Alliance Bank’s earnings jump on higher net interest income

By ANIS HAZIM / Pic source

ALLIANCE Bank Malaysia Bhd’s net profit has jumped 40% year-on-year (YoY) to RM146.01 million for its first quarter ended June 30, 2021 (1Q22), compared to RM104.31 million last year, mainly due by higher revenue from net interest income and other operating income.

Revenue increased 14.6% to RM482.96 million versus RM421.61 million in the same quarter last year, according to a filing to Bursa Malaysia today.

The lender noted that its loans, advances and financing declined by 0.5% YoY due to the soft economic environment over the year. 

“Nevertheless, the group is committed to growing our loans, advances and financing portfolios in the financial year of 2022 (FY22),” the group said.

Despite the challenging external environment, the group’s other operating income recorded a higher 25.3% YoY at RM118.4 million on higher treasury and investment income, wealth management and trade fees income.

Alliance Bank maintained a robust capital position from a conservative capital management approach, one of the strongest capital levels in the industry, with common equity tier-1 ratio at 16.9%, a tier-1 capital ratio at 17.9% and the total capital ratio at 22.2%.

Earnings per share increased to 9.43 sen from 6.74 sen in the same quarter last year.

The group has not declared any dividend for the quarter under review.

The bank said it would continue to focus on acquiring clients through digital channels amid continued physical movement restrictions. 

The group recently launched Alliance Digital SME unsecured loan for business owners in June 2021 to digitally acquire and serve smaller small and medium enterprise (SME) clients with an annual turnover between RM200,000 and RM5 million.

The group would focus on growing the business in three areas — scale-up SMEs and consumer banking, accelerate the cross-selling value propositions to its customers and enhance productivities and efficiencies by streamlining processes.

In a statement, Alliance Bank said it had extended RM14 billion in financial assistance to businesses and individuals to date, accounting for 32% of the bank’s loan book.

Of the total, RM9.8 billion were approved under the People’s Protection and Economic Recovery Package, also known as Pemulih.

“In addition to providing immediate financial and non-financial assistance, we are also helping our customers plan and reposition for growth so they can quickly expand once the market recovers,” Alliance Bank group CEO Joel Kornreich said in the statement.

In the consumer segment, the bank intends to establish consumer banking relationships with 70% of its business owner base by FY26 and acquire over 100,000 new customers per year.

“In the first quarter of FY22, we enrolled 900 business owner clients to be our new consumer banking customers, and aim to sign up 8,000 this financial year,” Kornreich said.

Besides that, in tandem with the bank’s growth ambitions, its Islamic subsidiary aims to contribute more than 25% to the group’s pre-provision operating profit by FY25. 

Alliance Islamic Bank would also drive the group’s overall environment, social and governance agenda, focusing on climate change and social responsibility.

The bank plans to provide RM5 billion in sustainable financing by FY25. 

Alliance Bank shares ended 1.2% higher, or three sen, to RM2.53 today, valuing the group RM3.92 billion.