Embed Size (px)
Citation preview
ANALYST BRIEFING 1st Half FY2015
26 November 2014
Executive Summary
Contents
1
Financial Results for 1st Half FY2015 2
Clear niche in Consumer & SME Banking:
Focused on delivering long term sustainable
financial performance:
Loans growth faster than industry at
15.5% y-o-y.
Improved asset quality with net impaired
loans ratio at 0.7%.
Effective funding structure with CASA
ratio at 35.2%.
Enhanced productivity and efficiency with
Cost to Income ratio at 44.3%.
Return on Equity at 13.9%.
Strong capital ratio at 13.2%.
The Alliance Financial Group Today
We have Built a Strong Franchise in Consumer & SME Banking
2
Build Consistent & Sustainable
Financial Performance
Deliver Superior Customer
Service Experience
Develop Engaged
Employees with Right
Values
Aspirations
3
Summarised
Income Statement
7.9% Growth in Pre-Tax Profit, Excluding One-Off Gain
+11.6% rise in net interest
income from 15.5% net loans
growth, but interest margins remain
under pressure.
+1.1% growth in non-interest
income, contributed by:
Higher investment income
Recurring income from
transaction banking, wealth
management and brokerage
and treasury activities
Other income: one-off gain on
disposal of land amounting to
RM21.6 million
Net write-back of provisions in
1HFY15 due to non-recurring
recoveries of impaired accounts.
Pre-tax profit up 7.9% excluding
one-off non-recurring gain on
disposal of land.
Income Statement 1HFY15
RM mil
1HFY14
RM mil
%
RM mil %
Net Interest Income 421.0 377.1 43.9 11.6%
Islamic Banking Income 107.6 105.6 2.0 1.9%
Non-Interest Income 198.3 196.2 2.1 1.1%
Net Income 726.9 678.9 48.0 7.1%
Operating Expenses 322.2 319.2 3.0 0.9%
Pre-Provision Operating
Profit 404.7 359.7 45.0 12.5%
Write-back of losses on loans
& financing and other losses 5.6 0.4 5.2 >100%
Pre-tax profit 410.3 360.1 50.2 13.9%
Net Profit After Taxation 311.1 269.0 42.1 15.7%
4
Summarised
Balanced Sheet
Balance Sheet 1HFY15
RM bil
1HFY14
RM bil
Change
RM bil %
Total Assets 50.8 45.9 4.9 10.7%
Treasury Assets 12.1 12.6 -0.5 -4.2%
Net Loans 34.1 29.5 4.6 15.5%
Customer Deposits 40.8 36.7 4.1 11.0%
CASA Deposits 14.3 12.3 2.0 16.7%
Shareholders’ Funds 4.4 4.1 0.3 5.6%
Net Loans Growth (y-o-y) 15.5% 13.1% - 2.4%
Customer Deposits Growth
(y-o-y) 11.0% 14.3% - -3.3%
+15.5% y-o-y net loans growth:
above industry – driven by
strong loans growth in the
Consumer and SME segments:
Residential mortgage
(+15.2% y-o-y)
Commercial mortgage
(+36.8% y-o-y)
SME (+24.4% y-o-y)
+11.0% y-o-y customer
deposits growth, maintaining a
healthy loans to deposit ratio
while at the same time, ensuring
efficient balance sheet
management.
+16.7% y-o-y growth in CASA
deposits, contributing to 35.2%
of total deposits.
Net Loans Growth at 15.5% Y-o-Y, Driven By Consumer & SME Segments
Note:
Treasury assets comprise financial assets (HFT, AFS & HTM), derivative financial assets & placements with Financial Institutions
5
Key Financial Ratios
Cost to income ratio – reduced
to 44.3% arising from effective
cost management.
Non-interest income – 25.8%
excluding one-off non-recurring
gain on sale of land
First interim dividend declared
of 9.0 sen (as compared to 7.5
sen last year).
Net Impaired Loans ratio –
improved further to 0.7%.
Loans to deposits ratio – raised
to 84.5% for a more efficient
balance sheet management, while
maintaining a strong liquidity
position.
CASA ratio – improved to 35.2%
on the back of CASA growth of
16.7%, outpacing our overall
deposits growth.
Strong capitalisation under Basel
III.
Financial Ratios 1HFY15 1HFY14 Change
Share-
holder
Value
Return on Equity 13.9% 13.3% +0.6%
Return on Assets 1.2% 1.2% -
Earnings per Share 20.5 sen 17.7 sen +15.8%
Interim Dividends per Share 9.0 sen 7.5 sen +20.0%
Net Assets per Share RM 2.82 RM2.67 +RM0.15
Efficiency Non-Interest Income Ratio* 28.1% 29.8% -1.7%
Cost to Income Ratio 44.3% 47.0% -2.7%
Asset
Quality
Gross Impaired Loans Ratio 1.2% 1.7% -0.5%
Net Impaired Loans Ratio 0.7% 0.9% -0.2%
Loan Loss Coverage Ratio 88.6% 86.7% +1.9%
Liquidity Loans to Deposit Ratio 84.5% 81.6% +2.9%
CASA Ratio 35.2% 33.4% +1.8%
Capital
Common Equity Tier 1
Capital Ratio 10.13% 10.76% -0.63%
Tier 1 Capital Ratio 11.11% 12.17% -1.06%
Total Capital Ratio 13.19% 14.79% -1.60%
Note: * Includes the non-interest income portion of Islamic banking business
Return on Equity
CASA Ratio Cost-to-Income Ratio
Non-Interest Income Ratio
6
Trend: Key Financial Ratios
Sustained Financial Performance, with Key Metrics in the Right Direction
34.0% 33.7% 33.6% 34.0% 35.2%
30%
35%
40%
45%
FY2011 FY2012 FY2013 FY2014 1HFY15
48.3% 47.6% 47.9%
46.6%
44.3%
42%
44%
46%
48%
50%
FY2011 FY2012 FY2013 FY2014 1HFY15
12.8% 14.0%
13.8% 13.8% 13.9%
5%
7%
9%
11%
13%
15%
FY2011 FY2012 FY2013 FY2014 1HFY15
20.8%
27.0% 28.7% 27.7% 28.1%
0%
5%
10%
15%
20%
25%
30%
35%
FY2011 FY2012 FY2013 FY2014 1HFY15
Franchise Building
7
Excellence in Brand Strategy
Alliance BizSmart Academy
Online Banking Initiative Of
The Year – Malaysia
Global Financial Market
Review
Best SME Bank Malaysia
2014
* Note: Customer Satisfaction Index
ABM & MPC Highest
CSI* Index Score in
Malaysia 2013
Best Use of
Integrated
Marketing
Campaign (Bronze)
Alliance BizSmart
Academy
Architecture Excellence
Awards 2014
Growing Business in New
Territory or New Service
Offering
Malaysia’s 100
Leading Graduate
Employers 2012,
2013 & 2014
in Asia Pacific, Gulf region & Africa
Strategic Priorities
8
Our Priorities
Build on strengths and niche in Consumer and
Business Banking
Enhance existing branch network and leverage
on alternate channels
Enhance customer experience through
streamlining of processes and raising staff
productivity
Improve efficiency in resource utilisation,
ensuring impactful investments in technology
and infrastructure
Strengthen investment banking and Islamic
banking capabilities
… We will continue to exercise caution &
implement vigilant risk management to
deliver consistent & sustainable results…
Build Consistent & Sustainable
Financial Performance
Deliver Superior
Customer Service
Experience
Develop Engaged
Employees with Right
Values
Aspiration
Continue To “Deliver Consistent and Sustainable Financial Performance”
Executive Summary
Contents
1
Financial Results for 1st Half FY2015 2
10
Steady Growth in Net Income Driven by Higher Loans Growth
Net interest income growth of RM43.9
million or 11.6% y-o-y:
+RM109.7 million increase in interest
income primarily from loans growth;
Offset by:
+RM65.9 million rise in interest expense
from 11.0% y-o-y expansion in deposits
Deposit rates on the rise:
• Competition for retail deposits
• Rates re-priced ahead of the recent
OPR increase, as well as expectation
of further OPR hike in 2015.
Net income from Islamic Banking:
On the uptrend in 1HFY15, with the
income from the expansion in hire
purchase lending offsetting the run-off of
the high-yielding co-op personal
financing.
Interest & Islamic Banking Income
Net Interest Income & Islamic Banking Income
343.3 340.4 364.6 377.1 421.0
114.3 127.6 124.4 105.6
107.6 457.6 468.0 489.0 482.7
528.6
0
200
400
600
1HFY11 1HFY12 1HFY13 1HFY14 1HFY15
Net Interest Income Islamic Banking Income RM mil
1HFY15 vs 1HFY14
+ RM 45.9 mil
+ 9.5%
11
Net Interest Margin Continues To Be Under Pressure
Net Interest Margin
2.68%
2.45% 2.35%
2.20% 2.11% 2.19%
1.5%
2.0%
2.5%
3.0%
FY2011 FY2012 FY2013 FY2014 1QFY15 1HFY15
2.07%
2.28% 2.22% 2.31% 2.38% 2.43%
1.5%
2.0%
2.5%
3.0%
FY2011 FY2012 FY2013 FY2014 1QFY15 1HFY15
Net Interest Margin (NIM) was 2.19% for 1HFY15,
down by 1 bp from a year ago (1HFY14: 2.20%).
Continuing margin compression mainly due to:
Run-off from repayments of higher-yielding co-op
loans:
RM408.7 million as at September 2014
RM454.4 million as at September 2013
RM1,023.1 million as at March 2011
New mortgage loans are at lower yield, with housing
loans as a % of total Loans:
41.5% as at September 2014
39.1% as at September 2013
37.1% as at March 2011
Intensified competition for lending activities and
deposits.
Cost of Funds (COF) increased to 2.43% following rise
in OPR and competition for deposits.
Net Interest Margin Trend
Cost of Funds Trend
12
Non-Interest Income
Non-Interest Income Supported by Continuing Focus on Building Recurring Income
Non-interest income (NII) in 1HFY15
increased by RM2.1 million or 1.1%, mainly
due to:
Higher investment income by RM18.8
million or 47.3%, contributed by the
marked-to-market valuation of derivative
financial instruments.
Other income: one-off gain on disposal of
land amounting to RM21.6 million.
Offset by: lower fee income compared to
previous year due to the one-off sign-on
fee income of RM30 million from
Bancassurance agreement with Manulife in
1QFY14.
Investment income from trading activities
remains under pressure due to market
volatility.
Excluding one-offs*, non-interest income
ratio in 1HFY15 is 25.8%.
RM mil
1HFY15 vs 1HFY14
+RM2.1 mil
+ 1.1%
18.3 26.5 35.3 42.5 39.4
58.0 53.3 48.6
82.0 68.5
23.9
53.5 62.9
39.7 58.5
15.4
19.0 22.5
32.0 31.9
115.6
152.3 169.3
196.2 198.3 20.9%
25.5% 27.2% 29.8%
28.1%
0
100
200
300
1HFY11 1HFY12 1HFY13 1HFY14 1HFY15
Commission Fee Income
Investment Income Other Income
NII Ratio
Non-Interest Income Trend
Mix
16.0%
29.5%
34.6%
19.9%
Note: * One-off gain on disposal of land amounting to
RM21.6 million in Q2FY15
Note: Non-interest income ratio includes the non-interest income portion of Islamic banking business
Operating Expenses
13
Cost-to-income Ratio improved to 44.3%, from Effective Cost Management
OPEX Contribution 1HFY15 RM mil
1HFY14
RM mil
Change
RM %
Personnel 206.2 209.2 -3.0 -1.5
Establishment 70.0 73.3 -3.3 -4.4
Marketing 14.0 8.3 5.7 69.4
Administration 32.0 28.4 3.6 12.6
Total OPEX 322.2 319.2 3.0 0.9
Operating Expenses Trend Composition of Operating Expenses
Overall personnel cost reduced by 1.5% to RM206.2 mil in 1HFY15. The Group incurred a one-off MSS cost of
RM10.6 million in June 2014 quarter, compared to VSS cost of RM22.3 million in June 2013 quarter.
Group has stepped up investments in branch channels, IT infrastructure and marketing cum brand building initiatives.
261.2 287.1 315.4 319.2
322.2 283.7 304.7
323.9 309.0
48.3% 47.6% 47.9% 46.6% 44.3%
0
200
400
600
800
1000
FY2011 FY2012 FY2013 FY2014 1HFY15
1st Half 2nd Half CIR
544.9 591.8
639.3 628.2
1HFY15 vs 1HFY14
+ RM3.0 mil
+ 0.9%
Personnel 65.5%
Establishment 23.0%
Marketing 2.6%
Admin 8.9%
1HFY14
Personnel 64.0%
Establishment 21.7%
Marketing 4.3%
Admin 10.0%
1HFY15
14
Gross Loans
Net Loans at 15.5% Y-o-Y, Driven By Consumer and SME Lending
RM bil
Net loans growth of 15.5% y-o-y, higher than the industry growth, driven by Consumer and SME segments. Loans
growth momentum continue following the streamlining of processes from loan origination to disbursements.
Balanced loans composition with 57.6% Consumer; 19.7% SME and 22.7% for Wholesale Lending.
Effective management of interest rate risk: 89.7% of loan book is floating rate (1HFY14: 89.3%).
Note: ^ BNM’s revised SME definition effective from 1 January 2014. FY2013 SME loans have been restated based on BNM’s revised SME definition.
Net Loans, Advances and Financing Trend Loans Composition by Business Segments
21.9 24.5
27.8
31.8 34.1
0
5
10
15
20
25
30
35
FY2011 FY2012 FY2013 FY2014 1HFY15
55.0% 53.9% 55.7% 57.2% 57.6%
21.3% 21.9% 17.9% 18.3% 19.7%
23.7% 24.2% 26.4% 24.5% 22.7%
0%
20%
40%
60%
80%
100%
FY2011 FY2012 FY2013^ FY2014^ 1HFY15^
Consumer SME Wholesale
1HFY15 vs 1HFY14
+ RM 4.6 bil
+ 15.5%
1HFY15 YTD
Annualised
+14.0%
15
Maintained Double-digit Growth Y-o-Y for Residential & Commercial Properties
Loans Growth: Residential & Commercial
Residential properties: +RM1.9 billion or 15.2% y-o-y growth, higher than industry growth rate of 13.7%.
Commercial properties: +RM1.5 billion or 36.8% y-o-y growth.
Focus on high growth areas i.e. Klang Valley, Penang and Johor, with attractive housing loan packages for the
right customer segments, and business premises financing for SMEs.
Loans Growth for Residential Property Loans Growth for Commercial Property
8.7 9.8
11.6 13.3
14.3 3.3%
12.4%
18.9% 14.9% 15.2%
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
18.0
20.0
FY2011 FY2012 FY2013 FY2014 1HFY15
RM bil
2.8 3.4
3.7
4.8
5.6 6.1%
17.9% 11.0%
27.8% 36.8%
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
FY2011 FY2012 FY2013 FY 2014 1HFY15
RM bil
1HFY15 vs 1HFY14
+ RM 1.9 bil
+ 15.2%
1HFY15 vs 1HFY14
+ RM 1.5 bil
+ 36.8%
1HFY15 YTD
Annualised
+14.5%
1HFY15 YTD
Annualised
+37.3%
Business Banking Loans Growth Accelerated to 13.4% Driven by Lending to SMEs
Loans Growth: Business Banking & SME
SME Lending: up RM 1.3 billion or 24.4% y-o-y
(based on BNM’s revised SME definition).
10.1 11.5
12.5 13.8 14.6
9.2% 14.2%
8.4% 10.1% 13.4%
0
5
10
15
20
FY2011 FY2012 FY2013 FY2014 1HFY15
RM bil
1HFY15 vs 1HFY14
+ RM1.7 bil
+ 13.4%
5.4
6.8
0
2
4
6
8
10
1HFY14* 1HFY15*
RM bil
Based on
BNM’s revised
SME definition
Overall business loans: +RM1.7 billion or 13.4% y-o-y.
Corporate & commercial loans: +RM0.4 million or 5.3%
y-o-y, mainly attributed by growth in commercial loans.
1HFY15 vs 1HFY14
+ RM1.3 bil
+ 24.4%
RM mil 1HFY15 1HFY14 Y-o-Y Growth
SME 6,780 5,449 24.4%
Corporate & Commercial 7,842 7,446 5.3%
16
Loans Growth for Business Banking Loans Growth for SME
Note:
* BNM’s revised SME definition effective from 1 January 2014. FY2013
SME loans have been restated based on BNM’s revised SME definition.
24.4%
1HFY15 YTD
Annualised
+12.3%
1HFY15 YTD
Annualised
+29.8%
Growth in Share Margin Financing and Hire Purchase Loans
Re-commenced Hire Purchase financing in
April 2012, focusing on new cars and non-
national marquees.
+RM351.2 million y-o-y growth with continued
expansion of panel of car dealers and
distributors.
1HFY15 vs 1HFY14
+ RM 0.3 bil
+21.9%
347.5 451.3
1,022.0
1,561.6 1,683.5
0
500
1000
1500
FY2011 FY2012 FY2013 FY2014 1HFY15
RM mil
Growth in Share Margin Financing in line with
greater focus on wealth management and re-
organisation of retail broking business.
Loans Growth: Share Margin & Transport Vehicles
17
Share Margin Financing Growth Loans Growth for Transport Vehicles
704.2 561.8
737.9
1,117.8
1,293.9
0
300
600
900
1200
1500
FY2011 FY2012 FY2013 FY2014 1HFY15
RM mil
1HFY15 vs 1HFY14
+ RM 0.4 bil
+37.3%
1HFY15 YTD
Annualised
+15.6%
1HFY15 YTD
Annualised
+31.5%
18
Well-diversified & Secured Loans Portfolio
Risk Management: well-diversified and collateralised loan book.
Residential and non-residential properties account for 57.9% of gross loans portfolio:
41.5% of loans portfolio is for the purchase of residential properties (slightly up from 41.4% in 1HFY14)
16.4% is for the purchase of non-residential properties (up from 13.8% in 1HFY14)
17.9% of loans is for working capital, compared to 20.6% in 1HFY14.
Composition of Loans Portfolio
Loans Composition by Economic Purposes
Purchase of residential property
41.5%
Working capital 17.9%
Purchase of non-
residential property
16.4% Personal use 6.2%
Credit card 1.8%
Purchase of securities
5.0%
Purchase of transport vehicles
3.8%
Others 7.4%
1HFY15
Purchase of residential property
41.4%
Working capital 20.6%
Purchase of non-
residential property
13.8%
Personal use 6.5%
Credit card 2.0%
Purchase of securities
4.8%
Purchase of transport vehicles
3.1%
Others 7.8%
1HFY14
19
Asset Quality – Net Impaired Loans Ratio Maintained at 0.7%
Asset Quality
Gross impaired loans ratio improved to 1.2%.
Net reduction in gross impaired loans of RM110.4 million y-o-y was mainly contributed by recoveries.
Continuing efforts to refine credit origination processes, credit scoring models and intensify collections.
Gross Impaired Loans Net Impaired Loans Ratio
629.2 579.2
442.8 452.5 412.8
2.5% 2.1% 1.4% 1.4% 1.2%
0
200
400
600
800
1000
1200
1400
FY2012 FY2013 FY2014 1QFY15 1HFY15
RM’mil Gross impaired loans GIL Ratio
1.4%
1.1%
0.7% 0.8%
0.7%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
FY2012 FY2013 FY2014 1QFY15 1HFY15
%
1HFY15 vs 1HFY14
NIL Ratio: - 0.2%
(from 0.9% Sep 2013)
1HFY15 vs 1HFY14
GIL: - RM 110.4 mil
-21.1%
1HFY15 vs 1HFY14
GIL Ratio: - 0.5%
(from 1.7% Sep 2013)
20
Improvement in Asset Quality for SME segment due to Recoveries
Asset Quality: Mortgages, Hire Purchase, SME
Gross impaired loans (“GIL”) ratio for the purchase of residential & non-residential properties maintained at 1.4%
on a combined basis, while GIL ratio for purchase of transport vehicles improved marginally to 0.8%.
GIL ratio for SME segment improved to 0.9% mainly due to recoveries.
Purchase of Residential and
Non-Residential Properties
Purchase of
Transport Vehicles
SME
266.7 282.4
254.2 265.6 272.2
2.0% 1.8%
1.4% 1.4% 1.4%
0
200
400
600
FY2012 FY2013 FY2014 1QFY15 1HFY15
RM’mil
Gross impaired loans GIL Ratio
5.7 5.6
9.8
11.6 10.9
1.0% 0.8%
0.9% 1.0% 0.8%
0
5
10
15
20
FY2012 FY2013 FY2014 1QFY15 1HFY15
RM’mil
Gross impaired loans GIL Ratio
146.2
101.4
79.4 76.7
60.1
2.7%
1.7% 1.4%
1.2% 0.9%
0
100
200
300
FY2012 FY2013 FY2014 1QFY15 1HFY15
RM’mil
Gross impaired loans GIL Ratio
(0.9)
(14.0)
(0.8)
(4.8)
3.4
(17.6)
1.8
(6.6)
-40
-30
-20
-10
0
10
Write-back of Impairment
Allowance for/(write -back of) Losses on Loans/Financing & Other Losses
4QFY14 1QFY15 2QFY14 2QFY15
(7.4) (5.7) 3.4
3QFY14
(31.6)
1.8
Impairment Provisions
21
RM 5.7 million Net Write-Back In Provision Due to Recoveries. Credit cost ~ 10.3 bps
87.7% 82.5%
92.7% 90.2% 88.6%
FY2012 FY2013 FY2014 1QFY15 1HFY15
Ch
arg
e
Net write-back in 1HFY15 is due to recovery of several
large accounts, despite the higher collective assessment
arising from loans growth.
For 1HFY15, credit charge for loans/financing was RM34.4
million or ~10.3bps (1HFY14: RM26.0 million or ~8.9bps)
(excluding recoveries).
Allowance for /(Write-back of) Losses on
Loans/Financing and Impairment Loan Loss Coverage
Wri
te-b
ack
RM’000 1HFY15 1HFY14
Individual assessment (2,358) 3,069
Collective assessment 27,261 6,582
Bad debts recovered (39,248) (25,490)
Bad debts written off 8,986 14,854
Allowance for other assets 523 1,513
(Write-back)/Allowance for losses on
loans/ financing and other losses
(4,836) 528
Write-back of impairment (CLO) (833) (902)
Total write-back (5,669) (374)
22
Balance Sheet Management
Effective Utilisation of Balance Sheet: Net Loans Constitute 67.1% of Total Assets
Total assets expanded by RM4.9 billion or 10.7%
y-o-y to RM50.8 billion, driven mainly by lending.
RM bil
Net Loans 67.1%
Investment securities
22.9%
Cash, ST funds,
Deposits with FIs
5.5%
Other Assets 4.5%
1HFY15
Deposits from customers
80.2%
Deposits of banks and other FIs
7.6%
Shareholders' Funds 8.6%
Other Liabilities
3.6%
1HFY15
1HFY15 vs 1HFY14
+ RM4.9 bil
+ 10.7%
24.5 27.8 31.8 32.8 34.1
11.5 12.7
11.9 12.8 12.1 3.7
3.2 4.4
4.5 4.6
39.7 43.7
48.1 50.1 50.8
0
10
20
30
40
50
60
FY2012 FY2013 FY2014 1QFY15 1HFY15
Net Loans Treasury Assets Other Assets Total
Composition of Total Assets Total Assets Trend
Composition of Total Liabilities/Equity
Note: Investment securities comprise financial assets (HFT, AFS & HTM) & derivative financial assets
Net Loans 64.3%
Investment securities
26.1%
Cash, ST funds,
Deposits with FIs
4.9%
Other Assets 4.7%
1HFY14
Deposits from customers
79.9%
Deposits of banks and other FIs
7.3%
Shareholders' Funds 9.0%
Other Liabilities
3.8%
1HFY14
1HFY15 YTD
Annualised
+11.5%
23
Customer Deposits
RM bil RM bil
Total customer deposits at RM40.8 billion in 1HFY2015, up
11.0% from last year.
CASA deposits expanded by RM2.0 billion or 16.7% y-o-y to
RM14.3 billion in 1HFY2015.
Robust Deposit Growth of 11.0% Y-o-Y, With CASA Deposits Up 16.7% to RM14.3 billion
32.2
36.0 39.2 39.6 40.8
0
5
10
15
20
25
30
35
40
45
FY2012 FY2013 FY2014 1QFY15 1HFY15
1HFY15 vs 1HFY14
+ RM4.1 bil
+ 11.0%
9.1 10.4 11.5 12.0 12.6
1.7 1.7 1.8 1.7 1.7
15.6 17.1
18.6 17.8 18.3
5.8
6.8 7.3 8.1 8.2
33.7% 33.6% 34.0% 34.7% 35.2%
-50%
-44%
-38%
-32%
-26%
-20%
-14%
-8%
-2%
4%
10%
16%
22%
28%
34%
40%
0
10
20
30
40
50
FY2012 FY2013 FY2014 1QFY15 1HFY15
DD SA FD NID,MMD,SD CASA ratio
10.8 12.1 13.3 14.3
40.8
32.2
36.0 39.2
Customer Deposits Trend CASA Trend
1HFY15 YTD
Annualised
7.8%
39.6
13.7
24
Customer Deposits
Strong Liquidity Position with Loans to Deposits Ratio at 84.5%
(%)
Loans to Deposit Ratio of 84.5% in 1HFY2015.
Our overall strategy is to maintain Loans to Deposit
ratio closer to 85.0% for a more efficient liquidity and
balance sheet management.
Individuals 42.6%
Business enterprises
32.5%
Govt. & statutory bodies 7.1%
Domestic financial
institutions 8.9%
Others 8.9%
77.7 78.4 82.1 83.8 84.5
0
20
40
60
80
100
FY2012 FY2013 FY2014 1QFY15 1HFY15
Demand deposits,
30.9% Savings deposits,
4.3%
Fixed/ investment deposits,
45.0%
Money market
deposits, 10.0%
Negotiable instruments of deposits,
9.0%
Structured deposits,
0.8%
Deposits Composition by Customer Type
Deposits Composition by Product Type
Loans to Deposit Ratio Trend
Legal Entities
CET 1
Capital
Ratio
Tier 1
Capital
Ratio
Total
Capital
Ratio
AFG 10.13% 11.11% 13.19%
ABMB 10.20% 11.37% 11.41%
AIS 12.17% 12.17% 12.96%
AIBB 86.04% 86.04% 86.04%
Basel III
Minimum
regulatory
capital adequacy
ratio ^
4.5% 6.0% 8.0%
Effective Capital Management
25
Strong profit generation capacity to enable balance sheet expansion and meet targeted dividend payouts.
Continuous enhancement of capital usage by focusing on:
• Less capital intensive lending activities – Consumer, Mortgage and SME lending
• Non-interest income and fee based activities – Wealth Management and Transaction Banking
• Improving asset quality
Capital adequacy ratios are well above the Basel III requirements.
15.13% 14.63%
13.67% 13.21% 13.19%
10%
12%
14%
16%
18%
FY2012 FY2013 FY2014 1QFY15 1HFY15
Basel III: Capital Adequacy Ratios Well Above Regulatory Requirements
^ Based on the Basel III minimum capital ratios for calendar year 2015
RM Mil FY12 FY13 FY14 1Q
FY15
1H
FY15
Double
Leverage
Ratio
98.7% 98.5% 99.0% 98.8% 98.2%
Total Capital Ratio
26
Note: ^ Includes proposed first interim dividend
# Excluding special dividend of 10.5 sen or RM159.2 mil paid on 26 June 2014
* Share price of RM4.99 as at 30 September 2014
2.2%
3.4% 3.8%
4.3%
1.8%*
0%
2%
4%
6%
FY2011 FY2012 FY2013 FY2014# 1HFY15^
%
26%
42% 47% 51%
44%
0%
20%
40%
60%
80%
FY2011 FY2012 FY2013 FY2014 # 1HFY15^
%
16.6 13.3
7.0
19.0
1HFY15: Progressively Raising Dividend Payout in line with Policy of up to 60% of Net Earnings
9.0
Dividend Per Share (Sen)
Dividend Payout Ratio
Dividends Paid (Amount)
Dividends Yield (%)
3.3 5.6 6.6 7.5 3.7
7.7 10.0
11.5
0
5
10
15
20
25
30
35
FY2011 FY2012 FY2013 FY2014# 1HFY15^
sen 1st interim 2nd interim
50.5 85.7 100.3 114.3
56.6
117.5 152.2
174.7
107.1
203.2 252.5
289.0
139.3
0
100
200
300
400
FY2011 FY2012 FY2013 FY2014# 1HFY15^
RM’mil 1st Interim 2nd Interim
Return on Equity at 13.9%, with Consistent Growth in Earnings Per Share
27
Enhanced
Shareholder Value
sen
RM mil RM mil
12.8
14.0 13.8 13.8 13.9
6
9
12
15
FY2011 FY2012 FY2013 FY2014 1HFY15
%
Net Profit After Tax
Earnings Per Share
Profit Before Tax
Return on Equity (After Tax)
287.9 341.0 357.1 360.1
410.3 265.2
333.6 356.9 389.3 553.1
674.6 714.0 749.4
0
200
400
600
800
1,000
FY2011 FY2012 FY2013 FY2014 1HFY15
1st Half 2nd Half
212.9 254.3 266.5 269.0
311.1 196.3
248.8 271.6 294.5 409.2
503.1 538.1 563.5
0
200
400
600
800
FY2011 FY2012 FY2013 FY2014 1HFY15
1st Half 2nd Half
13.9 16.6 17.5 17.7
20.5 12.8
16.4 17.8 19.5 26.7
33.0 35.3 37.2
0
10
20
30
40
50
FY2011 FY2012 FY2013 FY2014 1HFY15
1st Half 2nd Half
28
6.022 6.811 6.827
7.307 7.725
0
2
4
6
8
FY2012 FY2013 FY2014 1QFY15 1HFY15
RM bil
Enhanced
Shareholder Value
3.89 4.40 4.41
4.72 4.99
0
1
2
3
4
5
6
FY2012 FY2013 FY2014 1QFY15 1HFY15
RM
1HFY2015: Steady improvement in Market Capitalisation and Share Price performance
Market capitalisation and share price
performance is improving steadily, with
CAGR at 13.8% since FY2011.
Market Capitalisation Share Price Performance
RM Mil FY11 FY12 FY13 FY14 1Q
FY15
1H
FY15
Price to
book
multiple
1.4 1.6 1.7 1.6 1.8 1.8
Alliance Financial Group
7th Floor, Menara Multi-Purpose
Capital Square
No. 8, Jalan Munshi Abdullah
50100 Kuala Lumpur, Malaysia
Tel: (6)03-2604 3333
www.alliancefg.com/quarterlyresults
THANK YOU
Tan Hong Ian
Corporate Strategy & Investor
Relations
Contact: (6)03-2604 3370
Email: [email protected]
Disclaimer: This presentation has been prepared by Alliance Financial Group (the “Company”) for information purposes only and does not purport to contain all the
information 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 the
Company 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 it
form 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 in
connection therewith.
For further information, please contact: Amarjeet Kaur
Group Corporate Strategy &
Development
Contact: (6)03-2604 3386
Email: [email protected]
29
Islamic Banking: Y-o-Y Net Financing Growth of 22.7% and Deposit Growth of 13.7%
30
Net Financing & Advances (AIS)
Customer Deposits (AIS)
Islamic Banking Income
Net Profit After Tax & Zakat (AIS)
5.5 5.2 5.9 6.3
7.1
31.5% 36.8% 33.1% 32.9% 30.8%
0
5
10
FY2011 FY2012 FY2013 FY2014 1HFY15
RM bil Customer Deposits CASA Ratio
Appendix
114.3 127.6 124.4
105.6 107.6
19.9% 20.6% 18.9% 15.6% 14.8%
0
50
100
150
1HFY11 1HFY12 1HFY13 1HFY14 1HFY15
RM mil Islamic Banking Income % of Group's Net Income
40.8 39.0
29.2 25.7
28.4
0
10
20
30
40
1HY11 1HY12 1HY13 1HY14 1HY15
RM mil
4.0 4.4
4.6 5.0
5.7
0
3
6
FY2011 FY2012 FY2013 FY2014 1HFY15
RM bil
Appendix
31
Requirement
Banks to maintain, in aggregate, collective
assessment allowance (“CA”) and Regulatory
Reserve ratio of 1.2%.
The CA + Regulatory Reserve is stated as a
percentage of gross loans (excluding government
loans), net of individual allowance (“IA”).
CA includes both provision for impaired and non-
impaired loans, amount as per disclosed in our
financial statements.
The Bank shall comply with this requirement by 31
Dec 2015.
Guideline on Classification and Impairment Provision for Loans/Financing
Treatment
In the event the Bank is required to top up the provision
to 1.2% (via the creation of Regulatory Reserve), the
top up portion is created by way of transferring the
provision from retained profits i.e. merely movement
within the statement of equity without additional
charge to profit & loss accounts.
It would be a transfer from Retained Earnings to
Regulatory Reserve (within Shareholders Funds).
Effectively the Regulatory Reserve will be similar to
the Statutory Reserve – cannot be used to declare
dividends. But no impact on the NTA.
As per Para 14.1, Regulatory Reserve, attributable to
non-impaired loan is eligible for inclusion into Tier-2
capital computation. AFG Jun 2014 Mar 2014
CA % 0.90% 0.98%
Impact
As at end-Sep 2014, AFG’s CA ratio was at 0.90%. To top up to 1.2%, this translates to addition RM102.7 million.
Estimated impact to CET1 ratio is a drop of 0.31% to 9.81.%. Total Capital Ratio maintained at 13.18%.
