ALLIANCE BANKING GROUP’S PBT INCREASED TO RM296 MILLION

Kuala Lumpur, 29 June 2005 – The Alliance Banking Group delivered another strong performance in the financial year ended 31 March 2005 with a pre-tax profit of RM296 million, up 6.7% from the last financial year. This performance is a result of higher loans growth and broad-based growth across the Commercial Bank and Merchant Bank’s businesses.

Ng Siek Chuan, Group Chief Executive Director of Alliance Banking Group says, “FY2004/5 marked another milestone of growth and profitability for the Alliance Banking Group. Our financial performance showed that we are competitive in our businesses. Going forward the Group will continue to implement strategies to achieve stronger loans growth and fee income.”

Alliance Bank
Alliance Bank had maintained its momentum with profit before tax up 8.1% from RM243 million in the last financial year to RM262 million. This is despite the additional specific allowances of RM22 million contributed by the change in method of provisioning for long outstanding NPLs made in this financial year ended 31 March 2005, without which, the bank would have achieved a double digit growth in its pre tax profit.

Revenue increased by 10.5% to RM1,268 million in this financial year from RM1,148 million in last financial year. This was driven by an expansion in the Islamic banking business, increased contribution in interest income particularly from the merger with Alliance Finance and higher fee based income.

Overall, the Bank registered a gross loans base of RM14,692 million, up 10.8% from last financial year. Absorption of the Alliance Finance business as well as a significant increase in Islamic loans contributed to the loans growth. Consumer loans in particular home loan and hire purchase continued to register a net growth of 6.5% and 9.5% respectively.

Ng says, “We are extremely encouraged by the strides made by our Islamic banking business during the FY2004/5, which delivered almost a two-fold increase in net income from RM25 million in the previous financial year to RM46 million. This is also a result of a sharp increase in the Islamic loan base by RM457 million, primarily from BBA Term Financing, Islamic Hire Purchase and trading profits received from Islamic investment securities.”

Interest income rose by 12.9% to RM998 million in this financial year compared to RM884 million in last financial year due to increased lending activities and higher returns from investment securities.

Overall, the Bank’s net NPL ratio improved marginally from 8.8% to 7.8% as at 31 March 2005, thanks to heightened recovery efforts and improved loan quality. Total assets climbed from RM20,027 million in the previous year to RM21,550 million due to higher loans and advances and dealing securities. Shareholders’ funds have also increased by 7.6% to RM1,874 million in this financial year compared to RM1,741 million in last financial year. Despite a significant increase in asset base, the Bank’s risk-weighted capital ratio stood at 12.81%.

Alliance Merchant Bank
The Merchant Bank Group registered a pre-tax profit of RM45.6 million for financial year ended 31 March 2005, which is 14.9% lower than the previous financial year’s pre-tax profit of RM53.6 million, attributable primarily to higher loan provisioning.

Shareholders’ funds stood at RM486 million as at 31 March 2005, an increase of 4.7% from the previous year’s RM464 million whilst net NPL ratio at 13.4%, was lower than the industry’s average ratio of 14.9%. The Merchant Bank Group’s risk-weighted capital ratio (RWCR) of 24.9% as at 31 March 2005 was above the industry’s average of 20.2%.

The addition of Kuala Lumpur City Securities Sdn Bhd has transformed the Bank into a full service Investment Bank. According to Alliance Merchant Bank’s Chief Executive Director, Mr. Foo Kok Siew, “The addition has strengthened our capabilities and expertise to offer the full range of investment banking and value added services, and we are committed to our objective of being a total solution and service provider with the primary aim of maximizing value to all our clients. Moving forward, we will continue to optimize the use of our balance sheet and leverage on our debt and equity distribution capabilities to commit capital on behalf of our clients and to support our ideas. We believe the differentiating factor will be our client focus and ideas, combined with strong execution and distribution capabilities.”