Source from (The Sun Daily): http://www.thesundaily.my/news/772031
Published: July 17, 2013
"We closed the year (FY13) with a 13.4% loan growth. The biggest growth came from consumer mortgage loans, which grew above 18%. Loans to small and medium-sized enterprises (SMEs) grew 10.6%," he told reporters after its AGM yesterday.
Loan growth from the SME sector in FY14 is expected to be the same at last financial year's level.
"It could be stronger if the effects of the big capital investment projects, be it government or private sector, are launched because down the line SMEs will have to be the supporting industries," said Sng.
He added that the central bank's recent lending curbs on personal loans and mortgages will hurt the banking group's loan growth, although not significantly.
"We try to make up for the shortfall or difference in consumer loan growth with other consumer products. For example, we have generated decent momentum in our hire purchase portfolio as well as our share margin financing portfolio.
"While those numbers are not big, net impact on revenue could be the same or even better because they're differently priced," he said.
Sng also said a merger or acquisition (M&A) is not on AFG's cards, adding that its position as a "small bank" has enabled it to grow quickly over the last three years.
"Shareholders are very happy that we have delivered good earnings and paid out much higher dividends. In FY13, we paid out dividends 2.6 times more than what we paid four years ago.
"Our share price has gone up significantly. Three years ago our market capitalisation was less than RM5 billion. Based on yesterday's closing, we're above RM8 billion. We've delivered decent value to our shareholders," he added.
Sng said the group is looking to enhance its return on equity (ROE) via aggressive non-interest income generation and its investment bank.
"We need to be more aggressive (in increasing) our non-interest income (which) accounted for 28.7% of total income in FY13. I think we'll achieve the (medium-term target of) 30% non-interest income contribution earlier than expected and I hope to do even better than that.
"Another way (to improve ROE) is via investment banking... We're focusing a lot on sales of treasury products, basic foreign exchange, forwards, spots, option-based products, whatever that helps our clients hedge their foreign currency as well as interest rates risks."
However, Sng noted that the last two years have been tough for its investment banking business.
"On the broking side, retail volumes have dropped. It has not been growing especially in the last FY13 (due to the) pre-general election (when) the stock market was very quiet for retail (trading).
"On the deal side, it was mostly big deals that were done by the big investment bank houses. We're not playing in that space.
We're playing more in the IPO space for the smaller companies, commercial banking customers that we have," he added.
Sng hopes to see better earnings in FY14, backed by "decent" numbers in the first quarter ended June 30, 2013.
For FY13, AFG posted net profit of RM538 million on revenue of RM1.3 billion.
Yesterday, the group also postponed its EGM which was scheduled to be held after its AGM.
The EGM was to have two resolutions namely the proposed establishment of a long term incentive plan for eligible employees of AFG and its subsidiaries, and the proposed allocation of options and/or award of AFG shares to Sng.
"We postponed the EGM because although we consulted the shareholders, we got feedback from the fund managers and the Employees' Provident Fund, they asked us to take another look at the proposal because it appeared that they are not happy with the potential large dilution of 15%," said its chairman Datuk Oh Chong Peng.
"They also felt that they needed more information on the targets that we're going to set in the management before they're given the option shares.
"So, we decided as a board earlier this morning that we'll postpone this meeting to go back and consult again with the major shareholders and the other shareholders and if necessary, come back with another scheme. If they really don't like it, we may not have it at all. We shall see," he said, adding that no new date has been set for the EGM.
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