Affin – will a change of shareholders improve performance
The performance of Bursa banking group Affin over the past 12 year was nothing to shout about. Its performance, measured against a panel of 10 Bursa Malaysia banks, is below the sector median across key metrics such as returns, efficiency, and loan performance. However, it has improved its capital adequacy ratio.
But I would not consider Affin a value trap as it remains profitable with a margin of safety over 30% based on the asset value. However, it lacks a sufficient margin of safety under the earnings value.
The Sarawak State Government has recently acquired a substantial stake in the bank. There is hope that the state would divert its funds to Affin thereby improving its deposits and hopefully grow its loans. But if the challenge is efficiency and loan performance, I am not sure whether there would be a quantum leap in performance.
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