KUALA LUMPUR: Affin Bank Bhd has a neutral stance in response to the recent overnight policy rate (OPR) hike, acknowledging the increase in its loan rates and also highlighting the corresponding rise in the bank’s cost of funds.
On this note, the bank’s president and group CEO Datuk Wan Razly Abdullah Wan Ali emphasised its focus on enhancing the banks current account and savings account (Casa) ratio.
“Our plan is to focus on Casa through our digital channels, branches, and better customer service. These are all the means through which we aim to improve our Casa ratio. The stronger the Casa ratio we have across the board – SME, retail, and corporates – the stronger the bank will become,” he told reporters on the sidelines of the 5th Malaysian Banking and Finance Summit yesterday.
Wan Razly said that currently, its Casa ratio stands at 23%, representing a significant improvement from previous 14%. The bank aims to further increase this ratio to 30% by 2025, with aspirations to surpass this milestone if possible. However, it acknowledges that achieving this target will require time and effort.
Wan Razly also affirmed that Affin’s focus remains on retail and SME banking, as it continues to prioritise these segments for growth.
Earlier this month, Bank Negara Malaysia’s monetary policy committee (MPC) raised the OPR by another 25 basis points (bps) to 3% in a surprise move.
Maybank Investment Bank Bhd, Malaysia and regional head of equity research Anand Padmakanthan in a research note dated May 8, said that in Malaysia, banks stand to benefit from BNM’s OPR hike via net interest margin (NIM) expansion, although net impact this time around will be diluted by heightened competition for deposits and declining Casa ratios.
“Nonetheless, potential share price weakness stemming from anticipated lackluster Q1’23 reporting (due primarily to weak NIM) is now an even more attractive opportunity to accumulate. Our top picks are HLBK, RHB and Alliance, while we also have BUY ratings for AMMB and CIMB,” Anand added.
Regarding the US and European banking crisis, he expressed that the bank is taking a cautious stance, recognising that any developments in the western market have the potential to spill over into Asia in some way.
“We want to be guarded against any crisis or concerns that may come out of the crisis,” he said.
Meanwhile, last month the Armed Forces Fund Board (LTAT) sold 112.56 million of its shares in Affin Bank to the State Financial Secretary Sarawak for RM221.74 million, representing 4.95% of the total issued shares, via a direct business transaction.
“We take it as a positive endorsement of Affin transformation plan now that we have investors like the Sarawak state buying into Affin Bank shares. It indicates that they recognise the positive narrative and the favourable outcomes that Affin Bank’s transformation will bring in the future.
“I believe that an increasing number of investors are showing interest in Affin. Moreover, we have recently been included in the FTSE Russell and MSCI indexes, indicating that not only individual investors but also global share indexes recognise Affin’s potential. These additions serve as further positive endorsements of the interest and confidence placed in Affin Bank,” he stated.
