DRB-Hicom to sell 30% Bank Muamalat stake?

KUALA LUMPUR: Malaysia’s auto-to-insurance conglomerate DRB-Hicom plans to sell 30 percent of its 70 percent stake in partly state-owned Islamic lender Bank Muamalat Malaysia, a source with knowledge of the deal said on Thursday.

Malaysia’s central bank last month gave the country’s ninth-largest Islamic bank, AFFIN Holdings, permission to enter talks with DRB-Hicom, which has been told by the central bank to reduce its stake to a maximum of 40 percent.

DRB-Hicom bought its 70 percent stake in Bank Muamalat from Bukhary Capital in 2008. The government’s investment holding arm Khazanah Nasional owns the other 30 per cent.

“The matter is in Bank Negara’s (Malaysia’s central bank) hands now,” the source told Reuters, adding that a deal should be completed by the end of the year.
DRB-Hicom, controlled by billionaire Syed Mokhtar Al-Bukhary, had tried to reduce its stake in Bank Muamalat with a sale to Bank Islam Malaysia last year and previously to Bahrain-based Islamic lender Al Baraka Banking Group.

Should the deal go through, Affin would emerge as Malaysia’s fourth-largest Islamic lender by assets.

Read more: DRB-Hicom to sell 30% Bank Muamalat stake?

 

Affin makes its move

PETALING JAYA: Affin Holdings Bhd’s resolve to explore a possible acquisition of a stake in Bank Muamalat Malaysia Bhd seems to reflect an aspiration to become a bigger player, especially in the Islamic banking sector.

While news of Affin getting the authorities’ approval to start negotiations to potentially buy into Bank Muamalat had caught some analysts by surprise, there was no denying by market observers that a positive conclusion of the deal would up Affin’s game in the niche sector.

Kenanga Research, for one, which called the deal a potential synergistic acquisition, said in its report: “We believe Affin has identified Islamic banking as a growth area in which it wants to build its existing position in the medium to long term.”

“In our opinion, this is a good move and probably a natural progression, given that the acquisition of Bank Muamalat will be key to the group becoming a bigger player in Islamic banking,” the brokerage explained, pointing out that the potential acquisition would not only expand Affin’s existing branch network and asset and customer base, but it would also enable Affin to tap into Bank Muamalat’s existing business collaborations with DRB-Hicom Bhd, such as those in relation to Pos Malaysia Bhd and Proton Holdings Bhd.

Read more Affin makes its move
Read Affin Q2 net profit up on rise in income
Read Affin Financial Summary

Affin – seeking fresh perception

Affin banking group has improved much since the days of high NPLs. The onus is now on the bank to shake off its poor market impression.
A STIGMA is often hard to wash away. And that's in spite of the evidence to show that past perceptions don't hold water anymore.
That is somewhat the quandary the Affin banking group finds itself in.

It has transformed its chequered past of high non-performing or impaired loans where ratios had easily hit double digit to one where its balance sheet today is far more healthy than its previous reputation suggests.

However, that improvement is not reflected in the share price of its holding company Affin Holdings Bhd which continues to be dogged by poor market perception that the banking group is still carrying these legacy loans when the opposite is true.

Apart from the market perception, the holding company's shares also suffers from lack of market liquidity.

“Our recovery efforts as well as the writing off of impaired loans had brought down the loan book to RM16bil, which we subsequently grew to RM30bil through the creation of quality credits,” Affin Bank managing director Datuk Zulkiflee Abbas Abdul Hamid tells StarBizWeek.

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Kenanga Investment Launches Four New Call Warrants

KUALA LUMPUR, April 19 (Bernama)-- Kenanga Investment Bank Bhd today launched four new call warrants under its NagaWarrants umbrella brand, namely Affin-CC, MPHB-CC, MRCB-CC and Parkson-CB, in view of the bullish stock market.

Seow Choong Liang, Head of Equity Derivatives and Structured Products of Kenanga Investment, said positive market sentiments following the announcement of the New Economic Model (NEM) on March 30 is expected to benefit some of these companies.

"We believe it is an excellent time to trade call warrants especially in view of the house technical view that the FTSE Bursa Malaysia KLCI will reach 1,400 by the third quarter of this year," he said.

Performance of the selected companies is also a key driver in the launch of the warrants and it will give customers more options to diversify their warrants trading given the current market uptrend, he added.

‘New’ insurer AXA Affin eyes top five position

KUALA LUMPUR: After taking over BH Insurance (M) Bhd, the enlarged entity of AXA Affin General Insurance Bhd hopes to be among the top five insurers in the country by 2012.

AXA Affin, a joint-venture company between Affin Holdings Bhd and France-based AXA SA, has signed an agreement to buy over BH Insurance from Boustead Holdings Bhd and Felda Marketing Services Sdn Bhd.

Boustead Holdings and Felda Marketing hold 80% and 20% stake in BH Insurance respectively.

Affin Holdings chairman Gen (R) Tan Sri Mohd Zahidi Zainuddin said the merger of the two insurance companies was to strengthen the business and it was also in line with the group’s decision to streamline its insurance operations.

“The enlarged AXA Affin entity augurs well with the current economic development of the country,” he told reporters after the signing ceremony of the sales and purchase agreement yesterday.

AXA Asia General Insurance chief executive officer Jan van den Berg said the “new” AXA Affin aimed to be among the top five insurers in the country as soon as possible.

“Currently, the merged entity of AXA Affin and BH Insurance is in sixth place with a 6% market share.

“There are two major ways to grow the insurance business, namely via innovative products and the use of advanced technology, to reach a larger customer base and both (ways) exist in AXA Affin and BH Insurance,” he said, adding that the combined gross written premium value of the companies stood at RM655mil.

He said the different market segments covered by both insurers would also complement each other under one company.

“AXA Affin is more inclined towards retail while BH Insurance has stronger commercial business clients.”

Meanwhile, Boustead Holdings – which will gain RM363mil from the disposal of its stake in AXA Affin – will use the proceeds to further reduce its gearing to between 0.8% and 0.7% this year from just below 1% currently.

Felda Marketing, after the disposal of its 20% stake in AXA Affin, will take up a 16% stake in the new merged entity of AXA Affin.

The corporate exercise, which is expected to be completed in the second quarter of this year, will see a new shareholding of AXA Affin where AXA will hold 42.4%, Affin Holdings 33.6%, Felda Marketing 16% and the rest will be held by minority shareholders.

Affin joins queue for Indonesia

Affin joins queue for Indonesia
By Chong Pooi KoonPublished: 2010/01/19

Affin has set its sights on Indonesia as its first overseas venture but garnered little attention from banking analysts

AFFIN Holdings Bhd (5185) may become the fourth Malaysian bank to buy an Indonesian lender, reflecting vast untapped opportunities in Southeast Asia's most populous nation.

Still, the lack of information available on the bank that it is buying coupled with Affin's previous track record of poor asset quality has led to lukewarm response from stock analysts.

Shares of Affin rose 3.2 per cent to RM2.55 yesterday. A total of 1.5 million shares were traded.

Affin, owner of the second smallest among nine banks in Malaysia, said last Friday that it had Bank Negara Malaysia's green light to enter talks to buy a controlling stake in Indonesia's PT Bank Ina Perdana.

Affin said it has set its sights on Indonesia as its first overseas venture due to the country's big population and low banking penetration, but gave no further details on Bank Ina Perdana.

The announcement garnered little attention from banking analysts, most of whom do not track Affin's stock.

"It is a natural progression to move out since the domestic market is already crowded. But it is probably a very small lender that it's buying. There's no information available out there on Bank Ina Perdana," an analyst who has a "buy" call on Affin said.

The industry is fragmented in Indonesia, which has 121 commercial banks even after consolidation pushed by its central bank in recent years. Apart from the top 10 banks, other lenders are mostly very small with limited branches.

"From a partial list that I have, which ranks Indonesian banks by asset size, I can't find this bank even down to the rank of 91," the analyst, who asked not to be named, said, adding that a smaller target is probably easier for Affin to manage.

Affin has about RM700 million excess cash that it can spend, according to the analyst, sufficient to buy a bank with up to RM450 million in assets.

According to the central bank website, Bank Ina Perdana had total assets of RM314 million as at the end of September last year. It made a profit after tax of RM4.3 million in the nine months to September 30 2009, but its retained earnings were in deficit of RM6.4 million.

The bank, which has no website, operates seven branches - five in Surabaya and two in Jakarta - according to unofficial information.

A fast-growth economy, population of 230 million, and banking market still dominated by basic products means that prospects are bright for the industry, and banks in Indonesia have been a highly sought-after asset.

Global banks, including HSBC, have scrambled to get a slice of the market there, while Malaysia's top lenders - Malayan Banking Bhd, CIMB Group Holdings Bhd and RHB Capital Bhd - have all scooped up assets there.

Last year, the Indonesian economy fared better than most others in the region during the economic slump when countries like Malaysia and Singapore slipped into recession.

Indonesia's US$514 billion (RM1.7 trillion) economy is estimated to have expanded 4.3 per cent last year, and projected to grow as much as 5.5 per cent this year, according to its government. President Susilo Bambang Yudhoyono said earlier this month that it was targeting an average of 6.6 per cent annual growth over the next five years.

RHB Research maintains Outperform on Affin

KUALA LUMPUR: RHB Research Institute is maintaining its Outperform rating on Affin Holdings with a fair value of RM3 based on unchanged 11 times CY10 EPS (5 times discount to sector and benchmark price-to-earnings of 16 times to account for its weakest asset quality under the research house's coverage).

Last Friday, Jan 15, Affin said Bank Negara had granted it approval for the company to commence negotiations with the existing shareholders of PT Bank Ina Perdana, Indonesia for a possible acquisition of a controlling stake.

"This move is a natural progression to seek higher growth opportunity overseas given the crowded and relatively more matured market place in Malaysia," it said

On Affin's outlook, RHB Research said with consistency in earnings over the last four quarters, improvement in asset quality (albeit some relapse in 3Q) and strong loan growth, its prospects are improving.

The research house said Affin Holdings' high capital ratios suggest that there could be more special dividend ahead.

"Although the legacy issue (i.e. traditionally bad asset quality) and the latest spike in NPLs (non-performing loans) could still deter investors' interest, its valuations (single-digit PER and 20% discount to book) remain the lowest in its banking universe," it said.

Affin Holdings (5185.KU) may rise

Affin Holdings (5185.KU) may rise to psychological MYR2.50 vs Friday's close at MYR2.47 (down 1.2%), says dealer; this after owner of Malaysia's second smallest bank says received Bank Negara approval to start talks with shareholders of PT Bank Ina Perdana about acquiring controlling stake in Indonesian lender. Company says Indonesia chosen as group's first overseas venture as "banking penetration remains low." Dealer says although talks haven't started yet, investors will be encouraged that Affin is venturing beyond Malaysia to countries where higher growth can be attained. "Bank Ina Perdana is not a large bank but it has a good niche business and will provide the platform for the group to grow its Indonesian operations if the talks are successful," dealer adds.(KPL)