41ST ANNUAL GENERAL MEETINGPresentation to Shareholders
By En. Kamarul Ariffin bin Mohd Jamil
Group Chief Executive Officer
24 April 2017
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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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KEY HIGHLIGHTS & RATIOS
PROFIT BEFORE TAX BY SEGMENT
STRATEGIC DIRECTION – AFFINITY PROGRAM
PROPOSED REORGANIZATION
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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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KEY HIGHLIGHTS & RATIOS
PROFIT BEFORE TAX BY SEGMENTS
STRATEGIC DIRECTION – AFFINITY PROGRAM
PROPOSED REORGANIZATION
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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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STRATEGIC DIRECTION – AFFINITY PROGRAM
KEY HIGHLIGHTS & RATIOS
PROFIT BEFORE TAX BY SEGMENTS
PROPOSED REORGANIZATION
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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
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