KUALA LUMPUR (May 31): Alliance Bank Malaysia Bhd’s net profit for the fourth quarter ended March 31, 2021 (4QFY21) fell 48.9% to RM50.07 million, from RM98.06 million a year ago, mainly due to higher operating expenses and credit cost.
Its quarterly revenue, meanwhile, grew 2.6% to RM445.81 million, from RM434.41 million a year ago, its filing to Bursa Malaysia showed.
The group declared a dividend of 5.79 sen per share for the financial year ended March 31, 2021 (FY21), to be paid on June 30. This represented a dividend payout ratio of 25%.
The group said its net income for 4QFY21 of RM445.8 million was higher by RM11.4 million or 2.6% year-on-year mainly due to higher net interest income.
Its operating expenses for the quarter were higher by RM26.7 million or 13% year-on-year mainly from personnel cost and professional fees.
Its net credit cost for 4QFY21 stood at 30.1 basis points (bps).
For FY21, the group’s net profit slid 15.4% to RM358.79 million, from RM424.26 million a year earlier.
Its revenue, however, increased by 7.7% to RM1.82 billion, from RM1.69 billion a year earlier. Alliance Bank’s net interest margin was 2.3%.
Operating expenses decreased for the full year by RM6.4 million or 0.8%, mainly due to its initiatives in managing marketing, administrative and compensation costs. The group’s cost-to-income ratio decreased by 3.7% to 44.1%. Alliance Bank said it “will continue to focus on cost-saving efforts” as it navigates through the Covid-19 pandemic.
Meanwhile, the group’s allowance for expected credit losses on loans, advances, financing and other debts increased by RM218.5 million or 69.5% to RM533 million as compared to the previous financial year.
Included in the allowance for expected credit losses on loans, advances, financing and other debts were reserves that the group said was “built up via management overlays amounting to RM312.7 million in anticipation of the impacts of Covid-19 on the economy”.
As a result, the Alliance Bank recorded a net credit cost of 121.4bps.
The banking group had said in a statement that FY21’s 121.4bps net credit cost “includes a management overlay of 71.2bps as provision for higher risks due to the Covid-19 impact”.
“The overlay takes into account the bank’s assessment of its risks related to sensitive sectors and take-up of loan modifications,” it added.
As at March 31, 2021, the Alliance Bank’s gross impaired loans ratio rose to 2.34% from 2% a year earlier. For the same period, net impaired loans were 1.72% on March 31, 2021, from 1.33% on March 31, 2020.
Alliance Bank said in a May 31 statement that it had provided RM7 billion in targeted assistance to individuals and businesses in FY21. This accounts for 16.4% of the bank’s loan book.
Meanwhile, in its filing to Bursa Malaysia, Alliance Bank noted: “Given the ongoing impact of the Covid-19 pandemic, the group will continue to prioritise customer engagement to address asset quality concerns. Meanwhile, it will support targeted customers that remain affected by the pandemic. The group will also continue managing its loan portfolio with tighter credit underwriting.”
Notwithstanding the above, the banking group said it will focus on growing the business via the following three key focus areas:
- Acquiring more customers where the group intends to scale up in its core segments of small and medium enterprises (SMEs) and consumer banking by enhancing and equipping relationship managers with digital tools to serve high-value customers. The group will also focus on securing more customers via digital channels.
- Capitalising on its consumer and business banking franchises, whereby the group will focus on accelerating cross selling value propositions to its customers to increase market penetration and generate fee-based income.
- Enhancing productivity and efficiencies by streamlining processes, automating through digital tools/channels, centralising functions and improving branch productivity.
“With these focus areas and the group’s continuing effort to apply prudent management practices, the group expects to deliver sustainable returns to our shareholders while strengthening our market presence,” it said.
At noon break, Alliance Bank slipped seven sen or 2.64% to RM2.58, valuing the group at RM4 billion.
