ALLIANCE BANKING GROUP 3RD QUARTER PBT RISES 37%

1 March 2004, Kuala Lumpur – Alliance Banking Group (ABG) reported that its third quarter 2003 Profit Before Tax (PBT) rose 37% to RM222 million for the first nine months ended 31 December 2003 from RM162 million for the corresponding period in 2002.

ABG Chief Executive Director, Ng Siek Chuan reported that the banking group’s earnings growth was driven by higher non-interest income. Islamic Banking income surged two-fold to RM24 million from RM12 million in the corresponding period in 2002.

Total assets increased 11.2% to RM22.35 billion as at end December 2003 on the back of improved performance in net loan growth and higher recovery efforts. Reflecting an improvement in asset quality, the Group’s net non-performing loans (NPL) ratio has also marginally improved and is in line with the lower NPL amount outstanding.

Shareholders’ Funds increased 8.2% to RM1.68 billion in December 2003 due to an increase in the Year To Date profit of RM148 million while the Group’s risk-weighted capital ratio (RWCR) of 13.53% at the end December 2003 was significantly above the minimum requirement of 8%.

Alliance Bank Malaysia Berhad’s pre-tax profit increased 35.3% to RM199.3 million for the first nine months ended 31 December 2003 compared to RM147.3 million for the corresponding period in 2002. Says Ng, “The increase in the Bank’s PBT was contributed by higher non-interest income, increased lending activity and income from its subsidiaries.”

Higher income for first three quarters of FY 2003/4
Total income in third quarter FY 2003/4 was RM824.5 million, up 13% over the same quarter last year due to higher non-interest income. Non-interest income increased to RM143.3 million compared to RM69.6 million for the corresponding period in 2002, mainly contributed by dividend from subsidiaries of RM47.6 million.

Net interest income in the first nine months of this financial year of RM335.6 million was slightly higher than RM330.6 million for the corresponding period in 2002, despite a drop in BLR from 6.4% to 6% in May 2003.

Islamic Banking income posted an increase to RM18 million as a result of growth in the Islamic loan base.

Customer deposits has been encouraging with an increase of 10.8% to RM13.8 billion, reflecting an above-average strong account and deposit growth.

Moderate loans growth
Alliance Bank registered a growth in net loans of 8.9% to RM11.9 billion, with most of the loans derived from lending to small and medium-sized enterprises. In line with its specialisation strategy to achieve growth in the housing, infrastructure, plantations and services sectors, the bank achieved a growth of 9.7% in these sectors. For continued growth in the housing sector, the bank has planned for competitive home loan rates, focused marketing campaigns and an efficient loan delivery system.

Improving Asset Quality
During the period under review, the Bank saw strong asset growth of 13.8% at RM19.1 billion as at December 2003 compared to RM16.8 billion as at March 2003. Progress made in strengthening the bank’s credit processes and overall asset quality has resulted in an improvement of its net non-performing loans (NPL) ratio to 9.5% as at end December 2003 from 9.8% as at March 2003. Delinquency levels across the bank’s consumer lending portfolios’ remain low. The Bank’s risk-weighted capital ratio (RWCR) of 10.7% is comfortably above the minimum requirement of 8%.

Alliance Merchant Bank Berhad recorded an improvement in its PBT to RM51.1 million for the first nine months ended December 2003 compared to RM16.8 million for the corresponding period in 2002.

The strong surge in earnings is mainly due to lower loan provisioning as a result of better loan quality and improvements in the Merchant Bank’s fee-based businesses. The growth in this business segment is in line with the Merchant Bank’s strategic direction and will continue to be a key focus in positioning itself to be an investment bank. Islamic Banking income reflected a sharp increase to RM6 million as at end December 2003 from RM1.2 million for the corresponding period in 2002.

Total NPL amount decreased by 16.7% for the nine months ended December 2003, due to increase in recovery efforts from repayment. Despite the reduction in NPL amount, the Merchant Bank’s net NPL ratio stood at 14.7% as the reduction in net loan base is higher than the NPL amount. There was an improvement in the RWCR to 35.1% as at end December 2003, which was significantly above the minimum requirement of 8.0%.

Alliance Finance Berhad (AFB) achieved a PBT of RM19.8 million for the first nine months ended December 2003, compared to a pre-tax loss of RM1 million for the corresponding period in 2002. This is mainly due to higher interest income derived from motor vehicle financing. Alliance Finance registered a healthy growth of 22.9% in Hire Purchase loans to RM893.9 million for the first nine months as at December 2003. Net loans and advances increased 4.7% to RM1.43 billion as at end December 2003 while net NPL ratio continued to improve to 15.6%. AFB’s RWCR was 17.6% as at end of December 2003, which was comfortably above the minimum requirement of 8.0%.

13 Alliance Finance branches have been co-located with Alliance Bank branches, while another 2 Alliance Finance branches is expected to convert to Alliance Bank branches by May 2004. The eventual merger of the commercial banking and finance company businesses of the Alliance Banking Group will provide customers of the group with a more comprehensive range of services within one merged entity and greater convenience of an enlarged branch / ATM network.

Conclusion
Ng is confident that the merger of Alliance Finance with Alliance Bank will contribute positively to the Alliance Banking Group going forward. He says, “We have achieved positive growth in the first nine months operations and barring any unforeseen circumstances, we expect to sustain our improved financial performance for the fourth quarter of FY2003/4. The Alliance Banking Group will continue to focus on its strategic business direction to achieve further growth in the housing, infrastructure, plantations and services sectors.”

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About Alliance Bank
Alliance Bank Malaysia Berhad has had more than 4 decades of proud history in contributing to the financial community with its innovative and entrepreneurial spirit to business. Alliance Bank’s new business direction is focused on delivering growth and performance in the housing, infrastructure, plantations and services sectors.

As a full-fledged financial services provider, Alliance Bank with a network of 81 branches nationwide, will continuously strive to provide its customers with excellence and innovation in its services and products.