ALLIANCE BANKING GROUP'S 1ST HALF FY 2004/05 PROFIT BEFORE TAX RISE TO RM140.3 MILLION

Kuala Lumpur, 6 December 2004 – Alliance Banking Group’s Profit Before Tax (PBT) rose 11.5% to RM140.3 million for the 1st half of financial year 2004/5 ended 30 September 2004, from RM125.8 million for the corresponding period in financial year 2003/4.

Revenue for the banking group rose marginally to RM727.3 million for the 1st half of financial year 2004/5 compared to RM726.4 million as at end of September 2003.

Mr Ng Siek Chuan, Group Chief Executive Director of Alliance Banking Group said, “Our lending business showed broad based improvement despite the competitive Malaysian banking environment. The group’s 1st half year PBT was contributed by a significant improvement of 70.1% in its financing income from Islamic Banking operations to RM25 million for the 1st half of financial year 2004/5 from RM14.7 million as at September 2003; and an increase of 22.1% in non interest income to RM112.2 million as at end September 2004 from RM91.9 million for the corresponding period in financial year 2003/4.”

Total assets increased slightly to RM23.6 billion on the back of improved performance in net loans and advances, which was at RM14.8 billion as at end September 2004. Asset quality has also improved with reduction in net performing loan ratio to 8.7% as at end September 2004 from 9.7% as at end March 2004. Total shareholders’ funds increased to RM1.8 billion while the risk-weighted capital adequacy ratio improved to 14.1% for the period under review.

Alliance Bank Malaysia Berhad recorded a PBT to RM117.0 million for the 1st half of financial year 2004/5 from RM108.7 million for the corresponding period in financial year 2003/4. The marginal increase in the Bank’s PBT is a net result of a two-fold increase in Islamic Banking income and higher loan growth.

Strong growth in Islamic Banking
Net interest income edged up 9.2% to RM244.8 million while non-interest income was 10% higher at RM96.2 million. This was due to an increase in loan-related fees and stronger sales of wealth management products. The Bank's Islamic Banking income recorded a strong growth of 96.4% to RM 22.2 million as at end September 2004. This was mainly spurred by growth in Islamic Banking financing of 14% to RM746 million as at end September 2004 from RM654 million as at end March 2004.

Deposits from customers have been encouraging, with a growth of 9.6% during the first six months of the financial year 2004/5 to RM15.9 billion, reflecting an above average strong account and deposit growth. The Bank's merger with Alliance Finance Berhad also contributed to the growth in customers' deposit.

Improving loan growth
Gross loans grew 13.2% to RM15 billion in the 1st half of the financial year 2004/5, mainly driven by an enlarged loan base as a result of the merger with Alliance Finance as well as an increase in lending to the purchase of residential properties, small and medium size enterprises and real estate.

The Bank's improved financial performance for the 1st half of financial year 2004/5 is also reflected in the growth of net loans and advances by 12.7% to RM14 billion, which was achieved through a competitive range of products and focused marketing efforts.

Ng said that the group's lending operations, which accounts for 54.7% of the total loan portfolio, will be more retail-focused with loans for residential mortgages, real estate and to small and medium-scale industries.

Improving Asset Quality
Total assets increased by 9.2% to RM21.8 billion as at end of September 2004 from RM20 billion as at 31 March 2004. Stronger asset quality growth and credit risk management has resulted in improved net performing loans (NPL) ratio to 8.5% as at end September 2004 from 8.8% as at end March 2004. The Bank's risk-weighted capital adequacy ratio stood at 12.06%, which is comfortably above the minimum requirement of 8%.

Alliance Merchant Bank Berhad registered a pre-tax profit of RM26.9million for the 1st half of the financial year 2004/5, which reflected a 28.1% reduction over the pre-tax profit of RM37.4 million achieved in the corresponding period in financial year 2003/4.

The performance of the pre-tax profit in the Merchant Bank was mainly contributed by the decrease of RM4.6 million and RM3.3 million in fee income and investment income respectively. The substantial reduction in the loan provisioning from RM5.7 million in the previous corresponding period to RM1.6 million in the 1st half of the financial year 2004/5 offset the reduction in fee income and investment income.

Total shareholders' funds rose by 3.0% to RM479 million as at September 2004 from RM465 million as at March 2004 while total assets remained unchanged at RM2.2 billion. Net NPL ratio improved to 11.9% as at September 2004 from 14.1% as at March 2004 while risk-weighted capital adequacy ratio of 36.7% as at September 2004 was well above the industry's average of 21.9%.

Ng continued, "We are encouraged by our 1st half financial performance for the present financial year. Barring any unforeseen circumstances, we expect the underlying business performance to remain strong for the banking group for the financial year ending in March 2005."