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Alliance Bank Posts Highest Revenue in 5 Years

Executive Summary

Alliance Bank posted its highest revenue growth in five years at RM1.6 billion. The Bank had invested RM74.2 million in net restructuring costs, sales force expansion, and marketing & technology expenses as part of its Transformation Investments. Its incremental revenue of RM103 million more than compensates for its Transformation Investment.

The Bank also reported marginally higher profit before tax (+0.5%), and return on equity of 9.5% (excluding Transformation, 10.5%). It declared total dividend of 15.3 sen for FY2018, with a total payment ratio of 48%.

Alliance Bank’s Transformation initiatives centres around four key strategic priorities, that is SME Banking expansion, Alliance One Account, Alliance@Work, and Branch Transformation.

Kuala Lumpur, 11 July 2018 – Alliance Bank Malaysia Berhad (the “Bank”) posted its highest revenue growth in five years, with an improvement of 7% to RM1.6 billion for the financial year ended 31 March 2018 (FY2018). This is supported by a higher net interest margin (NIM), from better risk adjusted return (RAR) loans and non-interest income growth.

“Our FY2018 results is a positive indication that our strategy to optimise our business and processes is the right move,” said Tan Sri Dato’ Ahmad Bin Mohd Don, Chairman of Alliance Bank.

“To accelerate growth, we invested in our Transformation programme to scale up sales capacity, introduce new digital capabilities, and restructure for greater efficiency.”

Solid Financial Results

In FY2018, the Bank posted revenue of RM1.6 billion. This was driven by positive margin expansion, volume growth, and non-interest income. Its incremental revenue of RM103 million more than compensates for the RM74.2 million investments made in its Transformation initiatives.

The Bank’s net profit after tax was RM493.2 million. Its net interest margin is Top 2 in the industry, an improvement of 14 basis points year-on-year (YOY) to 2.4%.

Improvement in better risk adjusted return loans (+19.3%YOY) contributed heavily to the significant revenue growth this year. The Bank registered steady growth of 4.4% YOY in client based fee income, driven primarily by Banking Services and Wealth Management fees.

The Bank’s return on equity and cost to income ratios registered 9.5% and 50.5% respectively, while liquidity coverage and loan-to-fund ratios continued to be at a healthy level of 160% and 85.3% respectively.

During the year, the Bank completed the issuance of Additional Tier-1 Capital Securities of RM150 million out of a newly-established RM1 billion Additional Tier-1 Capital Securities programme, strengthening its Tier-1 Capital ratio to 13.8%.

In FY2018, it saw an improvement in total capital ratio to 18.3%, with common Equity Tier-1 (CET 1) ratio at 13.4% to solidify a robust capital position.

Net asset per share has increased steadily over the past four years to RM3.53. In FY2018, the Bank declared a first interim dividend of 8.5 sen per share and a second interim dividend of 6.8 sen per share. This translates to a total dividend of 15.3 sen per share for the financial year, with a total payment ratio of 48% or RM236.9 million.

Alliance Bank Transformation Programme

In FY2018, the Bank focussed on scaling up its four key priorities: SME Banking expansion, Alliance One Account, Alliance@Work, and Branch Transformation.

The Bank continues to make great strides in the SME segment. It has the highest net promoter score (NPS) in the industry for the second consecutive year. In FY2018, SME loan approval grew 10.2% to RM2.8 billion.

The Alliance BizSmart Online Banking solution with its cash management facility designed for businesses, won “Best Digital Sales Initiative, Application or Programme” at the Asian Banker International Excellence in Retail Financial Services Awards 2018, and “Excellence in Service Innovation” and “Excellence in Business Model Innovation” at the RBI Asia Trailblazer Awards 2018.

Alliance One Account (“AOA”), a loan consolidation solution, is designed to give consumers the control, convenience and flexibility over their loan obligations. Within a year of its launch, AOA registered RM1 billion loan growth. Its risk adjusted return is three times that of a usual standalone mortgage. Over 80% of AOA’s customers were new-to-bank customers.

In FY2018, Alliance@Work, an employee-employer proposition that offers payroll services to companies and banking services to its local and foreign employees, secured over 450 new-to-payroll companies, and more than 10,000 consumer CASA accounts.

Alliance@Work is supported by Alliance Cash2Home, a mobile app solution that uses biometric facial recognition and optical character recognition for paperless account opening and foreign remittance services.

Alliance Cash2Home was highly commended for “Excellence in Mobile Banking-Customisation” and “Best Multi-Channel Offering” at the RBI Trailblazer Awards 2018, and won the “Digital Transformation Leader (Malaysia) - Omni-Experience Innovation” at the IDC Digital Transformation (DX) Awards 2017.

Moving Forward into FY2019

“This year, emerging and developing economies are expected to contribute significantly to the growth of global gross domestic product (GDP). Malaysia’s 2018 GDP is forecasted to reach 5.6%, mainly due to sustained domestic demands and private consumption. Robust growth in Malaysia’s manufacturing sector, especially in the electrical and electronics (E&E), and oil and gas sectors, will help boost GDP growth,” said Tan Sri Dato’ Ahmad.

“For FY2019, we will scale up growth of our core Transformation initiatives, which are SME Banking Expansion, Alliance One Account, and Alliance@Work. We anticipate that these strategic business focuses will help us achieve our FY2019 target of improving by more than 10% in three specific areas – growth in total loans, net profit after tax, and return on equity,” he continued.

Tan Sri Dato’ Ahmad bin Mohd Don (middle), Chairman of Alliance Bank Malaysia Berhad holding up the Alliance Bank Annual Report 2018 at the Bank’s post-Annual General Meeting press conference. Flanking him are Mr Joel Kornreich, Group Chief Executive Officer and Mr Raymond Wong, Group Chief Financial Officer of Alliance Bank Malaysia Berhad.

Mr Joel Kornreich, Group Chief Executive Officer and Tan Sri Dato’ Ahmad bin Mohd Don, Chairman of Alliance Bank Malaysia Berhad sharing a laugh during the Bank’s post-Annual General Meeting press conference.

(From left) Mr Joel Kornreich, Group Chief Executive Officer; Tan Sri Dato’ Ahmad bin Mohd Don, Chairman; and Mr Raymond Wong, Group Chief Financial Officer of Alliance Bank Malaysia Berhad sharing the Bank’s achievements for the past financial year during its post-Annual General Meeting press conference.

- END -

About Alliance Bank Malaysia Berhad

Alliance Bank Malaysia Berhad and its subsidiaries, Alliance Investment Bank Berhad and Alliance Islamic Bank Berhad, is a dynamic, integrated financial services group offering banking and financial solutions through its consumer banking, SME banking, corporate and commercial banking, Islamic banking, investment banking and stockbroking businesses. The Bank provides easy access to its broad base of customers throughout the country via multi-pronged delivery channels which include retail branches, Privilege Banking Centres, Islamic Banking Centres, Business Centres, and Investment Bank branches, as well as mobile and Internet banking.

For more information on this press release, please contact Agnes Ong, Tel: (03) 2604 3378/012-672 4245, or e-mail at agnesong@alliancefg.com.

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