ANALYST BRIEFING  - 9 Months Ended 31 December 2011 -
Contents1   Executive Summary2   Financial Results for 9MFY20123   Questions & Answers                                    ...
Our Medium                                                                                    Term TargetsIn FY2012, we ar...
Our Business                                                                                                  ModelFY2012 ...
Summarized                                                                                        Income Statement Earning...
Income Statement:                                                                     Summarized RatiosEarnings Performanc...
Summarized                                                                                 Balance SheetStrong financial p...
Contents1   Executive Summary2   Financial Results for 9MFY20123   Questions & Answers                                    ...
Performance                                                                                                        Overvie...
Net Interest                                                                                                              ...
Non-Interest                                                                                                              ...
Non-Interest                                                                                                              ...
Operating                                                                                                                 ...
Operating                                                                                                                 ...
LoansGross loan grew by 11.5% Y-o-Y                    Gross Loans Composition                                            ...
LoansLoans by Economic PurposeComposition                                                                       0.5% Y-o-Y...
LoansStrong Liquidity with Stable loan and deposit growth                               Loan Deposit Ratio (%)            ...
DepositsDeposit Trend And CASA Ratio TrendsRM’b                                                                           ...
DepositsDiversified Source of Customer Deposit    RM’m                 Type of Deposit                    RM’m            ...
Asset                                                                                                                     ...
CapitalCapital Management                                                                       •     Strong profit genera...
Today,                                                                        Alliance Bank GroupThe Bank remains strong a...
Contents1   Executive Summary2   Financial Results for 9MFY20123   Questions & Answers                                    ...
THANK YOUDisclaimer: This presentation has been prepared by Alliance Financial Group (the “Company”) for information purpo...
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Third Quarter Analyst Briefing as at 31 December 2011

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This is the Third Quarter Analyst Briefing as at 31 December 2011 for Alliance Financial Group Berhad (AFGB).

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Third Quarter Analyst Briefing as at 31 December 2011

  1. 1. ANALYST BRIEFING - 9 Months Ended 31 December 2011 -
  2. 2. Contents1 Executive Summary2 Financial Results for 9MFY20123 Questions & Answers 1
  3. 3. Our Medium Term TargetsIn FY2012, we are setting a sound foundation to deliver on our medium term (3-5 years)targets … Asset Quality … to be better than industry average … move to industry average (45% - 48%) through: CIR • targeted revenue growth • improved productivity … achieve industry average (14% - 16%) through: ROE • focus on underlying earnings • effective capital management Dividend … pay “as much as we can afford, whenever we can”, subject to Policy maintaining strong capital ratios … and increase non-interest income to 30% of total revenue 2
  4. 4. Our Business ModelFY2012 - 2015: By building sustainable growth in Consumer and SME BankingLine of Business Investment Consumer SME Wholesale Treasury Islamic BankStrategy Revenue: Driving Fee Income through Cross-Selling  ROE; ROA; CIRMajor Products CONSUMER BANKING BUSINESS BANKING • Mortgage Loans • SME • Wealth Management • Credit Cards • WHOLESALE • Bancassurance • Personal Loans • Transaction Banking • Hire Purchase  Cash Management • Advisory • Deposits  Trade Finance • Treasury Sales • Stockbroking • Investment Banking Existing Existing New Growth Opportunities Opportunities Opportunities 3
  5. 5. Summarized Income Statement Earnings Performance – Net Profits up 14.8% y-o-y RM’ m 3Q12 3Q11 Change 9M12 9M11 Change Net interest & Islamic 231.9 227.0 2.1% 704.1 684.7 2.8% banking income Non-interest income 79.4 57.9 37.1% 231.7 173.5 33.5% Net income 311.4 284.9 9.3% 935.8 858.2 9.0% Operating expenses 148.1 137.4 7.8% 435.2 398.6 9.2% Operating profit 162.9 147.6 10.4% 499.3 459.6 8.6% Loan impairment recovery/ 0.2 3.2 na 0.2 -20.8 na (allowances) Pre-tax profit 163.1 150.8 8.2% 499.5 438.7 13.8% Net Profit after Tax 121.4 111.3 9.1% 372.3 324.2 14.8%Income Expense Allowance Net interest income grew 2.8%, • Positive jaws due to • Lower impairment allowances despite 12.3% y-o-y loans growth improvements in productivity in 3Q despite collective due to margin compression. and moderate rise in provisions at 1.5% for the Strong growth in non-interest income expenses strong loan growth, as a result from transactional fee income, FX of RM10m recovery from sales and treasury trading CLOs. 4
  6. 6. Income Statement: Summarized RatiosEarnings Performance: Delivering sustainable returns consistent with Medium Term Strategy 14.1% return on equity – driven by higher non-interest income 26.1% non-interest income ratio – driven mainly by recurring transactional income 46.5% cost to income ratio – driven by productivity improvementsRM’ m 3Q12 3Q11 Change 9M12 9M11 ChangeEarning per Share (sen) 7.9 7.3 24.4 21.2Net return on equity * 14.1% 13.8% 14.1% 13.8%Net return on assets * 1.3% 1.3% 1.3% 1.3%Net interest margin on 2.5% 2.5% 2.6% 2.7%yielding assetsNon-interest income/Total 27.4% 21.1% 26.1% 21.0%incomeCost to income ratio 47.6% 48.2% 46.5% 46.4% * Key earnings indicators, have been annualized for comparison purposes 5
  7. 7. Summarized Balance SheetStrong financial position AssetsRM’ b 3Q12 3Q11 change • Assets expansion driven by strong loansTotal Assets 38.6 36.9 4.6% growth LoansLoans and • Annualized loans growth for 9 months at 23.6 21.0 12.3%Advances 12.3%, due to expansion in SME and Consumer lending activities.Deposit from 30.6 28.0 9.2% • Better than industry asset quality, as grosscustomers impaired loans dropped to 2.5%. NetShareholders’ impaired loans at 1.4%, with loan loss 3.7 3.3 12.1% coverage rising to 107.6%Funds DepositNet assets per 2.39 2.15 11.2% • CASA ratio maintained at 35.6%.share (RM) • Loans to Deposits ratio up to 77.1%,Loans to reflecting more effective utilization of balancedeposits (LD) 77.1% 74.9% 2.2% sheet.ratio (%) Shareholders FundsGross impaired 2.5% 3.7% 1.2% • Shareholders’ funds increased to RM3.7loans billionLoan loss RWCR 107.6% 83.1% 24.5%coverage • Strong capital position at 15.2%, well above regulatory and Basel III requirements.RWCR (%) 15.2% 15.9% 6
  8. 8. Contents1 Executive Summary2 Financial Results for 9MFY20123 Questions & Answers 7
  9. 9. Performance Overview Performance Overview – Strong Net Profit Growth Net Profit After Tax RM’m 400 • 9 Months results 14.8% • NPAT growth 14.8% 350 • EPS growth 15.1% • Quarterly NPAT 300 • YOY growth 9.1% • QoQ stable (3QFY12: 121.4m; 2QFY12: 121.1m) 250 • Non-interest Income growth 200 • 3Q growth YoY 37.1% 324.2 372.3 • 9M growth YoY 33.5% 150 9.1% • Loans book growth YoY 11.5% 100 3Q11 4Q11 1Q12 2Q12 111.3 121.4 50 NPAT 111.3 84.9 129.8 121.1 0 EPS (sen) 7.3 5.5 8.5 7.9 3Q11 3Q12 9M11 9M12EPS (sen) 7.3 7.9 21.2 24.4 8
  10. 10. Net Interest Income Sustainable interest income and margin Interest Income Cost of Funds (COF) Net Interest Income AFGs NIM - rhs Industrys NIM (computed)* - rhs AFG Industry (computed)* RM ’m300.0 2.7% 3.5% 2.6% 2.6% 2.6% 2.6%250.0 2.5% 2.5% 2.5% 3.0% 2.5% 2.5% 2.5% 2.5%200.0 2.4% 2.4% 2.5% 2.5%150.0 2.5% 2.4% 2.4% 2.3% 2.3% 2.3% 2.3%100.0 2.2% 2.0% 2.1% 2.1% 50.0 2.1% 585.5 168.0 159.8 168.7 176.0 165.6 0.0 2.0% 1.5% Q3 FY11 Q4 FY11 Q1 FY12 Q2 FY12 Q3 FY12 Q3 FY11 Q4 FY11 Q1 FY12 Q2 FY12 Q3 FY12 Rise in cost of funds due mainly to the 50bps rise in OPR and 3% increase in statutory reserve ratio. There was 25bps rise each in OPR on 8 July 2010 and 5 May 2011. Note: * based on 9-listed banks (2QFY12 refers to industry data up to Sept 2011 for 8 listed banks) 9
  11. 11. Non-Interest IncomeNon-interest income contribution & growth momentum Non-interest income contribution 9MFY12 9M YTD yearly growth Fees Income Gain on sales securities Service charges &fees Revaluation of securities Dividend income 10% Other Income Others 10% 33.5% commissions 17% Processing fees 3% Corp advisory 2% Gain on sales of Portfolio AFS/HTM/HFT managemnet 24% 2% Dividends income 4% Commmitment fees Guarantee fees 5% Revaluation gain 3% 15% Brokerage 5% 9M11 9M12 33.5% increase in non-interest income. 10
  12. 12. Non-Interest IncomeNon-interest income gaining momentum 9M YTD yearly growth Non-interest income trend Commissions Fee Income Investment Income Foreign Exchange Gain Other Income Non-Interest Income - lhs NII / Total Income - rhs RM ’m 90 30% RM ’m 231.7 27.4% 230 14.8 26.4% 80 24.6% 25% 190 70 21.1% 173.5 7.2 20.1% 10.1 60 20% 5.5 98.8 150 +123.7% 44.2 50 15% 110 40 80.0 53.1 30 10% 87.4 -8.5% 70 57.8 20 5% 30 10 235.0 235.0 233.2 233.2 225.7 225.7 235.7 +52.6% 26.6 40.3 26.4 18.5 (2.1) 57.9 52.2 79.2 73.1 79.4 0 0% -10 9MFY11 9MFY12 Q3 FY11 Q4 FY11 Q1 FY12 Q2 FY12 Q3 FY12 9MFY2012 major achievements 9MFY2012 major achievements  Non-interest income gaining momentum driven by combination of service charges, commissions from sale of wealth management products, foreign exchange and treasury trading activities. 11
  13. 13. Operating ExpensesOperating Expenses and CIR Trends Operating Expenses Trends Operating Expenses RM’m YTD Dec 2011200 60.0% 54.1% 36.9 48.2% 46.5% 47.6% 50.0% 13.5160 45.2% 45.5% 45.9% 40.0%120 107.3 277.5 -1.5% 30.0% 12.0% 80 20.0% 40 10.0% Personal expenses Establishment expenses Marketing expenses Adminkistration and general expenses 0 0.0% Q1 FY11 Q2 FY11 Q3 FY11 Q4 FY11 Q1 FY12 Q2 FY12 Q3 FY12 • Personnel cost remain the main operating Administration and general expenses expenses as we continue to invest in human Marketing expenses Establishment expenses capital. Personnel expenses CIR % • Overall cost increased by 9.2% in line with expansion of business. 12
  14. 14. Operating ExpensesCost to Income Ratio now in line with industry average Cost to Income Ratio (CIR) Overheads Breakdown 9MFY12 9MFY11 CIR - AFG CIR - Industry ( *computed) RM ’m Total 435.2 55% Overhead +9.2% Expenses 398.6 277.5 Personnel 50% +12.0% 48.5 Costs 247.7 46.4 46.5 46.5 46.0 107.3 Establishment -1.5% 45% 46.5 Costs 108.9 46.3 45.8 44.5 13.5 Marketing +20.0% Expenses 11.2 40% 36.9 Admin & +20.2% General 30.7 Expenses 35% 3QFY11 4QFY11 1QFY12 2QFY12 3QFY12 0 100 200 300 400 500 9MFY12 9MFY11 • Personnel cost remain the main operating expenses as we continue to invest in human capital. • Overall cost increased by 9.2%. • Cost-to-income ratio (“C/I”) ratio maintained at 46.5% compared to 46.4% 3Q last year.Note: * based on 9-listed banks (2QFY12 refers to industry data up to Sept 2011 for 8 listed banks) 13
  15. 15. LoansGross loan grew by 11.5% Y-o-Y Gross Loans Composition Loans by Economic Purposes Variable Rate Fixed Rate 9MFY12 9MFY11 RM’b RM’b 30 Purchase of securities +11.5% 25 24.2 Purchase of transport vechicles 23.5 22.4 22.6 21.6 Purchase of landed property +1.2 7.1% 20 Purchase of fixed assets 5.5% 5.8% Personal use 6.4% (1.9%) 15 18.3 19.3 19.7 20.6 21.3 Credit card 14.3 14.6 12.2 Construction 10 14.1 Mergers and acquisition 1.7 +0.5 5 1.7 1.6 Working capital 1.6 Others +0.6 8.9 3.36.8 3.1 8.1 2.9 8.0 2.9 2.9 26.6% 34.4% 28.3% 29.3% 0 0 5 10 15 Q3FY11 Q4FY11 Q1FY12 Q2FY12 Q3FY12 14
  16. 16. LoansLoans by Economic PurposeComposition 0.5% Y-o-Y % 1.6% 2.4% 38.9% 13.4% 8.9% 2.6% 0.8% 1.3% 24.6% 5.0% 15% -21% 9% 16% 15% 1% -6% -13% 10% 98% 10,000 95% 9,000 75% 8,000 7,000 55% 6,000 35% 5,000 4,000 15% 3,000 2,000 -5% Purchase of Purchase of Purchase of Purchase of Purchase of Personal Use Credit Card Contruction M&A Working Capital Others Securities transport Residential Non-Residential fixed assets 1,000 -25% Vehicles properties properties (ex-landed) - 3Q12 3Q11 Y-o-Y Loan Growth And LDR Trends 95.0% 92.6 14.0% 90.0% LDR % (LHS) Y-o-Y Loan Growth % (RHS) 12.0% 11.5 10.0% 85.0% 7.9 82.8 7.6 79.2 80.0 8.0% 80.0% 77.2 78.9 6.0% 75.0% 6.2 4.8 77.3 4.0% 5.0% 70.0% 2.0% 3.3 65.0% 0.0% Q1 FY11 Q2 FY11 Q3 FY11 Q4 FY11 Q1 FY12 Q2 FY12 Q3 FY12 15
  17. 17. LoansStrong Liquidity with Stable loan and deposit growth Loan Deposit Ratio (%) • LDR remained stable and healthy below 80%. 95% 92.6% • Loan growth continues to be supported through 90% the consumers and business banking 85% 82.8% 80.0% 78.9% • Deposit growth 9% with equal contribution from 80% Business banking 75% 79.2% 77.2% 77.3% 70% 65% 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 Gross Loan Composition by Segment Deposit Composition by Segment 3Q11 3Q12 3Q11 3Q12 RM’b RM’b14 1612 14 1210 10 15.0 15.1 8 12.6 12.3 8 6 6 9.2 8.1 9.9 8.7 4 4 5.1 6.9 2 0.3 2 0.2 0 0 Consumer Business Banking Others Consumer Business Banking Others 16
  18. 18. DepositsDeposit Trend And CASA Ratio TrendsRM’b 45.0% • Steady growth momentum on 41.4%50 Demand Deposit. 35.6% 34.9% 35.5% 34.8% • CASA Ratio at a stable and healthy level. 35.4%40 34.0% 30.0% • 9 months YTD total deposit growth 9.1% vs. prior year.30 • YTD CASA balances growth 11.2% Y-o-Y.20 14.3 13.5 15.0% 14.2 14.3 14.6 14.3 11.810 8.0 8.2 8.0 8.4 8.9 9.2 7.8 0 0.0% Q1 FY11 Q2 FY11 Q3 FY11 Q4 FY11 Q1 FY12 Q2 FY12 Q3 FY12 NID FD DD SA CASA Ratio 17
  19. 19. DepositsDiversified Source of Customer Deposit RM’m Type of Deposit RM’m Source of Core Deposit 35,000 30,000 30,000 25,000 24,109 24,422 25,000 21,863 20,000 8,192 12.7% 9,233 20,000 8,002 15,000 15,000 10,000 10,000 14,309 13,528 5,000 12,210 5,000 0 0 3Q10 3Q11 3Q12 3Q10 3Q11 3Q12 Customer Deposits Core Deposit NID&MMD Fixed deposit Current accounts Saving accounts Core deposit mainly fixed deposit with steady increase in current accounts deposit 18
  20. 20. Asset QualityLoan loss coverage at 107.6% due to the 1.5% collective provisions for the loans growthNet impaired loans down to 1.4% is below the industry average of 1.9% Gross impaired loan ratio Collective Assessment Allowance - lhs Net impaired loan ratio Individual Assessment Allowance - lhs Industrys computed net impaired loan ratio* AFGs LLC - rhs Industrys LLC (computed)* - LLC - rhs4.0% RM ’m % 1,000 110 3.7 107.6% 99.7% 99.9%3.5% 3.3 96.9% 96.3% 94.4% 3.0 800 90.1%3.0% 95.1% 90 2.6 2.5 340.22.5% 2.3 2.2 2.2 600 322.9 2.12.0% 1.9 1.9 1.8 339.6 70 2.0 373.81.5% 1.4 1.4 400 1.8% 1.8% 1.8%1.0% 50 2000.5% 531.8 438.6 328.4 264.6 (115.1) 31.9 (33.3) 875.1 806.3 741.30.0% 0 30 3QFY11 4QFY11 1QFY12 2QFY12 3QFY12 FY2009 FY2010 FY2011 9MFY12Note: * Industry data were sourced from Monthly Statistical Bulletin November 2011 19
  21. 21. CapitalCapital Management • Strong profit generation capacity17.0% 16.1 15.9 16.1 • Strong assets quality 15.816.0% 15.5 • Continuous enhancement , emphasis on15.0% less capital intensive fee based and non 15.3 15.2 interest income business14.0% • Strong shareholders13.0%12.0% 11.9 11.8 12.0 11.9 • Basel III - meet requirements 11.3 11.4 11.211.0% Capital Adequacy by Legal Entities10.0% Legal Core Capital RWCR Entities9.0% ABMB 13.29% 13.68%8.0% 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 AIS 11.28% 13.13% AIBB 70.57% 71.20% Core Capital Ratio RWCR 20
  22. 22. Today, Alliance Bank GroupThe Bank remains strong and well-positioned.• Performed well in 9 months FY2012 despite competitive and challenging economic environment.• Clear niche position in Consumer and Business Banking segments.• Strong and healthy balance sheet in terms of capital and liquidity.• Continued focus on strengthening risk management capabilities.Achieving continued growth.• Focus on revenue growth in core areas of expertise.• Successfully restarted momentum in mortgage and generic personal lending.• Leverage on all our business franchises to achieve long term sustainable growth especially in non-interest income activities.Clear strategy and the right team to deliver it.• Improving customer service, cross-selling, productivity and reducing turn around times. remains a major priority.• Strong full senior management team now in place. 21
  23. 23. Contents1 Executive Summary2 Financial Results for 9MFY20123 Questions & Answers 22
  24. 24. THANK YOUDisclaimer: This presentation has been prepared by Alliance Financial Group (the “Company”) for information purposes only and does not purport to contain all theinformation that may be required to evaluate the Company or its financial position. No representation or warranty, expressed or implied, is given by or on behalf of theCompany as to the accuracy or completeness of the information or opinions contained in this presentation.This presentation does not constitute or form part of an offer, solicitation or invitation of any offer, to buy or subscribe for any securities, nor should it or any part of itform the basis of, or be relied in any connection with, any contract, investment decision or commitment whatsoever.The Company does not accept any liability whatsoever for any loss howsoever arising from any use of this presentation or its contents or otherwise arising inconnection therewith.For further information, please contact: Alliance Financial Group Eric Lee Amarjeet Kaur 31st Floor, Menara Multi-Purpose Group Chief Financial Officer Group Corporate Strategy & Capital Square Contact: (6)03-2730 2388 Development No. 8, Jalan Munshi Abdullah Email: ericlee@alliancefg.com Contact: (6)03-2034 4386 50100 Kuala Lumpur, Malaysia Email: amarjeet@alliancefg.com Tel: (6)03-2070 1322 www.alliancebank.com.my/investorrelations.html 23

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