Alliance Bank’s earnings decline 10% on operating costs

by FARA AISYAH / pic by MUHD AMIN NAHARUL

HIGHER operating expenses dragged Alliance Bank (M) Bhd’s net profit in the third quarter ended Dec 31, 2019 (3Q20), lower by 10% year-on-year (YoY) to RM134 million from RM148.93 million previously.

The bank’s operating expenses climbed by 7.3% or RM14.4 million YoY to RM211.18 million during the quarter, it told Bursa Malaysia last Friday.

Earnings per share for the three months in focus decreased to 8.7 sen compared to 9.6 sen in 3Q19.

Quarterly revenue, however, rose 1.4% YoY to RM424.32 million from RM418.4 million in the previous year.

Net income improved by RM5.9 million or 1.4% mainly due to higher other operating income.

Net interest income fell 5% to RM242.15 million in the 3Q20 from RM254.9 million the year prior as a result of the Overnight Policy Rate cut.

Subsequently, the group’s net interest margin fell by 17 basis points to 2.39%.

For the nine months ended Dec 31, 2019, earnings fell 23.4% YoY to RM326.21 million, while revenue increased 3.3% YoY to RM1.26 billion.

The net profit dip was mainly due to credit losses stemming from the impairment of a few large accounts during 1Q20 and increased credit costs in the mortgage portfolio.

Net income grew by RM41.9 million or 3.4% to RM1.3 billion contributed by other operating income, which grew by RM43.3 million or 18.9% YoY stemming from treasury gains and growth in wealth management fees of RM12.7 million or 26.5% YoY.

Gross loans and advances grew 5.5% YoY to RM43.5 billion, while the bank’s gross impaired loan ratio came in at 1.86% as at end-2019.

Small and medium enterprises (SMEs) loans improved 10.6% YoY to RM9.3 billion, with over 44% of the growth coming from the bank’s unsecured lending proposition via its partnership with Credit Guarantee Corp Malaysia Bhd.

Customer-based funding climbed 8.9% YoY to RM47.1 billion, mostly from consumer deposits.

In the coming months, the lender will launch several additional digital solutions to improve customer experience, its group CEO Joel Kornreich (picture) said.

“This includes the mobile BizSmart app for business owners who need to approve transactions on-the-go, and conveniently access their business account anywhere, anytime.

“The mobile app will also provide SMEs with quick and simple trade financing. We will continue to form meaningful collaborations to expand our reach and serve our customers better,” he said.