AFG Q3 earnings at nearly RM130m


  • Banking
  • Wednesday, 22 Feb 2017

CEO Joel Kornreich said the banking group continues to deliver good financial results because of its strategy of focusing on risk adjusted returns, effective risk management measures and optimisation of balance sheet mix.

KUALA LUMPUR: Alliance Financial Group Bhd reported slightly lower earnings of RM129.68mil in its third quarter ended Dec 31, 2016 on higher allowance for losses on loans, advances and financing and other receivables.

The banking group said on Wednesday the earnings were down 4.3% from the RM135.59mil a year ago. In the just ended quarter, the allowance had increased to RM32.45mil from RM6.42mil a year ago.

However, its revenue rose 4.8% to RM378.64mil from RM361.17mil. Earnings per share were 8.5 sen compared with 8.9 sen.

AFG said in Q3 ended Dec 31, 2016, pre-provision operating profit improved by 6.2% quarter-on-quarter to RM204.3mil for this quarter. 

“Better risk adjusted return (RAR) loans grew at the annualised rate of 14.6% for 9MFY2017; lower RAR loans contracted 1.4%. Net interest margin improved 9 basis points on-quarter to 2.31%,” it said.

During the quarter, AFG had accorded higher allowance for losses on loans, advances and financing and other receivables totalling RM32.45mil compared with RM6.42mil a year ago.

For the nine months, the banking group's earnings were up 0.64% to RM394.73mil from RM392.19mil in the previous corresponding period. Revenue increased marginally to RM1.10bil from RM1.07bil.

Net interest income including Islamic banking income grew by RM33.2mil supported by 1.6% loan growth and improvement in net interest margin (NIM) by 8bps. 

AFG chief executive officer Joel Kornreich said the banking group delivered a sustainable financial performance despite the challenging market environment. 

“Our results came from growing our best performing segments with better risk adjusted returns, implementing effective credit risk management measures and optimising our deposit mix,” it said.

The group’s SME loans grew 12.3% on-year and net interest margins improved to 2.31%. 

“With our loans growth strategy, we were able to maintain healthy liquidity. Our loan-to-deposit and loan-to-fund ratios remain strong at 86.6% and 83.4% respectively, while our current account and savings account ratio is kept steady at 33.7%,” he said.

In the nine months ended December 2016, the AFG’s net profit after taxation was RM394.7 million, an increase of RM2.5 million or 0.6% compared to corresponding period last year primarily due to increase in revenue. 

Revenue grew by RM30.7 million or 2.9%, primarily from higher net interest income. 

Other operating income including Islamic banking income dropped by RM2.4mil or 0.9%, due to lower gain from derivative and foreign exchange trading. 

Gross impaired loan was 1.0%, while the loan loss coverage was at 137.1%, reflecting a healthy book. 

Operating expenses only increased marginally by RM2.4mil or 0.5% attributable to tight cost management discipline. 

The current account savings account ratio stood at 33.7%, while the loans-to-deposits ratio rose to 86.6% as at 31 December 2016, from 84.2% in 31 March 2016. 
 
Total capital ratio stood healthy at 16.6%, with a Common Equity Tier 1 Capital ratio of 12.0% as at 31 December. 2016. 

Performance by business segment: 

Consumer Banking profit before tax was higher by RM3.7mil or 3.1% from last year. Revenue rose 7.7% to RM29.7mil from a year ago. Operating profit rose 19.5% or RM28.7mil ,mainly due to higher revenue. Allowance for loans, advances and financing was higher by RM24.9mil or 87.6%. Segment asset was RM1bil or 4.3% lower, while liabilities rose 9.8% or RM2.1bil. 

Business Banking profit before tax rose 4.7% or RM12.2mil on-year, mainly due to a 5.9% increase in revenue of RM27.3mil which was partially offset by higher other operating expenses by RM13.3mil or 7.6% from a year ago. Segment asset and liabilities registered growth of RM1.3 billion or 8.2% and RM1.7 billion or 9.4%. 

Financial Markets profit before tax fell 21.2% or RM32.5milr mainly due to lower revenue of RM39.9mil or 20.4% partially offset by lower other operating expenses by RM9.4mil or 22.7%. 

Investment Banking segment improved RM8.1mil or 74.9% from a year ago.
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