Affin Holdings (Hold) - Targeting More Controlled Pace Of Growth

Affin Holdings (Hold)

Targeting More Controlled Pace Of Growth

• Targeting more controlled pace of FY12 loans growth at 10-11% but no change in lending direction i.e. balance expansion between retail and business.  Strong pipeline to support the target.
• New responsible lending guideline has some impact but not sufficient to derail the growth trajectory.
• CIR and credit costs guidance are 47-48% and 20-25bps.
• Already fully complied with FRS139.
• Collaboration with BEA is ongoing with increased flows but China still lacks framework to become viable.
• It is still interested in Bank Ina and the recent meeting with the Indonesian authority could result in follow up action.
• Dividend should be sustainable if not improve.
• We are more conservative in loans growth projection (7%) but in line with CIR and credit costs guidance.  Thus, FY12 ROE projection of 9.5% is slightly below KPI of 9.6%.
• Maintain Hold.
• Target price maintained at RM2.96 based on Gordon Growth with both ROE of 9.4% and WACC of 11%.

Source: HLIB Research 19 March 2012