ALLIANCE BANKING GROUP POSTED RM94.4 MILLION FOR Q3 FY2006/7 PRE-TAX PROFIT

Kuala Lumpur, 28 February 2007 – The Alliance Banking Group posted a pre-tax profit of RM94.4 million for the 9 months ended 31 December 2006, compared to a pre-tax loss of RM260.4 million in the corresponding period last year. The improvement in pre-tax profit was primarily due to lower loan loss provisions and impairment loss as well as higher interest income, including income from Islamic Banking.

Bridget Lai, Group Chief Executive Officer of Alliance Banking Group said, "The Group is committed to its long term strategy of improving asset quality while growing quality loans and fee-based income. In view of this, the Group has made the necessary adjustments and provisioning for non performing loans.

The Group's 9 months net interest income, including income from Islamic Banking grew 20% or by RM84.9 million compared to the same period last year mainly due to improved margins and strong Islamic financing growth of 21% or RM375 million year-on-year. In addition, the current 9 months ended 31 December 2006 included higher interest recoveries from non performing loans by RM45.2 million as compared to the corresponding period last year.

Further change in provisioning
In December 2006, the Group made further change to its provisioning basis where specific provision of 50% and 100% is now required for NPLs of 3 to 6 months and more than 6 months repayments in arrears respectively. This change in accounting estimate has resulted in additional provision of RM30.5 million in the current quarter.

Recoveries strengthened
The Group also registered an improvement in principal recoveries by 115%, achieving RM200.7 million compared to RM93.1 million for the same period last year. Recovery efforts have been strengthened with the setting up of the new Special Assets unit and centralized collection centres for Consumer Banking and Commercial Banking.

Stringent underwriting standards
The Group's gross loans and advances at RM14.2 billion, declined by 2.6% compared to 31 March 2006 largely due to loans written-off coupled with repayment of several lumpy loans during the period under review. The decline is also attributed to stringent underwriting exercised for large corporate loans.

Encouraging loan growth
According to Lai, "We continue to be encouraged by Consumer Banking's loan growth of 12% during the 9 months of the financial year. Credit cards registered a growth of 49%, housing loan of 13%, and hire purchase of 5% largely attributed to aggressive marketing activities. Commercial loan also registered a moderate growth of 2% during the period under review."

Improving asset quality
The Group's net NPL ratio and gross NPL provisioning cover at 6.7% and 57% continue to improve further compared to 31 March 2006 at 9.5% and 49% respectively. The Group's risk-weighted capital ratio remained strong at 15.9%.

Sustainable growth
Lai said, "The Group will continue to focus on the Consumer Banking and SME business to grow our market share in these businesses. During the third quarter of the financial year, the Group started operations of its new Contact Centre in Subang to further affirm its customer centric approach. Branch expansion and repositioning in growing segments will continue in 2007 to provide the consumers more access to banking convenience."

The successful merger of Alliance Investment Bank Berhad's (AIBB) merchant banking and the stock broking businesses will further pave the way for a more holistic and synergistic approach to banking. Going forward, AIBB will raise its loan and bond underwriting standard and build its strength on corporate finance advisory and debt capital markets with a focus on delivery of financial solution to selected segments through better cross selling efforts. Some of AIBB's efforts have started to pay off as evidenced by the much improved league table positions, where AIBB was ranked no 5 (out of 22) in the RAM Lead Managers' League Table.

Barring any unforeseen circumstances, the Group expects its level of performance for the financial year to be satisfactory.

Alliance Banking Group

Alliance Banking Group is a dynamic, integrated financial services group offering end-to-end financing solutions through it consumer banking, commercial banking, wholesale banking, Islamic banking, investment banking and stock broking businesses as well as unit trust and asset management, providing products and services that are suited for every customer at every stage of their life.

The Group has had five decades of proud history in contributing to the financial community in Malaysia with its innovative and entrepreneurial business spirit. It provides easy access throughout the country serving its broad base of customers via multi-pronged delivery channels including 79 retail branches, 8 Privilege Banking Centres, 19 Hire Purchase hubs, 22 Business Centres, 12 investment bank branches, 6 direct marketing offices and 3 unit trust agent offices located nationwide in a mix of rural and urban areas.

Through strategic partnerships, the Alliance Banking Group is also able to offer customers to regional and global platforms.

The Group's aspiration is to be Malaysia's premier integrated financial services group delivering the best customer experience and creating long term shareholder value. Strategic alliances, enhanced group synergy, excellent technology and human capital will be the key to creating long term value for all stakeholders.

Alliance Bank is wholly-owned subsidiary of Malaysian Plantations Berhad