ALLIANCE BANKING GROUP POSTS 22.7% RISE IN PRE-TAX PROFIT TO RM278 MILLION

28 June 2004, Kuala Lumpur – Alliance Banking Group posted an improvement of 22.7% from RM226 million in the previous financial year to RM278 million in pre tax profit for this financial year. Higher loan growths and an all round improvement in the Bank, Merchant Bank and Finance Company’s performances contributed to the increase in pre tax profit of the Group.

Alliance Bank’s financial performance

Alliance Bank achieved a rise of 21.2% in pre-tax profit from RM200 million in the previous financial year to RM243 million for this financial year.

The Bank’s improved earnings growth was contributed by higher fee income and interest income arising from increased lending activities as well as dividends income generated from our subsidiaries. Overall, the Bank registered a gross loans growth of 12.4%, which exceeds the average loan growth for the commercial banking industry.

The Bank’s Islamic Banking financing also charted strong growth during the financial year. This upward trend is evident from the Bank’s two fold increase in income to RM26 million this financial year from RM13 million in the previous financial year, as a result of a sharp increase in the Islamic financing base.

Interest income increased marginally by 1.8% from RM868 million in the previous financial year to RM884 million this financial year. The increase is contributed by a rise in interest income from inter-bank placements coupled with investment and dealing securities which generated a 47.8% increase in interest income totaling RM137 million during this financial year compared to RM93 million in the previous year. However, this increase was negated by a decrease in interest income from loans, advances and financing due to the downward revision in BLR from 6.4% to 6% with effect 27 May 2003, despite an expansion in loan base from RM11, 801 million in the previous year to RM 13,264 million this financial year.

Overall, the Bank’s Net NPL ratio improved from 9.8% as at March 2003 to 8.8% as at March 2004 through loans growth and intensive recovery efforts. Total assets and liabilities continued to grow respectively from RM16,813 million in the previous year to RM20,027 million this financial year and RM15,212 million in the previous year to RM18,286 million this financial year. In relation to the growth in assets and liabilities, the Bank’s shareholders’ funds have also strengthened by almost 9% to RM1.7 billion in this financial year. Total assets increased 19.1% or RM3.2 billion in this financial year, largely due to an increase in loans and advances, cash and short-term funds and dealing securities. The growth in asset was funded by a 16.9% rise or RM2.1 billion in deposits from customers. On the back of a significant increase in asset base, the Bank’s risk-weighted capital ratio stood at 10.85%.

Alliance Merchant Bank’s financial performance

The Merchant Bank registered a pre-tax profit of RM53.3 million this financial year, which reflected a 68.1% improvement over the pre-tax profit of RM31.7 million achieved in the previous financial year.

The improved performance of the pre tax profit in the Merchant Bank was mainly contributed by an increase of RM6.7 million and RM5.1 million in Investment income and Islamic Banking income respectively. The substantial reduction in loan provisioning from RM21.8 million in previous financial year to RM0.7 million in this financial year also contributed to the overall financial performance.

Total shareholders’ fund stood at RM465 million as at 31 March 2004 compared to RM440 million as at 31 March 2003, while net NPL ratio at 14.1% as at 31 March 2004 was lower than the industry’s ratio of 17.2%. Its risk-weighted capital ratio (RWCR) of 34.8% as at 31 March 2004 was well above the industry’s average of 20.4%.

On 4 June 2004, the Merchant Bank entered into a sale and purchase agreement with Kuala Lumpur City Corporation Berhad and Assedina Sdn. Bhd. For the acquisition of equity interest in Kuala Lumpur City Securities Sdn. Bhd. And other related acquiree companies.

Alliance Finance’s financial performance

Alliance Finance recorded a pre-tax profit of RM30.4 million for this financial year as compared to a loss of RM2.2 million in the preceding financial year. The sharp increase of RM32.6 million pre-tax profit resulted mainly from a higher loan base particularly from hire purchase loans, which caused an increase of 16.4% or RM10 million increase in net interest income, coupled with a decrease of 32.8% in loan loss provisions of RM12.8 million.

In addition, the improvement in financial position was also contributed by an increase in non-interest income of RM5.6 million and decrease in overhead expenses by 17.1% or RM4.2 million, mainly as a result of extraordinary gain from the sales of assets, deferment of the V5 system implementation and the co-location of its branches with Alliance Bank. The co-location of 8 branches and conversion of 5 branches to the Bank’s branches as part of the administrative merger has largely been completed. In relation to the legal merger, the proposed legal merger between Alliance Finance Berhad and Alliance Bank Malaysia Berhad has been approved by the Ministry of Finance and Bank Negara Malaysia.