KUALA LUMPUR: AFFIN group has begun preparations to meet Bank Negara Malaysia’s net stable funding ratio (NSFR) rule, which will be implemented no earlier than January 1 2019.
“We will have to build up retail deposit and everybody will be going for the same market,” said Affin Bank Bhd chief financial officer Ramanathan Rajoo at the group’s extraordinary general meeting (EGM), here, yesterday.
“We are competing for mostly longer-term deposits to boost our NSFR to at least 100 per cent from about 70 per cent currently.”
He said the rush to secure long-term deposits could pressure the bank’s net interest margin amid rising rates paid on deposits in the industry.
Bank Negara issued the NSFR exposure draft on September 27, which states the minimum standard for licensed banks, licensed investment banks and licensed Islamic banks (banking institutions) to maintain a stable funding profile in relation to the composition of their assets and off-balance sheet activities.
The NSFR measures funding risk over a period of one year. It supplements the liquidity coverage ratio (LCR) standard, which focuses on short-term resilience of the liquidity risk profile of banking institutions.
The LCR has been in effect since June 1 2015.
Affin Holdings Bhd group chief executive officer Kamarul Ariffin Mohd Jamil said the company was looking at enlarging its consumer banking segment as there were immense business opportunities despite the competitive environment.
“Our business used to be 55 per cent corporate banking, but now we want to move the focus to retail banking and work on our asset composition so that the retail banking asset would grow.” He said the bank’s current size and reorganisation exercise, which saw the transfer of the listing status from Affin Holdings to Affin Bank help this endeavour.
“We are keen on consumer banking because there are a lot of opportunities to grow. When it comes to non-performing loans, they are also lower as opposed to corporate banking,” he said.
Because of its small size, Affin would have more freedom to tailor its offerings to retail clients, which bigger banks were not able to do so, he said.
For the first half of this year, the bank saw its loans growing by 2.5 per cent and the bank is anticipating full-year growth to be about six per cent.
“The growth will be mainly from our consumer banking and small and medium enterprise segments,” said Kamarul.
Another segment the bank will be focusing on is Islamic banking.
Yesterday, shareholders approved the transfer listing status from Affin Holdings to Affin Bank.
Affin Holdings also successfully transferred its entire shareholding in Affin Hwang Investment Bank Bhd, Affin Moneybrokers Sdn Bhd, AXA Affin Life Insurance Bhd and AXA Affin General Insurance Bhd to Affin Bank.
“This reorganisation will simplify the shareholding structure of the group as well as reduce the layers or corporate structure. It will also allow us to move forward in achieving our next growth phase,” said Kamarul.
The corporate exercise is expected to be completed in the first half of next year.