41ST ANNUAL GENERAL MEETING Presentation to...

41ST ANNUAL GENERAL MEETINGPresentation to Shareholders

By En. Kamarul Ariffin bin Mohd Jamil

Group Chief Executive Officer

24 April 2017

1

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KEY HIGHLIGHTS & RATIOS

PROFIT BEFORE TAX BY SEGMENTS

STRATEGIC DIRECTION – AFFINITY PROGRAM

PROPOSED REORGANIZATION

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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%

Key Highlights of Financial Year 2016 Performance

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156.4 159.6

72.7 54.0

94.558.7

Net Income (RM Mil)Profit Before Tax and After Zakat (RM Mil)

Net Profit (RM Mil) Earnings Per Share (sen)

* Inclusive of Regulatory Reserves

42.08 43.49

34.52

19.01

29.03

2012 2013 2014 2015 2016

628.9 650.0 598.5

382.2

579.8

2012 2013 2014 2015 2016

826.7 854.2 801.1

514.4

737.7

2012 2013 2014 2015 2016

.. Sustainable income and earnings over the years

1,522.1 1,525.7 1,819.8 1,802.5 1,935.9

2012 2013 2014 2015 2016

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PBT 2016(RM million)

AFFIN Bank Group 599,871

AFFIN Hwang Investment Bank Group 129,787

AFFIN Moneybrokers 1,557

AXA AFFIN Life Insurance (Share of results) (4,275)

AXA AFFIN General Insurance (Share of results) 53,137

AHB Group (Consolidated) 737,713

Contribution of PBT by entities in the Group

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156.4 159.6

72.7 54.0

94.558.7

2,534.7

238.9 460.3 61.2 94.3

GrossInterestincome

IslamicBankingincome

Fees &brokerage

income

Incomefrom

financialinstruments

Otherincome

Income Composition

2015 (RM bil)

2,553.1

272.8 496.1

109.6 86.8

GrossInterestincome

IslamicBankingincome

Fees &brokerage

income

Incomefrom

financialinstruments

Otherincome

2016 (RM bil)

SEGMENTAL REVENUE AND PROFIT (2016)

Commercial Banking

Investment Banking

Insurance Others Eliminations Group

Segment Revenue 1,324.4 549.1 - 256.6 (194.2) 1,935.9

Profit Before Tax After Zakat

599.9 100.8 48.9 179.0 (190.9) 737.7

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Pro-active management of capital to mitigate underlying risk and future business growth..

CET 1 / Tier 1 / CCR FY2015 FY2016 Industry average (4Q2016)

AFFIN Bank Berhad* 11.93 12.52 12.92

AFFIN Islamic Bank Berhad 13.20 12.42 12.33

AFFIN Hwang Investment Bank Berhad* 32.07 35.30 33.21

Total Capital Ratio FYQ2015 FY2016* Industry average (4Q2016)

AFFIN Bank Berhad* 14.33 16.13 16.17

AFFIN Islamic Bank Berhad 14.41 13.59 16.00

AFFIN Hwang Investment Bank Berhad* 32.07 35.30 33.55

* After proposed dividend

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Earnings per share of 29.03 sen per share,total dividend of 7.5 sen per share, and

total dividend payout of RM145.7 million.

183.1 224.2

291.4

155.2 145.7

46.3 56.6 51.5

67.2

88.4

- 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0 90.0 100.0

-

50.0

100.0

150.0

200.0

250.0

300.0

350.0

2012 2013 2014 2015 2016

%

RM M

illion

Payment (RM Million) Dividend Payout Ratio (%)

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RM Million (‘000) 2016 2015 Percentage Growth (%)

Personnel cost 603,640 595,735 1.3Promotion & marketing related expenses 157,019 132,951 18.1

Establishment-related expenses 270,493 255,827 5.7General & administrative expenses 111,769 101,205 10.4TOTAL 1,142,921 1,085,718 5.3

Cost to Income Ratio (%)

46.0 47.054.8 60.2 59.0

2012 2013 2014 2015 2016

Group Overheads Composition

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Net Interest Margin (%) Gross Credit Cost (bps)* Cost of funds (%)

2.0 1.9

2.0

2.1

2.2

2012 2013 2014 2015 2016

2.6 2.6 2.8 2.9 2.8

2012 2013 2014 2015 2016

27.0

17.0

32.0

64.0

16.0

2012 2013 2014 2015 2016

Key Ratios in 2016

*Net credit cost for 2015 : 29bps & 2016 : 3bps

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Gross Loan by Customer Type (2016)Total Gross Loans (RM bil)*

Loan Loss Reserve (%) Loan by Business Segment (RM bil)

* Inclusive of Regulatory Reserves

71.0 74.4

100.7 98.1 94.3

2012 2013 2014 2015 2016

17.4 18.3

13.4 13.3

13.0 12.6

2015 2016Consumer Corporate SMEs

44.243.9

28.5%429.7%

* Rebalancing of Loan Portfolio in FY16, normalized loan growth -4%

30.6%

39.7%

30.1%

41.4%

34.7 37.5

41.1 43.9 44.2 45.8

2012 2013 2014 2015 2016 Proforma

Gross loans advances & financing growth..

0.01 1.9

53.3

3.3

40.6

0.2 0.7 Domestic bankinginstitutionsDomestic non-bankinginstitutionsDomestic businessenterprisesGovernment &statutory bodiesIndividuals

Other domestic entities

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Type of Deposits (%) (2016)Deposits from Customers (RM Bil)

Gross Loans/Deposit Ratio (%)

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 2016Consumer 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

Our deposits grow steadily over the years..

1.0

14.8 4.0

58.2

20.0

1.5 0.5 Money marketdepositsDemand Deposits

Saving Deposits

Fixed Deposits

NID

CMD

Others

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Asset QualityGross Impaired Loan by Purpose (%) (2016) Gross Impaired Loan (RM Mil)

Net Impaired Loan Ratio (%)Gross Impaired Loan Ratio (%)

*

1.13 0.92 0.84

1.02 1.08

1.40 1.30 1.20 1.20 1.20

2012 2013 2014 2015 2016Net Impaired Loan ratio (%)Net Impaired Loan ratio (industry)

790.4 741.0 747.8

834.2 737.3

2012 2013 2014 2015 2016

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 (%)

5.4

27.5

10.3 11.7

40.0

3.9 1.2 Construction

Purchase of residentialpropertiesPurchase of nonresidential propertiesPurchase of transportvehiclesWorking capital

Personal use

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PROFIT BEFORE TAX BY SEGMENT



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AFFIN Bank Group (ABG)

ABG’s PBT after zakat increase 31.1% to RM599.9 million, compared to 457.5 million recorded in 2015 compounded byhigher income from Islamic banking business by 14.2%, higher income from other operating income by 18.9% and lowerallowances for loan impairment.

ROE (after tax) improved from 6.74% to 8.45% and improvement in Gross Impaired Loan Ratio from 1.80% to 1.60%.Total Assets continued to grow by 0.5% to RM 60.2 billion. Gross Loans, advances and financing stood at RM 43.1 billionwhilst 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 enhance its Islamic financingportfolio to 40% in 2020. It has shown progress as the Bank’s Islamic portfolio has increased to 27.8% (as at December2016) of the Bank’s total banking assets.

The Bank has also won the JomPay Award being the highest biller acquired within Group B consisting of local and foreignbanks.

Net Income (RM Million) PBT After Zakat (RM Million)

1,014.7

231.8

1,048.9

279.1

AFFIN Bank AFFIN Islamic

2015 2016

344.2

113.6

456.1

143.4

AFFIN Bank AFFIN Islamic

2015 2016

Key highlights

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Key Highlights

AFFIN HWANG Investment Bank Group Net Income (RM Million) PBT After Zakat (RM Million)

68.0

129.8

2015 2016

353.1

77.9 78.1

382.2

83.7 83.3

Fee Income Net InterestIncome

Other Income

2015 2016

PBT after zakat improved by 91% to RM129.8m Net Income grew 7.9% to RM549.1m driven by 8.3% growth in Fee Income Operating Expenses also improved by RM7.7m led by 10.9% improvement in personnel costs;

FY15 include one-off staff rationalization expenses of RM16.9m and PYA to AFS Securities ofRM15.2m

No. 1 Bursa ranking for Value & Volume traded, for three years running, No. 3 Unit Trust industryranking with RM23.7 billion in AUM and total AUM grew to RM36.3 billion

Net Synergies is 10 months ahead of schedule

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AFFIN Moneybrokers Sdn Bhd

Brokerage (RM Million) PBT After Zakat (RM Million)

2.3

1.6

2015 2016

12.2

10.7

2015 2016

PBT after Zakat was RM1.6 million as compared to RM2.3 million in FY 2015 Brokerage income was RM10.7 million as compared to RM12.2 million in FY2015

Key highlights

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AXA AFFIN Life Insurance Berhad

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%

Gross Premium (RM Million) Loss Before Tax (RM Million)

(28.4)

(20.2)

2015 2016

AALI is focused on taking actions to deliver sustainable growth through multi-distribution channels and partners. This includes strengthening protection and health offerings, efficiency with expenses and capital,

leading to better margins and sustained financial strength in a challenging economic environment.

Protection and Health business accelerated in line with objective to improve margins.Protection & Health Gross Premium more than double growth rate of total portfolio, +15% vs. 2015 Value of new business increased +18% vs. 2015 2016 pre-tax loss lower due to higher investment income and lower expenses

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Key highlights

AXA AFFIN General Insurance BerhadGross Written Premium (RM Million) Profit Before Tax (RM Million)

1,334.9 1,465.8

2015 2016

114.9

181.2

2015 2016

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

After five years of significant profitable development, the strategy is to consolidate operations by focusing onselective growth (diversification) and efficiency projects to enhance the level of profitability; and investing intransformation projects to prepare the Company for future industry challenges.

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•Increasing encroachment of non-banks- telcos, retailers, autos/developers

•Rise of FINTECHS

•Controlled but unavoidable liberalization of industry

•Gravitation to scale and size

•Rise of Islamic FIs

•Changes in socio-demographics

•Rise of more self-directed and technology savvy customers

•Awakening to financial planning

•Funding suppliers (customers) market, multiple options

•Talent wars and retention

Risk of irrelevance

Limited white spaces to carve out

Risk of disintermediation (eg. payments and lending)

Banks may be slow to respond to new threats

Solution innovation critical

People management key to win in the fight for talent

Customers need to be reached preemptively

Commodification of products and services

AFFIN Group operates in an increasingly challenging environment

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Pillar 6 People & Organization

Pillar 5 Technology

Pillar 2DistributionChannels

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

AFFINITY Transformation Pillars

•32 New Transformation Projects under 8 Pillars targeted full completion in 2019

Pillar 8 Risk & Compliance Governance

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BENEFIT IMPACT

PILLARI

Target Customer Segments

IIDelivery Channels

IIIProducts & Solutions

IVOperations

VTechnology

VIPeople &

Organization

VIIPerformance Management

Direct Financial Impact:

• RevenueGrowth

• Cost Savings

Strategic Foundation Building

Operational Foundation Building

BAU Projects

P2.2 New RM Model

P2.5Call Center for Sales

P2.6Intensify Selling @ Branches

P2.7Manage Cost-to-Serve

P2.9Launch e-Wallet

P3.1Complete Core Products

P3.2Relaunch Credit Card Biz

P3.5R&D Solutions

P5.1Tech Refresh Review

P5.4BI & CRM Infrastructure

P3.6Iconic Segment “Brand”

P1.1 CE Organization

P1.2Segments Detailing

P1.3CE Model &Framework

P2.1RIB/MIB Implementation

P2.4Digital Banking Strategy

P3.3Product EconomicsFRW

P3.4Product Dev Organization

P6.1WF Transformation: BR

P6.2Leadership Agenda

P5.2Re-invigorate IT-Biz

P2.3Branch-Hub MgmtFRW

P4.1Credit Management Model

P4.2Group Operations Model

P5.3Solution Architecture

P7.3 Data Mgnt FRW & Governance

P7.1 Performance Mgmt FRW

P7.2Biz Performance FRW

Ethics, Risk & Compliance Culture Awareness

9 Cards Projects

3 Credit/SIBS Projects1 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

P2.8SME Sales Organization Setup

P4.3SME Credit Scorecard

P4.4SME 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

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AFFIN announced that it will be undertaking a series ofcorporate exercises that will essentially entail a re-organisationof the AFFIN Group

AFFIN Holdings Berhad’s listing status will ultimately betransferred to AFFIN Bank Berhad

AFFIN Holdings Berhad and AFFIN Bank submitted therelevant applications to BNM

Other key highlights in 2016….

16 FEBRUARY 2017

20 FEBRUARY 2017

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Benefits of the Proposed Reorganisation

Simplifying our shareholding

structure and de-layering of the

corporate structure.

Opportunity to enhance supervision

and efficiency.

AFFIN Bank will spearhead the future

growth of the Banking Group.

AFFIN Bank is a natural candidate as

it is the largest contributor to the Group’s assets.

AFFIN Bank’s profile will improve and it

will have direct access to the capital

markets.

Our shareholders will be able to participate

directly in the re-organised AFFIN

Bank.

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Our current group structure

1. AFFIN Hwang IB2. AFFIN Hwang

Asset Management (70%)

3. AIIMAN (100%)

1. AXA AFFINGeneralInsurance(37.07%)

2. AXA AFFINLifeInsurance(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%

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Introducing the new Group structure

1. AFFIN Hwang IB2. 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 futuregrowth

2. Will have direct access to capital3. Enlarged capital base and CAR ratio improves

resilience4. Profile will improve due to its listing status

100%

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Announcement Submission of the

application to BNM/MOF/SC

6 months* 9 months

10 months

Subject to Receipt ofBNM/MOF/SC’s approval

Submit Circular to BursaSecurities

Subject to Receipt ofconfirmation from High Court

Delisting of AFFIN Holdings Entitlement date for the share

swap

Listing of AFFINBank on the MainMarket of BursaSecurities

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 theProposed Reorganisation

Q1 2017 Q3 2017 Q4 2017Q2 2017

Expected Timeline

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THANK YOUDisclaimer. This presentation has been prepared by AFFIN Holdings Berhad (the “Company”) for information purposes only and does not purport to contain all theinformation 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 theCompany 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 ortheir contents or otherwise arising in connection therewith.

AFFIN Holdings Berhad7th Floor, Chulan Tower

3 Jalan Conlay50450 Kuala LumpurTel : 603-21429569

Corporate Planning Contact:Syed Sabeer Ali

Head, Corporate [email protected]

Investor Relations Contact:Isman Ariffin

[email protected]

mailto:[email protected]

mailto:[email protected]

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