CEO Morning Brief

Alliance Bank's 2Q Net Profit Up 17% to RM185m, Declares Dividend of 10.85 Sen

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Publish date: Fri, 01 Dec 2023, 08:49 AM
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TheEdge CEO Morning Brief

KUALA LUMPUR (Nov 30): Alliance Bank Malaysia Bhd saw its net profit rise 16.98% to RM185.33 million for the second quarter ended Sept 30, 2023 (2QFY2024), from RM158.42 million a year before, due to higher revenue and lower expected credit losses.

Earnings per share came in at 11.97 sen for 2QFY2024, versus 10.23 sen for 2QFY2023, the bank showed in a bourse filing.

Quarterly revenue was up 9.89% to RM528.1 million, from RM480.57 million a year before.

The bank declared a first interim single-tier dividend of 10.85 sen per share, representing a total dividend payout ratio of 50%, payable on Dec 28.

Its net interest margin came down to 2.43%, from 2.70% in 2QFY2023.

Net interest income increased by RM8.9 million or 2.1% to RM429.8 million, due to higher loan growth and an increase in the overnight policy rate. Other operating income increased by 64.7% to RM38.6 million, due to higher wealth management income and lower hedging cost.

Operating expenses increased by RM38.6 million or 18.6%, mainly due to higher personnel cost, marketing cost, administrative and establishment cost, while net credit cost stood at 7.7 basis points (bps), down from 16 bps in 2QFY2023.

For the first half ended Sept 30, 2023 (1HFY2024), net profit dropped 9.37% to RM335.87 million, from RM370.58 million a year earlier, despite revenue rising 4.16% to RM994.36 million, from RM954.65 million previously.

For 1HFY2024, Alliance Bank’s cost-to-income ratio stood at 48%.

Overall loans accelerated 10% year-on-year (y-o-y) to RM51.5 billion, with small and medium enterprise (SME), commercial and consumer banking loans growing 15%, 12.2% and 8.8% respectively.

The bank's customer-based funding saw a 4.4% y-o-y increase. The current account saving account (Casa) ratio also improved to 44.2%, and remains one of the highest in the industry.

The bank's 1HFY2024 net credit cost was 14.8 bps, with a healthy loan loss coverage ratio of 120%.

Its common equity Tier 1 (CET1) ratio stood at 12.9%, with the Tier 1 capital ratio at 13.7%, as at Sept 30.

The bank's total capital ratio was at 17.5%. Its liquidity position was also strong, with a coverage ratio of 154.3% (industry average: 151.5%), and a loan-to-fund ratio of 88.6%.

In 1HFY2024, Alliance Bank said, it acquired 61,000 new-to-bank customers, representing more than a 40% y-o-y increase. The bank’s continued focus on digitalisation and targeted approach towards high-net-worth individuals and young professionals led to a record first-half expansion of 42% y-o-y in new to-bank acquisition in the consumer banking segment.

In tandem with this, consumer banking loans grew about 1.6 times faster than the industry average.

Meanwhile, in the business banking segment, Alliance Bank acquired 6,200 new-to-bank business customers representing a 30% y-o-y growth. SME loans continued its strong growth, outpacing industry growth by 1.8 times.

Additionally, the bank intensified its cross-sell approach, which bolstered business banking client fee income.

“Our efforts to broaden our growth focus across key segments are starting to yield positive results, as our total loan market share has started expanding,” said Alliance Bank group chief executive officer Kellee Kam in a statement.

In the Islamic financing business, the bank continued its momentum with a 7% y-o-y growth, driven by the bank’s flagship Halal in One programme, which offers business owners venturing into the halal space end-to-end solutions, including business advisory, business matching services, and shariah-compliant financing.

On its prospects, the bank said with prudent loan growth above the industry average, strong credit risk management, strengthening of the deposit/Casa proposition and cost management, it aims to meet its performance guidance for the year.

At the time of writing on Thursday, Alliance Bank shares had risen five sen or 1.47% to RM3.44, giving the group a market capitalisation of RM5.31 billion.

Source: TheEdge - 1 Dec 2023

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