Synopsis:

AFN Bank Berhad (AFN) is a Malaysian based commercial bank and listed on Bursa Malaysia. AFN commenced operations in November 2000 following a merger between two commercial banks as a result of the banking sector consolidation exercise. To date it has 80 branch networks nationwide. The Bank is constantly reviewing its strategies to achieve higher performance and produce good quality services and products to serve its customers better. Towards this end, the Bank is on constant look-out for high added value banking operations involving diversified assets portfolio and more strategic assets allocation to reduce risks and maximise returns.

In 2004 to 2005, AFN experienced serious deterioration in assets quality due to very high non-performing loans (NPL) ratios. It recorded 24.09% NPL to Total Loan Ratio in 2004 but managed to reduce it to 14.01% in 2005. Although there was a significant improvement in assets quality, the NPL ratio, which represents credit risk, was very much higher than the industry level. This problem affected the bank’s profitability whereby its ROE decreased from 11.95% in 2004 to 10.81% in 2005.