KUALA LUMPUR (Nov 29): Alliance Bank Malaysia Bhd’s net profit fell 8.2% to RM158.42 million or 10.23 sen per share in the second quarter ended Sept 30, 2022 (2QFY2023) from RM172.74 million or 11.16 sen per share a year ago due to higher allowance for expected credit losses.

Revenue rose 6% to RM480.57 million from RM452.98 million.

The bank has declared a first interim dividend of 12 sen per share, representing a total dividend payout ratio of 50%.

For the first half ended Sept 30, 2022 (1HFY2023), net profit increased 16.3% year-on-year (y-o-y) to RM370.6 million. Revenue jumped 2% to RM954.6 million from RM935.94 million.

During the period under review, net interest income grew 12.4% y-o-y to RM813 million due to higher loans volume and overnight policy rate (OPR) hike impact. Net interest margin improved 11 basis points (bps) to 2.64%. Client-based fee income (excluding brokerage) was up 5.7% y-o-y to RM141.6 million, driven by higher wealth management, foreign exchange sales and trade fees. Cost-to-income ratio remained stable at 43.9%

Alliance Bank’s overall loans grew by 6.7%, outpacing the industry average (6.4%). The strong performance is attributable to the growth in small and medium enterprise (SME) banking, which rose 14% y-o-y, and commercial banking, which increased 16.8% y-o-y. Customer-based funding was 8.4% higher y-o-y, and CASA ratio maintained at the top of industry at 48.7%.

The bank’s 1HFY2023 net credit cost improved to 12.3 bps as customers successfully graduate from the payment relief programmes. The loans under relief reduced to RM1.97 billion, representing 4.2% of the bank’s total loan book.

All customers under moratoria have now graduated, and the bank will continue to assist customers who need further financial assistance.

Alliance Bank’s capital positions and liquidity remained strong. Common Equity Tier-1 (CET 1) ratio was at 15.1%, while Tier-1 Capital ratio was at 16.4%. Total capital ratio was at 20.5%. Liquidity coverage ratio was at 164.4%. The bank’s loan-to-fund ratio stood at 85.7%.

Alliance Bank group chief executive officer Kellee Kam said in a press statement: “Alliance Bank is built on strong foundations. The strategic priorities have guided the bank to achieve success and sustainable results in the SME sector, as evidenced by our market share in this segment relative to our size and improving performance.

“Going forward, we will focus on broadening our strategy and expanding into new areas beyond SME to accelerate our business growth.”