Alliance Financial Group reported strong financial results for the third quarter of fiscal year 2011, with operating profit increasing 12.3% year-over-year to RM147.6 million. Loan growth was driven by an 11.6% increase in SME loans. While net interest income grew due to loan growth and improved net interest margin, non-interest income declined in the challenging market conditions. The company maintained tight control over expenses. Asset quality remained stable and the capital position remained robust, with core capital and risk-weighted capital ratios improving.
3. Financial
Performance
Robust financial position
Quarterly Results Cumulative 9 Months Results
PBT Operating Profit PBT Operating Profit
RM ’mil RM ’mil
180 600
160.5
160 500 459.6
151.4 147.6
409.4 394.6
138.8 400 371.0
140
131.5
300
299.6
120 150.3 150.8
137.6 200 393.7 438.8
131.0 297.6 301.5
100
107.4 100
84.6
80 0
3Q10 4Q10 1Q11 2Q11 3Q11 9M07 9M08 9M09 9M10 9M11
• Operating profit of RM147.6mil (+12.3% YoY) • Operating profit of RM459.6mil (+23.9% YoY)
• Key drivers: • Key drivers:
higher net interest income net interest income due to growth in loans and
financing, and improved NIM
lower overheads
lower overheads
• PBT of RM150.8mil (+15.1% YoY)
• PBT of RM438.8mil (+45.5% YoY)
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4. Financial
Performance
Growth in net interest income
Cumulative 9 Months Quarterly
(RM ’mil) 9MFY10 9MFY11 % YoY 3QFY10 3QFY11 % YoY
Net Interest Income 430.0 511.3 18.9% 147.7 168.0 13.7%
Islamic Banking Income 174.8 173.4 -0.8% 65.7 59.0 -10.2%
Non-Interest Income 182.2 173.5 -4.7% 64.9 58.0 -10.6%
Net Income 787.0 858.2 9.1% 278.3 285.0 2.4%
• Higher net interest income due to +3.3% loans growth and improved asset quality
• Islamic banking income affected by planned slowdown in “Koop” loans and prior PER adjustment
• Non-interest income eased due to tough market conditions and softer treasury income
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5. Financial
Performance
Competition drives lower NIM
GIM NIM
5.0% 3.0%
4.8% 2.8%
2.6%
4.6%
2.4%
4.4%
2.2%
4.2%
2.0%
4.0% 1.8%
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11
GIM 4.4% 4.3% 4.4% 4.4% 4.7% 4.5% 4.6% NIM 2.3% 2.5% 2.6% 2.8% 2.8% 2.8% 2.5%
KEY DRIVERS OF NIM
Consumer SME Commercial Group Corporate
NIM NIM NIM NIM
4.3% 5.1% 4.9% 3.3%
3.9%
4.8% 4.5% 3.0%
3.5%
4.5% 4.1% 2.7%
3.1%
4.2% 3.7% 2.4%
2.7%
2.3% 3.9% 3.3% 2.1%
Jul-09 Nov-09 Mar-10 Jul-10 Nov-10 Jul-09 Nov-09 Mar-10 Jul-10 Nov-10 Jul-09 Nov-09 Mar-10 Jul-10 Nov-10 Jul-09 Nov-09 Mar-10 Jul-10 Nov-10
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6. Financial
Performance
Loans growth driven by SME
Consumer
Loans breakdown by businesses 13,500 5%
RM 'mil - lhs
FYE FYE 2010 FYE 2011 % QoQ - rhs
(RM ’mil) % YoY 12,500 3%
31/3/10 3Q 3Q
11,500 1%
Consumer 12,800 12,621 13,026 3.2%
10,500 -1%
SME 4,235 4,059 4,528 11.6% 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11
SME
Corporate & Commercial 4,123 4,016 3,920 -2.4% 4,700
RM 'mil - lhs
5%
% QoQ - rhs
4%
4,400
Exit Books 252 276 188 -31.9% 3%
4,100
2%
Total 21,410 20,972 21,662 3.3% 3,800
1%
3,500 0%
• AFG loans growth of 3.3% in 3QFY2011 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11
• AFG loans growth was driven by SME and supported by Consumer Corporate & Commercial
4,400 10%
Banking loans, which grew by 11.6% and 3.2% respectively RM 'mil - lhs
% QoQ - rhs
4,200 5%
• Corporate and Commercial Banking loans affected by a few lumpy
repayments/maturities 4,000 0%
• Exit book loans have decreased to RM188mil in 3QFY2011 from 3,800 -5%
RM276mil in 3QFY2010 3,600 -10%
2Q10 3Q10 4Q10 1Q11 2Q11 3Q11
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7. Financial
Performance
Overhead expenses continue to be tightly managed
Personnel Costs Establishment Costs Marketing Expenses Admin & General Expenses
9MFY2010 9MFY2011
2.9%
2.7% 11.0% 7.7%
27.3%
27.3%
59.0% 62.1%
RM415.9mil RM398.6mil
• We continue to manage our cost productivity without stifling out our overall business
productivity
• Personnel costs, which account to 62.1% of total costs, is the main operating cost as the
Group continues to invest in its people
• Establishment costs remain stable in tandem with the Group’s business strategy
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8. Financial
Performance
Further improved asset quality
Gross Impaired Loans Ratio - Old GP3 - lhs
Gross Impaired Loans Ratio - FRS 139 - lhs
Loan Loss Coverage - rhs
% %
4.6 95
94.4% • The Group adopted FRS 139 w.e.f.
FRS 139 1 April 2010
90
91.0% • Asset quality remains stable at
3.7% in 3QFY2011 with focus to
4.2 improve on collection system and
85.6%
85 credit risk
83.1%
83.2%
• Loan loss coverage reduced from
80
83.2% to 83.1% in 3QFY2011
0.1%
3.8
3.9%
75
3.8% 3.8% 3.8% Note: Collective allowance for domestic loans is computed
3.7% based on 1.5% requirement under the transitional
provisions of the BNM guidelines on Classification and
Impairment Provisions for Loans/Financing issued in
January 2010
3.4 70
3Q10 4Q10 1Q11 2Q11 3Q11
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9. Financial
Performance
L/D ratio superior to industry average
AFG’s L/D ratio below industry average Cost of funds stable despite stronger deposit growth
AFG Industry Cost of Funds - lhs Deposit Growth - rhs
3.0% 30%
95%
2.6% 19.8%
92.6% 19.0%
2.6% 20%
15.8%
11.9%
90.3% 90.6% 2.4%
2.2% 2.1% 10%
90% 11.9%
2.0%
1.9% 2.1%
2.1% 1.7%
88.9% 1.7%
1.8% 0%
0.0%
2.1% -4.0%
-7.6%
85% 1.4% -10%
84.1%
3Q09 1Q10 3Q10 1Q11 3Q11
82.8% CASA at top quartile of industry
82.4% 81.4%
81.4% CASA Fixed Deposits Money Market Deposits Others
35,000
81.2% RM ’mil
80%
78.9% 30,000 4.4%
79.2% 0.9%
25,000 2.6% 1.9% 1.8%
78.2% 77.9%
9.9% 9.7%
77.2% 20,000
76.6% 4.7% 4.9% 5.9%
75% 15,000 53.8% 51.0%
51.8% 51.7% 50.8%
73.5% 10,000
73.7%
5,000 40.9% 41.5% 41.5% 35.4% 34.9%
70% 0
3Q09 1Q10 3Q10 1Q11 3Q11 3Q10 4Q10 1Q11 2Q11 3Q11 9
10. Financial
Performance
Capital position remains strong
• AFG’s core capital and risk-
(RM ’mil) FY 2009 FY 2010 3QFY10 3QFY11 % YoY weighted capital ratio (RWCR)
continued to improve to 11.8%
and 15.9% in 3QFY2011
compared to 11.0% and 15.2%
Tier I Capital 2,234.1 2,429.2 2,429.1 2,603.2 7.2%
in 3QFY2010
• Total capital base of RM3.5bil,
Total Capital Base 3,167.3 3,339.3 3,328.7 3,520.6 5.8%
increased by 5.8% YoY. Tier 1
capital represents 74% of total
capital, improved further to
RWCR (%) 14.7 15.4 15.2 15.9 +0.7 RM2.6bil
• Healthy capital position and is
Core Capital Ratio (%) 10.3 11.1 11.0 11.8 +0.8 in line with BASEL III
requirements
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13. Organisational
Chart
Key roles being filled
Consumer Banking SME Banking Group Chief Operating Officer Group Chief Financial Officer
Ronnie Lim Steve Miller Raymond Leung Eric Lee
Islamic Banking Corporate & Commercial Corporate Strategy &
Group Chief Credit Officer
Banking Corporate Communications
Tuan Haji Yahya Ibrahim Choo Joon Keong Timothy Daniels Low Choon Seong
Financial Markets Investment Banking Group Legal Group Chief Risk Officer
S. Gerard Anand A/L S.
Yeo Chin Tiong New CEO Identified Pang Choon Han
Sinnappah
Investment Management Group Human Resource Group Compliance
Michelle Chow Teow Leong Wah
Nik Azhar Bin Abdullah
Group Internal Audit
Leong Sow Yoke
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14. Key
Focus
Building sustainable growth
High NEM Talent
Household Shared
& Management
Debts Expertise
ETP Framework
Driving Fee Income and Cross-Selling
CONSUMER SME
• Wealth Management
• Mortgage Loans CORPORATE &
• Credit Cards COMMERCIAL • Bancassurance
• Personal Loans • Transaction Banking • Asset Management
• Deposits • Treasury Sales • Treasury Sales
• Cash Management
• Stockbroking
• Syndicated Deals
Very Existing New
Competitive Opportunities Growth
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15. Looking
Ahead
Over the medium term (3-5 years) we will ...
Q1 Q2 Q3 Q4
Gross
Impaired … to be in line with industry average
Loans
… move to industry average (45 - 48%) through Y-o-Y
CIR
improvements, driven by:
• targeted revenue growth
• productivity focus
… achieve industry average (14 - 16%) through Y-o-Y
improvements, driven by:
ROE
• focus on underlying earnings
• prudent capital management
Dividend
Policy
… pay “as much as we can afford, whenever we can”
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16. Key
Messages
Bank is strong and performing well
• The Group has performed well in 3QFY2011 despite a competitive operating environment
• We are executing based on transformation and investments made, and will leverage on and
aggressively expand our prudent suite
• Growth to be in-line with the economic cycle supported by sustainable loans growth and higher
customer acquisition capacity to build further on fee income growth
Delivering value to our shareholders
• We remain well-capitalised
• We pay good dividends
• All our business decisions will be evaluated based on a long-term perspective
We are gaining momentum
• We are ensuring growth is value creating and give best customers’ experience
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17. THANK YOU
Investor Relations
Alliance Financial Group
7th Floor, Menara Multi-Purpose, Capital Square
8 Jalan Munshi Abdullah
50100 Kuala Lumpur, Malaysia
www.alliancebank.com.my/investorrelations.html
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25. Financial
Performance
Collateralised Loan Obligations (CLOs) are a matter of the past
(RM ’mil) Kerisma Idaman Capital CapOne
Total AFG’s Total AFG’s Total AFG’s
Issuance Exposure Issuance Exposure Issuance Exposure
175mil 240mil 10mil
• Total Issuance 1,000mil 800mil 1,000mil
(17.5%) (30%) (1%)
• Maturity Date Jun-09 Oct-11 Sep-10
Key points: • Matured • As at March 2010, the • Matured
Group had made a
100% provision
• AFG’s exposure is fully • AFG’s exposure at
covered super senior level
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