Alliance Bank Malaysia Bhd. · MYX:ABMB

Alliance Bank Malaysia Bhd — 9M FY2016 Earnings Presentation

23 slides from Alliance Bank Malaysia Bhd's earnings presentation, Feb 22, 2016

  1. Slide 1: Analyst Briefing 9M FY2016

    ANALYST BRIEFING 9M FY2016 22 February 2016 in Asia Pacific, Gulf Region & Africa

  2. Slide 2: Contents

    Contents 1 Executive Summary  Revenue and Profitability  Effective Risk Management  Key Results 2 Appendix - Financial Results:  3Q FY2016  9M FY2016

  3. Slide 3: 3Q FY2016: Performance

    3Q FY2016: Performance Continued progress despite challenging economy 1  Efficient loans growth with improved Risk Adjusted Return (“RAR”) Revenue and  Optimization of funding cost Profitability  Better client based fee income  Continued cost discipline 2  Stable asset quality Effective Risk 

  4. Slide 4: Growth: Revenue & Profitability - Loan Portfolio Yield

    Growth: Revenue & Profitability Efficient loans growth with improved risk adjusted returns Loan Portfolio Yield a) Q-o-Q loan portfolio yields expanded 3 bps to 5.13% Alliance Bank Industry  Improving loan mix  Pricing for risk % 5.08% 5.06% 5.10% 5.13% b) Industry yield* up slightly by 1 bp to 4.

  5. Slide 5: Efficient growth in better risk adjusted return loans

    Growth: Revenue & Profitability Efficient growth in better risk adjusted return loans Loans Growth YTD (April – December) a) Improved loan origination mix: FY2016 annualized loans growth: 9M FY2015 9M FY2016 9M FY2016 Loans Loans Annualized Growth Growth Loans Growth  Better risk adjusted return (“

  6. Slide 6: Optimizing funding cost

    Growth: Revenue & Profitability Optimizing funding cost Deposits and CASA Growth a) Funding mix optimization:  Growing customer deposits and CASA RM bil 35.0% 34.8% balances  CASA ratio at 35.0% 41.5 43.5 Fixed Deposits & Others b) Q-o-Q rise in cost of funds (+8 bps) mainly due 28.3 Saving Deposi

  7. Slide 7: Focus on customer based funding

    Growth: Revenue & Profitability Focus on customer based funding Funding of Balance Sheet a) Proportion of funding from customer deposits remained high (>80%), after new Sub-MTNs issuance Sub-MTNs b) +5.0% y-o-y customer deposits growth, faster than % + RM1.2B industry^ (+1.8%) 3.2% 5.8% 8.4% 8.6% 7.

  8. Slide 8: Growing recurring client based fee income

    Growth: Revenue & Profitability Growing recurring client based fee income Client Based Fee Income: Q-o-Q Q-o-Q Performance: Client based fee income up 8.0%, with growth in: RM mil a) Wealth Management fee: +13.3%, contributed by Banca and share trading fees 73.8 b) Commission and other fee income: +

  9. Slide 9: Continued cost discipline

    Growth: Revenue & Profitability Continued cost discipline with investment to enhance customer experience Operating Expenses Trend: Q-o-Q a) Investment in brand building, human capital and infrastructure and re-engineering of processes to OPEX CIR continue providing a great customer experience RM mil

  10. Slide 10: Effective Risk Management: Stable asset quality

    Effective Risk Management Stable asset quality Gross Impaired Loans a) Better than industry asset quality:  Gross impaired loans ratio at 1.1% (industry: 1.6%) RM mil Gross impaired loans Gross Impaired Loan Ratio  Net impaired loans ratio at 0.7% (industry: 1.2%) Net Impaired Loan Ratio b) Stable

  11. Slide 11: Credit cost within guidance

    Effective Risk Management Credit cost within guidance Overall Credit Cost (bps) a) 9MFY2016: Annualized net credit cost moderated at 15.1 bps, with absence of major recoveries Excluding recoveries Including recoveries b) Recoveries: • 9MFY 2016: RM28.7 million 29.4 25.2 • 9MFY 2015: RM48.6 million c

  12. Slide 12: Effective management of interest rate risk

    Effective Risk Management Effective management of interest rate risk Investment Securities a) Opportunistically enhanced investments in Available for Sale and Held for Trading securities RM bil Financial assets held-for- trading b) Reduced sensitivity to interest rate risks 12.2 11.2 0.2  Shorten p

  13. Slide 13: Effective Capital Management: Strong capital ratios

    Effective Capital Management Strong capital ratios Total Capital Ratio (%) a) Strengthened total capital ratio to 17.1%, with RM1.2 billion Tier-2 Subordinated Medium 17.1% 15.9% Term Notes issuance, comprised of: 14.6% 13.7% 13.0%  RM900 million on 27 October 2015  RM300 million on 18 December 20

  14. Slide 14: Key Results: Better Risk Adjusted Return strategy

    Key Results Better Risk Adjusted Return strategy Net Profit After Tax and Return on Equity a) Sequential improvement Q-o-Q with Risk RM mil NPAT Return on Equity Adjusted Return strategy in:  NPAT : + 0.7%, registered three consecutive 11.6% 11.7% 11.6% quarterly growth 10.9% 9.4%  ROE : 11.6% 126

  15. Slide 15: Way Forward: Business Priorities

    Way Forward: Business Priorities Focus on sustainable profitability 1  Efficient loans growth with focus on Risk Adjusted Returns Revenue  Optimization of funding mix and cost of funds and  Improved client based fee income Profitability  Continued cost discipline with investments to enhance cust

  16. Slide 16: Contents - Appendix

    Contents 1 Executive Summary  Revenue and Profitability  Effective Risk Management  Key Results 2 Appendix - Financial Results:  3Q FY2016  9M FY2016

  17. Slide 17: Key Highlights Q-o-Q: Financial Performance

    Key Highlights Q-o-Q: Financial Performance Three consecutive net profit after tax quarterly growth Net Interest Income & Revenue Non Interest Income & NII Ratio Islamic Banking Income RM mil Client Based Non Client Based NOII Ratio RM mil RM mil 23.4% 25.9% 21.9% 23.8% 344.4 365.9 361.2 91.7 306.0

  18. Slide 18: 3Q FY2016: Income Statement

    3Q FY2016: Income Statement 3QFY16 net profit after tax up 0.7% Q-o-Q Change  Net profit after tax registered three consecutive 2QFY16 3QFY16 Better / (Worse) quarterly growth since1QFY16 Income Statement RM mil RM mil RM mil %  Net interest income grew by 1.3% q-o-q, driven by higher RAR loans an

  19. Slide 19: Key Highlights Y-o-Y: Financial Performance

    Key Highlights Y-o-Y : Financial Performance 3QFY16 net profit after tax up 7.3% y-o-y Net Interest Income & Revenue Non Interest Income & NII Ratio Islamic Banking Income Client Based Non Client Based NOII Ratio RM mil 1,075.4 1,071.4 RM mil 26.4% 24.4% 23.3% 23.8% 274.1 251.9 801.3 819.5 57.0 (1a)

  20. Slide 20: 9M FY2016: Income Statement

    9M FY2016: Income Statement Fewer write backs of loan loss provisions Y-o-Y Change  Net income up 2.6%, mainly driven by higher (Normalised) RAR loans and better pricing discipline and 9MFY15 9MFY15 9MFY16 Income RM mil RM mil RM mil Better / (Worse) higher non-interest income Statement (Reported)

  21. Slide 21: Summarised Balance Sheet

    Summarised Balance Sheet Balance sheet growth Change Y-o-Y  +8.5% y-o-y net loans growth, with Dec 14 Dec 15 Balance Sheet RM bil RM bil RM bil % focus on better risk adjusted return loans namely SME, commercial and consumer Total Assets 51.2 54.4 3.2 6.2% unsecured lending Treasury Assets * 11.4 1

  22. Slide 22: Key Financial Ratios

    Key Financial Ratios Reported Financial Ratios 2QFY16 3QFY16 9MFY15 9MFY16 Return on Equity 11.7% 11.6% 13.7% 11.4% Shareholder Earnings per Share 8.8sen 8.9sen 28.8sen 25.7sen Value Net Assets per Share RM2.98 RM3.02 RM2.80 RM3.02 Net Interest Margin 2.19% 2.15% 2.20% 2.17% Efficiency Non-Interest

  23. Slide 23: Thank You

    THANK YOU 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

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