Move won't hurt Affin significantly,says RHB Research

KUALA LUMPUR: Affin Holdings Bhd may not be significantly hurt by its decision to call off buying a bank in Indonesia.

"Quantitatively, the impact of the latest development is not significant given that the total cost and Bank Ina's size is not too significant," said RHB Research Institute Sdn Bhd in a research report.

However, Affin may have to pay more if it revisits the deal and PT Bank Ina Perdana posts strong profits.

"Qualitatively, this pushes back the group's plans to gain a foothold in Indonesia," it said.

Indonesia is currently considering limiting foreign shareholdings in commercial banks to less than 50 per cent from 99 per cent now.

Spooked by the central bank study, Affin dropped its plan to buy about 80 per cent of Bank Ina for some RM138 million. It has signed the deal one year ago.

Affin shares fell 2.7 per cent, or 9 sen, to close at RM3.30 yesterday.

The research firm maintained its "outperform" call on Affin as well as its earnings projections.

It also kept Affin's indi-cative fair value of RM4.22, based on 2012 price-earnings ratio of 11 times.

Separately, analysts do not expect RHB Capital Bhd (RHBCap) to scrap plans to buy Indonesia's PT Bank Mestika Dharma after Affin's U-turn.

Renzo Viegas, managing director of the group's banking unit RHB Bank Bhd, has said that it would go ahead with the acquisition despite the planned policy by Bank Indonesia to limit majority shareholding in banks.

"No, we're still interested. We're hoping it can be completed at the end of the third quarter, or at the latest, fourth quarter," he told Business Times in a report published last Tuesday.