WEALTH MANAGEMENT | Tony Chua, Malaysia

Affin Bank mulls EON Cap takeover

Lender banks on improving financials and fundraising potential for bid despite criticized for being small.

As the tussle for control at EON Capital Bhd (EON Cap) simmers on, Affin Holdings Bhd, the parent company of Affin Bank Bhd, may be gearing itself to launch a takeover of EON Cap.

Unfazed by criticisms of it being among the smallest banking groups in Malaysia, Affin Holdings is confident of its improving financials and the fact that it has not raised its tier-2 capital indicates that it may be timely to do so.

For the financial year ended 31 December 2009, Affin Holdings reported a net profit of RM371.8 million ($112.34 million) compared with RM292.8 million ($88.47 million) the year before.

Net non-performing loans (NPL) improved to 2.2%, exceeding its target of 2.3% for the period. Back in early 2007, it was reported that the NPL ratio stood at 11% but that has been pared down significantly.

"People usually think that a bank has to be big to be successful," said a source. "Not every big bank has good ratios and look what happened to some of the world's biggest banks."

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