Gross Impaired Loan (RM Mil)
Net Impaired Loan Ratio (%)Gross Impaired Loan Ratio (%)
11%
23%
3%3%
13%
44%
3%
Purchase of transportvehiclesPurchase of ResidentialpropertyPurchase of Non-residential propertyPersonal use
Construction
Working capital
Others
*
1.13
0.92 0.84
1.02 1.08
1.40 1.30
1.20 1.20 1.20
2012 2013 2014 2015 2016
Net Impaired Loan ratio (%)
Net Impaired Loan ratio (industry)
790.4 741.0 747.8
834.2
737.3
2012 2013 2014 2015 2016
Gross NPL/Impaired Loans
2.28 1.98
1.82 1.90 1.67
2.00 1.85
1.66 1.60 1.61
2012 2013 2014 2015 2016
Gross Impaired Loan ratio (%)
Gross Impaired Loan ratio - industry (%)
www.affin.com.my
Allowance for Impairment Losses on Loans, Advances and Financing
FY 2015RM’000
FY2016RM’000
Collective impairment- made/(written-back) during the financial year
17,646 43,732
Individual impairment- Made during the financial year- Written-back during the financial year
258,762(7,361)
83,130(60,297)
Bad debts- Recovered- Written-off
(84,515)3,603
(51,358)2,840
Additional allowance for impairment losses- Other debtors 243 373
Net Charge 188,378 18,420
Page 11
www.affin.com.my
KEY HIGHLIGHTS & RATIOS
PROFIT BEFORE TAX BY SEGMENTS
STRATEGIC DIRECTION – AFFINITY PROGRAM
PROPOSED REORGANIZATION
www.affin.com.my
AFFIN Bank Group (ABG)
Net Income (RM million) PBT after zakat (RM million)
ABG’s PBT after zakat increase 31.1% to RM599.9 million, compared to 457.5 million recorded in 2015compounded by higher income from Islamic banking business by 14.2%, higher income from otheroperating income by 18.9% and lower allowances for loan impairment.
ROE (after tax) improved from 6.74% to 8.45% and improvement in Gross Impaired Loan Ratio from1.80% to 1.60%. Total Assets continued to grow by 0.5% to RM 60.2 billion. Gross Loans, advances andfinancing stood at RM 43.1 billion whilst Deposits from customers at RM 47.6 billion.
The Bank has launched its Priority Islamic Policy (“PIP”) which is the Bank’s strategic move to enhanceits Islamic financing portfolio to 40% in 2020. It has shown progress as the Bank’s Islamic portfolio hasincreased to 27.8% (as at December 2016) of the Bank’s total banking assets.
The Bank has also won the JomPay Award being the highest biller acquired within Group B consisting oflocal and foreign banks.
Page 12
www.affin.com.my
PBT after zakat (RM million) Net Income Contribution (RM million)
PBT after zakat improved by 91% from RM68.0m to RM129.8m
Net Income grew 7.9% from RM509.1m to RM549.1m, driven by 8.3% growth in Fee Income
Operating Expenses also improved by RM7.7m. Personnel costs were lowered by 10.9%following completion of rationalization
No. 1 Bursa ranking for Value & Volume traded, for three years running
No. 3 Unit Trust industry ranking with RM23.7 billion in AUM
Assets Under Administration grew to RM36.3 billion
Key Highlights
AFFIN HWANG Investment Bank Group
Page 13
www.affin.com.my
AXA AFFIN Life Insurance Berhad
Gross Premium (RM Million) Loss Before Tax (RM Million)
2016 pre-tax loss lower due to higher investment income and lower expenses.
Protection and health gross premium growth accelerated +15% vs. 2015.
Value of new business +18% vs. 2015 on comparable basis.
Key highlights
Single Premium Single Premium
First Year Premium
First Year Premium
Renewal Premium
Renewal Premium
2015 2016
Gross Premium grew 7% to RM386m
+12%
-28.4
-20.2
2015 2016
Lower Pre-tax loss
Page 14
www.affin.com.my
Gross Written Premium (RM million) Profit Before Tax (RM million)
FY2016 PBT of RM181.2 million is significantly higher than FY2015 of RM114.9 million
Growth in health and motor insurance businesses
Improvement in net underwriting results and higher investment income
GWP increased by RM130.9 million (9.8%) in FY2016 vs FY2015
NWP increased by RM125.9 million (11.5%) in FY2016 vs FY2015
Key highlights
114.9
181.2
FY2015 FY2016
1,334.9
1,465.8
FY2015 FY2016
Page 15
AXA AFFIN General Insurance Berhad
www.affin.com.my
KEY HIGHLIGHTS & RATIOS
PROFIT BEFORE TAX BY SEGMENTS
STRATEGIC DIRECTION – AFFINITY PROGRAM
PROPOSED RE-ORGANIZATION
www.affin.com.my
Pillar 6 People & Organization
Pillar 5 Technology
Pillar 2
Distribution
Channels
Pillar 3
Products &
Solutions
Pillar 4
Operations
Pillar 7
Performance
Management
Pillar 1
Target
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
comprehensi
ve set of
metrics
Affinity Transformation Pillars
• 32 New Transformation Projects under 8 Pillars
targeted full completion in 2019
Pillar 8
Risk & Compliance Governance
Page 16
www.affin.com.my
BENEFIT
IMPACT
PILLARI
Target Customer
Segments
II
Delivery Channels
III
Products &
Solutions
IV
Operations
V
Technology
VI
People &
Organization
VII
Performance
Management
Direct
Financial
Impact:
• Revenue
Growth
• Cost
Savings
Strategic
Foundation
Building
Operational
Foundation
Building
BAU
Projects
P2.2
New RM Model
P2.5
Call Center for Sales
P2.6
Intensify Selling
@ Branches
P2.7
Manage
Cost-to-Serve
P2.9
Launch e-Wallet
P3.1
Complete Core
Products
P3.2
Relaunch Credit
Card Biz
P3.5
R&D Solutions
P5.1
Tech Refresh Review
P5.4
BI & CRM
Infrastructure
P3.6
Iconic Segment
“Brand”
P1.1
CE Organization
P1.2
Segments Detailing
P1.3
CE Model &
Framework
P2.1
RIB/MIB
Implementation
P2.4
Digital Banking
Strategy
P3.3
Product Economics
FRW
P3.4
Product Dev
Organization
P6.1
WF Transformation:
BR
P6.2
Leadership Agenda
P5.2
Re-invigorate IT-Biz
P2.3
Branch-Hub Mgmt
FRW
P4.1
Credit Management
Model
P4.2
Group Operations
Model
P5.3
Solution Architecture
P7.3
Data Mgnt FRW
& Governance
P7.1
Performance Mgmt
FRW
P7.2
Biz Performance
FRW
Ethics, Risk &
Compliance
Culture
Awareness
9 Cards Projects
3 Credit/SIBS
Projects
1 Payments
Project3 Disaster
Recovery
Projects3 BNM/ITIS
Projects
5 NSRS Projects
2 Risk Projects
IT Sourcing
InsiteMy OCS
Batch Scheduler
Business
Productivity
Monitor
CIB Trade
Finance Module
P2.8
SME Sales
Organization
Setup
P4.3
SME Credit
Scorecard
P4.4
SME Credit
Process
Risk &
Compliance
Governance
Direct Financial
Impact
Strategic
Foundation
Building
Operational
Foundation
Building
Legend
BAU Projects
32 New Transformation Projects
1 MFRS 9 Project
Affinity Transformation Projects
Page 17
www.affin.com.my
Financial 2016 2020
ROE 8.45% 14-15%
Ops
Profit630m 1120m
CIR* 50+ 40+
Fee :
Total
Income
18-
20%25-30%
Targeted Customers
1.Tertiary Students
2.Families
• Newly Weds
• With Growing Children
• With College-going Children
3.SMEs
Products & Solutions
1.Core Banking Products
2.Utility Solutions
3.Life-Stage Financing
4.Wealth Solutions
Delivery Channels
1. Consistent and Unique
Customer Experience
2. Sales and Service Focus
3. Brick & Mortar AND Digital
4. Productivity Driven
Competitive Differentiation
Core Competencies
Operating PrinciplesOrganization Principles
GO
-TO
-
MA
RK
ET
PE
RF
OR
MA
NC
E
GO
AL
S
• Possesses a unique
customer experience that
drives customer loyalty and
deepens relationships
• Leverages its size
advantage to be nimble and
responsive to the market
place
• Ability to identify and
understand unique
customer insights that
shape relevant financial
services solutions
• Ability to use & apply new
or emerging technologies
• Increasing digitalization of
the business to create
greater straight –through
processing
• Tight coupling of front and
back office for seamless
customer experience
• Leadership driven
organization with clear
accountability
• Enabled by a robust
performance management
framework to encourage the
right behaviors* Based on estimation for Bank only
Page 18
Affinity Transformation Target
www.affin.com.my
KEY HIGHLIGHTS & RATIOS
PROFIT BEFORE TAX BY SEGMENTS
STRATEGIC DIRECTION – AFFINITY PROGRAM
PROPOSED REORGANIZATION
www.affin.com.my
16 February 2017
20 February 2017
AFFIN announced that it will be undertaking a
series of corporate exercises that will essentially
entail a reorganisation of the AFFIN Group
AFFIN’s listing status will ultimately be transferred
to AFFIN Bank
AFFIN and AFFIN Bank submitted the relevant
applications to BNM
Proposed Reorganization
Page 19
www.affin.com.my
Our current group structure
1. AFFIN Hwang IB
2. AFFIN Hwang
Asset
Management
(70%)
3. AIIMAN (100%)
1. AXA AFFIN
General
Insurance
(37.07%)
2. AXA AFFIN
Life
Insurance
(51%)
100%
100%
100%
Step 1
Material
companies
will be
transferred
to AFFIN
Bank
Step 2
AFFIN will
distribute its
AFFIN Bank
shares to its
shareholders
Step 3
AFFIN’s
listing status
will be
transferred to
AFFIN Bank
Step 4
AFFIN Bank will
be the Bank
Holding Company
of the Group
100%
Page 20
www.affin.com.my
Introducing the new AFFIN Banking Group
1. AFFIN Hwang IB
2. AFFIN Hwang Asset
Management (70%)
3. AIIMAN (100%)
1. AXA AFFIN
General
Insurance
(37.07%)
2. AXA AFFIN
Life Insurance
(51%)
100% 100%
1. Positioned to spearhead the Group’s future
growth
2. Will have direct access to capital
3. Enlarged capital base and CAR ratio
improves resilience
4. Profile will improve due to its listing status
100%
Page 21
www.affin.com.my
Announcement
Submission of the
application to
BNM/MOF/SC
6 months* 9 months
10 months
Subject to Receipt of
BNM/MOF/SC’s approval
Submit Circular to Bursa
Securities
Subject to Receipt of
confirmation from High
Court
Delisting of AFFIN Holdings
Entitlement date for the
share swap
Listing of AFFIN Bank
on the Main Market of
Bursa Securities
EGM
Submit application to High
Court
8 months
Note:
* Subject to BNM approval obtained within 6 months from the submission of AHB and ABB’s application on the Proposed
Reorganisation
Q1 2017 Q3 2017 Q4 2017Q2 2017
Expected Timeline
Page 22
www.affin.com.my
THANK YOU