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Group also records improved loans asset quality; registering continued declines in net NPL ratio
Highlights of 3Q 2009 Results:
- The Alliance Financial Group posted year-on-year net income growth of 7.9% or RM58.6 million for the 9 months ended 31 December 2008. This income growth was registered despite a sharp decline in investment bank fee income due to adverse industry-wide equity and capital market conditions.
- The Group's loan asset quality has continued to improve with net non-performing loans ratio declining in the period. The ratio slid to 2.2% as at 31 December 2008 from 2.3% as at 30 September 2008. At 31 March 2008 the ratio was 3.3%.
- The Group's gross loans and advances grew in the 9-month period by 17.4% to RM19.4 billion despite a general perception that some banks are not lending enough.
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Kuala Lumpur, 24 February 2009 - The Alliance Financial Group ("the Group") registered net income growth of RM58.6 million for the 9 months period ended 31 December 2008, an increase of 7.9% compared to the corresponding period last year. This is despite a sharp decline in investment bank fee income of RM39.2 million (or 65.6%), driven by the adverse industry-wide equity and capital markets conditions.
This net income growth was contributed by higher net interest income at the Commercial Bank, as well as higher net income from the Islamic Banking business. Datuk Bridget Lai, Group Chief Executive Officer of Alliance Bank Malaysia Berhad and Director of Alliance Financial Group Berhad said, "Both the businesses contributed to an increase of RM72.8 million (or 13%) resulting from strong loans growth. The RM72.8 million also included an over-provision of RM10.8 million in deposit insurance premium which had already been written back in the first quarter."
At the operating profit level, the Group registered results of RM396.9 million for the period under review, a decrease of 3% compared to the corresponding period last year. The decline was mainly due to the once off write-back of overhead provisions of RM51.8 million in the corresponding period last year. Excluding this write back, the operating profit is higher by 11.0% compared to corresponding period last year.
Pre-tax profit decreased by RM96.1million or 24.4% to RM297.6million compared to the corresponding period last year mainly due to higher allowances for losses on loans, advances and financing during the period under review. This was mainly due to additional specific allowances of RM56.6million made in anticipation of the impact of present and future economic conditions, along with lower recoveries (RM52.9million) of written-off loans and financing during the 9-month period under review. Included in last year was a once-off recovery of a lumpy written-off loan.
Meanwhile, the Group's loan asset quality continued to improve with net non-performing loans ratio declining from 2.3% as at 30 September 2008 to 2.2% as at 31 December 2008 (31 March 2008: 3.3%). Gross loans provisioning coverage improved from 91.2% as at 30 September 2008 to 92.6% as at 31 December 2008 (31 March 2008: 79.9%).
Gross loans and advances for the Group increased for the 9 months by 17.4% to RM19.4 billion, while its risk-weighted capital ratio remained strong at 14.7%.
Datuk Bridget affirmed that the Group remains focused and committed to its business strategy and business model. In the light of the global and economic conditions, the Group expects a reasonable performance for the financial year ending 31 March 2009.
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