KUALA LUMPUR (July 31): Alliance Bank Malaysia Bhd (KL:ABMB) is expecting to achieve a loan growth of between 8% and 10% in the financial year ending March 31, 2025 (FY2025), which is slower than the 13.6% achieved in the previous year.

Speaking at a virtual conference on Wednesday, Alliance Bank group chief executive officer Kellee Kam Chee Khiong said the projected loan growth will be on a broad-base level driven by improved economic growth.

“We actually see a very broad base of opportunities across multiple sectors.... We have seen a very strong demand growth and recovery in the manufacturing as well as agriculture sectors, and the country's economy is growing pretty rapidly.

“There are also further opportunities from the foreign direct investments (FDIs) that have been approved, as well as the increase in tourists and very low unemployment rate in Malaysia. If the first half of the year is anything to go by, we do believe that FY2025 should continue to have a good demand for the banking sector’s loan growth,” said Kam.

He also highlighted the bank’s emphasis on the quality of loan growth over sheer volume and avoiding taking excessive risks to ensure the sustainability of its portfolio.

“So as part of how we plan, we do look at not just absolute loan growth, but the quality of loan growth and where we see opportunities to accelerate the loan growth. Our strategy is to ensure that we price our loans right and not take excessive risks,” Kam said.

In FY2024, Alliance Bank surpassed its loan growth target of up to 10%, having achieved 13.6% — against the 6.2% recorded in FY2023.

Expected decline in gross impaired loans for FY2025

In terms of asset quality, Kam expects Alliance Bank’s gross impaired loans (GIL) to continue its downward trend in FY2025.

“As an industry, we have seen GIL stabilise, and we do expect our own GIL ratio to be on a downward trend. But again, we remain very cautious when it comes to how we look at our asset quality,” he said.

Alliance Bank’s GIL ratio decreased to 2.1% in FY2024, following a rise to 2.5% in FY2023 from 1.9% in FY2022.

Financially, having achieved record high earnings and revenue in FY2024, the bank expects the positive momentum to continue in FY2025.

“Given the more favourable economic conditions and the banking sector, we do believe that our growth momentum will carry through to the financial year ahead,” Kam said.

In FY2024, Alliance Bank’s net profit edged 1.9% higher to RM690.5 million or 44.6 sen per share, from RM677.85 million or 43.79 sen per share in FY2023. Its annual revenue crossed the RM2 billion mark for the first time to RM2.02 billion in FY2024 against RM1.92 billion previously.