AFFIN ISLAMIC SET FOR EXCITING 2019

Lender to focus on higher margin financing, says CEO

AFFIN Bank Bhd’s Islamic banking arm is set for an exciting 2019 where it will be shifting focus to higher margin financing, which will push up its total financing contribution to the group.

Affin Islamic Bank chief executive officer Nazlee Khalifah said it was not about achieving higher loans growth but rather the quality of financing.

“We hit 17 per cent loan growth in the third quarter. For next year, we hope to maintain the same momentum but higher margin financing.

“We won’t be aggressive in this endeavour as we expect the market to continue to be soft next year. As much as we want to grow, we must be mindful of the risk,” said Nazlee in an interview with NST Business last week.

Affin Islamic contributes 39 per cent to the Affin group.

Nazlee believes the figure will increase to 43 per cent by end of next year.

“One of Affin Islamic’s main contributions is via mortgages, contributing 90 per cent. However, we will be more selective in this segment,” he said.

Nazlee said the bank had seen an increased uptake in mortgages compared with last year but believed the housing financing market would slow further next year due to economic uncertainties.

Another area to focus on will be education and small and medium enterprise (SME) financing.

“We have seen a healthy takeup rate of the Affin Education Financing-i since it was launched this year. We have approved 176 accounts with a total financing of more than RM10 million to date,” said Nazlee.

The bank is only partnering with Malaysian-based private higher education institutions for now, given that their fees are more expensive compared with public universities.

Nazlee said the SME financing market was competitive as almost all financial institutions were targeting this segment.

“However, this does not deter us as the SME pie is huge. A thousand companies are registered daily and these companies would need financing as they scale up their businesses; that’s where we come in,” said Nazlee.

“The risk for us is low as well as we are now partnering with Credit Guarantee Corp, where it will guarantee agreements of up to RM100 million. We have already approved financing for 44 SMEs amounting to RM26 million,” he said.

Affin Islamic saw its pre-tax profit decreasing 40.7 per cent to RM31.6 million for the third quarter ended September 30, from RM53.3 million in the corresponding quarter last year.