Bank made good progress in accelerating core businesses and digitisation initiatives
Kuala Lumpur, 22 February 2020 - Alliance Bank Malaysia Berhad (“Alliance Bank” or the “Bank”) today reported that its net profit after tax grew 16% compared to the previous quarter to RM134 million for the third quarter of the financial year ending 31 March 2020 (“3QFY20”). This resulted in an improvement in return on equity to 9.3%.
For the third quarter, the Bank’s net interest income (including Islamic net financing income) grew 1.7% to RM331.3 million (2QFY20: RM325.8 million), while its client-based fee income grew 3.1% to RM83.7 million.
In addition, the Bank’s net credit cost (including impairment) for 3QFY20 moderated to 7.7 basis points (“bps”) due to account recoveries in the business portfolio and intensified collection efforts in the consumer banking portfolio.
On a year-on-year basis, revenue for the first nine months of the Bank’s financial year ended 31 December 2019 grew 3.4% to RM1.26 billion. Its net interest margin of 2.38% remains near the top of the industry. Margin erosion from the Overnight Policy Rate (“OPR”) cut was mitigated by the Bank’s stronger growth in better risk adjusted return loans. The Bank has also been repricing its deposit products and strategically rebalancing its available-for-sale investment portfolio to cushion the OPR cut impact.
The Bank’s gross loans and advances grew 5.5% YOY to RM43.5 billion, outpacing industry’s loan growth of 3.9%. SME loans improved 11% YOY to RM9.3 billion, while the industry contracted 1.7%. Over 44% of the Bank’s SME loan growth was from its unsecured lending proposition via its partnership with Credit Guarantee Corporation.
“Our key transformation initiatives, supported by meaningful partnerships and digitisation efforts, continue to yield good results. We remained focused in building up capabilities and investing in technology to deliver fast, simple, and responsive customer experience. In turn, this has strengthened our position in the SME and consumer segments,” said Mr. Joel Kornreich, group chief executive officer of Alliance Bank.
“In addition, we will continue to strengthen our efforts and vigilance in managing our credit portfolio,” added Mr. Kornreich.
Accelerating the SME and Consumer Banking Businesses
The Bank continues to enhance its acquisition channels to accelerate its core businesses of SME and consumer banking. Alliance ONE Account (“AOA”), its loan consolidation service for consumers, grew 71% YOY for the 9-month financial period to RM4.7 billion, thanks to its partner-in-sales programme and digital marketing efforts. The Bank also recorded 14% YOY growth to RM2.1 billion for Personal Loan balances.
The Bank reported 7.6% growth in CASA, largely due to improvements in Alliance SavePlus (+RM1.3 billion YOY) and Alliance@Work payroll-related CASA (+RM206 million YOY). The Bank will increase its cross-selling efforts of higher value proposition products such as its wealth management solutions to business owners and high net worth customers.
In 9MFY20, the Bank acquired more than 1,200 company payroll accounts and over 23,000 new employee Current Account/Savings Account (“CASA”) from its Alliance@Work programme. CASA balances from these new acquisitions grew 170% to RM326.9 million in 9MFY20.
The Bank continues to expand its reach by establishing ecosystem partnerships. In January this year, the Bank signed a Memorandum of Understanding with Celcom Axiata Berhad (“Celcom”) to help business owners grow and manage their business better with a combined package of connectivity and banking solutions. The Celcom Business Suite™ for Retail and Alliance SME Express Financing package provides businesses with better pricing value on mobile and data connectivity, and preferential rates from the Bank.
The Bank also launched its Halal in One Programme, which offers business owners venturing into the Halal market end-to-end solutions including business advisory, business matching services, and shariah-compliant financing.
Alliance Bank continues to roll out digital innovations to deliver fast, simple, and responsive client experience. For personal financing, the Bank introduced its digital personal loan/financing solution which offers fast approval in as little as 10 minutes, and disbursement of funds within 24 hours.
Through the Bank’s Branch-in-a-Tablet initiative, individuals can open a savings account, and activate their debit card and online banking account, in as little as 15 minutes. Today, 90% of the Bank’s customers open a current account using a tablet at the branch. For business owners, they too can open a business account within the same day with minimal documentation using the Branch-in-a-Tablet.
Looking Forward
“In the coming months, we will launch several additional digital solutions to improve our customers’ experience with us. This includes the mobile BizSmart app for business owners who need to approve transactions on-the-go, and conveniently access their business account anywhere, anytime. The mobile app will also provide SMEs with quick and simple trade financing. We will continue to form meaningful collaborations to expand our reach and serve our customers better,” said Mr. Kornreich.
“We are confident that our Key Transformation initiatives, complemented by our digital innovations, will enable us to deliver sustainable growth,” said Mr. Kornreich.
