Alliance Bank posts lower 2Q net profit of RM103.94m on higher reserves


Alliance Bank said its revenue growth in the first half was due to the improvement in non-interest income, which rose 28.4% year-on-year (YoY) to RM229.5mil mainly due to higher treasury income, and improvements in wealth management and brokerage income.

KUALA LUMPUR: Alliance Bank Malaysia Bhd posted net profit of RM103.99mil in its second quarter ended Sept 30,2020 compared with RM115.52mil a year ago mainly due to prudent higher reserves.

In its statement to Bursa Malaysia on Friday, it said revenue increased by 11% to RM464.44mil from RM427.43mil a year ago. Earnings per share were 6.7 sen compared with 7.5 sen.

The bank set aside allowance for expected credit losses on loans, advances and financing and other financial assets of RM150.50mil, which was doubled the RM77.23mil a year ago.

Net income was higher by 11.0% mainly due to higher treasury and investment income and lower interest expense.

Net interest margin (NIM) decreased by 9 basis points (bps) to 2.23% mainly due to the impact of the Overnight Policy Rate (OPR) cuts.

Alliance Bank said its other operating income increased by RM31.5mil. As for its operating expenses, they fell by 2.8% mainly from personnel cost due to lower headcount and training cost. Net credit cost was recorded at 34.5bps.

When compared with the first quarter ended June 30, its 2Q net profit of RM103.94mil was down by 0.4% mainly due to higher reserves.

However, in the first half, its net profit rose by 8.3% to RM208.25mil from RM192.21mil in the previous corresponding period. Its revenue increased by 7.6% to RM896.05mil from RM832.44mil.

Alliance Bank said its revenue growth in the first half was due to the improvement in non-interest income, which rose 28.4% year-on-year (YoY) to RM229.5mil mainly due to higher treasury income, and improvements in wealth management and brokerage income.

The bank also reported a pre-provision operating profit growth of 17.8% YoY to RM518.7mil stemming from the better revenue growth and prudent cost control.

Net interest income (including the Islamic banking segment) improved by 2% YoY to RM666.5mil due to lower funding cost arising from better a deposit mix. Net interest margin was at 2.2% due to the OPR cut impact.

Net credit cost stood at 56.3 bps for 1H, of which 48 bps (amounting to RM209mil) is a management overlay to buffer against the uncertainty of the pandemic’s impact.

“The bank’s liquidity and capital positions remain strong. Common Equity Tier-1 (CET 1) ratio was at 15.4%, Tier-1 Capital ratio at 16.3%, and total capital ratio at 20.7%. Liquidity coverage ratio was at 156.9% (industry: 152%).

“Its holding of high-quality liquid assets, which helps to mitigate possible shocks, remained stable at RM14.7 billion. Loan to fund ratio was 82%, ” it said.

It did not declare a first interim dividend in 2Q and will consider future dividend proposals once the full economic impact of the Covid-19 pandemic is clearer.

Group chief executive officer of Alliance Bank, Joel Kornreich (above) said: “We continue to focus on our two key priorities of helping our customers stay resilient during the pandemic and accelerating our digitisation initiatives to scale up and reach more customers, improve client engagement, and drive better cost efficiency.”

He said in 1H, the bank provided RM5bill in targeted assistance to individuals and business clients. Of this, over RM2.1bil was for the three-month extended loan/financing moratorium, and RM2.9bil was for payment relief assistance packages. The approval rate was 98%.

“The bank has just announced its expanded payment relief assistance packages for the B40, M40, and micro-SME segments in line with the Budget 2021 initiatives tabled recently.

“It will continue to provide payment relief to those who have lost their jobs, have had their income reduced, or work in highly-affected sectors such as hotels, tour operators, restaurants, or aviation, ” he said.

Kornreich said the bank continues to support businesses in their funding needs and in 1H, SME loans grew 7.4% YoY to RM9.8bil.

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