Affin Bank: Sarawak Expands its Financial Influence

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By Antonia Chiam

“By leveraging Affin’s extensive network and expertise, we will work together to unlock new opportunities, facilitate access to capital, and ignite the entrepreneurial spirit of our people. Together, we will build a financial ecosystem that nurtures innovation, promotes financial literacy and empowers financial literacy, and enables our communities to achieve their aspirations.” Abang Johari (September 27, 2024)

IN a landmark development in September 2024, the Sarawak government became the largest shareholder in Affin Bank Bhd (Affin Bank), a strategic move that marks a significant shift in the State’s financial and economic landscape. This milestone was made possible through the completion of a strategic agreement with the Armed Forces Fund Board (LTAT), under which the State acquired 165.05 million shares—equivalent to 6.87 per cent in Affin Bank. Before this deal, the Sarawak government had already invested in Affin Bank through its unit, SG Assetfin Holdings Sdn Bhd (SAH), which had previously acquired a 20.08 per cent stake from Boustead Holdings Bhd.

With the completion of the LTAT deal, the Sarawak government now controls a significant 31.25 per cent of Affin Bank’s shares. This brings the State’s total ownership across both direct and indirect stakes in Affin Bank to more than 31 per cent, allowing it to supersede LTAT as the largest shareholder in the bank.

First State in Malaysia to Own Bank

Following this acquisition, the Sarawak government made history as the first State government in Malaysia to hold the largest stake in a bank, positioning itself at the forefront of financial innovation and economic empowerment. The deal also underscores the growing influence of state-led initiatives in the banking and financial sectors, reflecting Sarawak’s commitment to strengthening its financial landscape and fostering sustainable economic growth. Sarawak Premier Tan Sri Datuk Patinggi Abang Johari Tun Openg, who played a pivotal role in securing this deal, articulated the rationale behind the State’s strategic move. In a statement following the acquisition, he highlighted that Sarawak’s decision to invest in Affin Bank was part of the State’s broader goal of creating a robust financial platform capable of supporting its long-term economic aspirations.

Abang Johari emphasised the importance of having a competent banking partner to unlock new opportunities, facilitate access to capital, and drive innovation within Sarawak’s economy. He believed that by leveraging Affin Bank’s extensive network and expertise, the State could empower entrepreneurs, fuel business growth, and foster a thriving financial ecosystem. The State’s increased stake in Affin Bank also allows it to tap into the bank’s vast resources, expertise, and infrastructure to further its economic agenda. Sarawak is positioning itself not just as a consumer of financial services but as a proactive stakeholder in the financial sector, with the ability to shape its future especially through Environmental, Social and Governance financing portfolio.

Providing Services to the Underserved

One of the key aspects of Sarawak’s vision for Affin Bank is to address the financial needs of underserved communities. Abang Johari had noted that many individuals and businesses in Sarawak, especially those in remote areas, face challenges in accessing formal banking services. This creates barriers to financial inclusion, entrepreneurship, and economic development. Abang Johari is keen on leveraging Affin Bank’s resources to bridge this gap. Under the Sarawak government’s stewardship, Affin Bank could implement game-changing initiatives such as microfinancing solutions, financial literacy programmes, and accessible banking services aimed at supporting underserved segments of society.

His approach aligns with Sarawak’s broader agenda of an inclusive growth, ensuring that all communities, regardless of their location or socio-economic status, are given the tools needed to succeed. One best example is, following the acquisition move, Affin Bank will establish its regional headquarters in Kuching and will have the mandate to approve loans up to a certain amount locally, expediting the process for small and medium enterprises in Sarawak.

Despite becoming a major shareholder in Affin Bank, the Sarawak government has made it clear that it would not interfere in the bank’s day-to-day operations. Abang Johari previously stated that the State government respects the bank’s autonomy and will allow its management team to operate the institution independently. This assurance aims to instil confidence among investors and stakeholders, reinforcing that Affin Bank will continue to function as a professional entity, with the Sarawak government focusing on leveraging its stake to drive long-term economic growth. The Sarawak government’s acquisition of Affin Bank’s significant stake signals a new chapter in the State’s economic journey. Following this deal, Sarawak now has a direct hand in one of Malaysia’s leading financial institutions, with the potential to shape its role in the financial sector.

Managing Sarawak Endowment Fund

At the time of the Sarawak government’s acquisition of a larger stake in Affin Bank, the bank had a market capitalisation of RM6.94 billion. In 2024, the bank reported a net profit of RM509.70 million—marking a remarkable 26.7 per cent increase from the previous year. This strong financial performance not only reflects the bank’s growth but also provides a solid foundation for Sarawak’s long-term financial strategy to come. In one of its first major roles in Sarawak, Affin Bank has been appointed to manage the Endowment Fund Sarawak (EFS) 2.0 for a five-year term, from January 1, 2025, to December 31, 2029.

Under this new arrangement, starting January 1, 2025, all EFS applications will continue to be submitted at the Sarawak National Registration Department (JPN) branches. JPN will then forward birth application forms for children born from 2025 onward to Affin Bank, which will oversee the management of their EFS. This move ensures a more streamlined and efficient process for families participating in the EFS programme, further reinforcing Sarawak’s commitment to providing enhanced financial support for its future generations.

Supporting Sarawak’s Businesses

The Sarawak government’s investment in Affin Bank is poised to support its sustainable economic agenda while harnessing greater opportunities for businesses and entrepreneurs. The bank is set to further expand its presence and range of services in Sarawak to better meet the evolving needs of Sarawak’s consumers and enterprises.

Currently, the bank operates eight branches across the State, with locations in Kuching, Sibu, Bintulu, and Miri. Looking ahead, Affin Bank plans to increase its branch network to 14 by July 2025, strengthening its accessibility and support for Sarawak’s growth.

Aiming for Long-term Sustainable Growth

Affin Group continues to show a strong foundation as it reported a Profit Before Tax (PBT) after zakat of RM701 million for the financial year ended December 31, 2024 (FY2024), marking a 35.3 per cent increase from RM518.3 million in FY2023. Total loans and financing grew 8.1 per cent year-on-year to RM72 billion, up from RM66.7 billion in the previous year, while total assets stood at RM111.8 billion as of Dec 31, 2024.

In the fourth quarter of 2024, it implemented an Early Retirement Scheme, incurring a one-off cost of RM48.5 million. Excluding this, its Business-as-Usual PBT would have been RM749.5 million, reflecting a 44.6 per cent YOY increase. Affin Group remains focused on resilience and sustainable profitability by expanding its loan portfolio and reinforcing its asset base. To reward shareholders, the Group is proposing a Bonus Issue of one new share for every 18 existing shares held. The Bonus Issue will allow more shareholders to participate in its value creation.

By fostering synergies between the State’s development initiatives and Affin Bank’s financial expertise, Sarawak aims to position itself as a hub of economic innovation and empowerment. The initiative will redefine Sarawak’s economic future, ensuring that its people and businesses have access to the financial tools and support they need to thrive.

The content featured here is an excerpt from the book “Rise of Sarawak: Abang Johari’s Era of Transformation”, published by Sage Salute Sdn Bhd.

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