Alliance Bank Malaysia Bhd. · MYX:ABMB

Alliance Bank Malaysia Bhd — FY2020 Earnings Presentation

47 slides from Alliance Bank Malaysia Bhd's earnings presentation, Jun 26, 2020

1. Slide 1: Analyst Briefing FY2020

   Analyst Briefing FY2020 26 June 2020

2. Slide 2: Contents

   Key Results Contents 1 COVID-19 Supports & Early Impact 2 FY20 Financial Performance  Revenue & Franchise Development  Effective Risk Management  Key Results 3 Going Forward  Our Strategy  FY20 Achievements  FY21 Priorities & Sustainability 4 Appendix  4QFY20 & FY20 Financial Result 1

3. Slide 3: Keeping Our Stakeholders and the Bank Safe During COVID-19

   Executive Summary Keeping Our Stakeholders and the Bank Safe During COVID-19 Keeping Our Stakeholders Safe Keeping the Bank Safe • Frequent COVID-19 task force meetings to closely monitor and discuss mitigation actions • Successfully implemented business continuity plan Helping our staff to stay saf

4. Slide 4: Keeping Our Stakeholders and the Bank Safe: Credit Risk Management

   Executive Summary Keeping Our Stakeholders and the Bank Safe During COVID-19 Keeping Our Stakeholders Safe Keeping the Bank Safe Helping our clients stay financially healthy during and Enhancing our credit controls post-pandemic  Conducted portfolio review to assess sectorial exposure to COVID-19 

5. Slide 5: Overview of Consumer Banking Portfolio Stratification Strategy

   Overview of Consumer Banking Portfolio Stratification Strategy Managing asset quality while growing affluent markets 1 Stratify 2 3 Customer Diagnostic tools Action Plans Segmentation Study customer risk Assess COVID-19 Post-diagnostic: Grow affluent customers while level impact to customers’ keepin

6. Slide 6: Overview of SME Banking Portfolio Stratification Strategy

   Overview of SME Banking Portfolio Stratification Strategy Identify risk and opportunity from the current borrowing portfolio Step 1: Step 2: Step 3 Prioritization Diagnostic Action Plan a) Stratify Customer Diagnostic Tool Action Plan Segmentation  Credit score  A set of guided Reduce exposure  S

7. Slide 7: Overview of Corporate & Commercial Banking Portfolio Stratification Strategy

   Overview of Corporate & Commercial Banking Portfolio Stratification Strategy Identify risk and opportunity from the current borrowing portfolio Step 1: Step 2: Step 3 Prioritisation Diagnostic Action Plan a) Stratify Customer Diagnostic Tool Action Plan Segmentation Reduce exposure  A set of guided

8. Slide 8: Early COVID-19 impact

   Executive Summary Early COVID-19 impact 4QFY20 results was partly affected by early COVID-19 impact Business growth slowed down Underlying Net Profit After Tax Gross loans – RM bil RM mil Early COVID-19 impact ECL model review +0.3% +7.0% q-o-q +16.0% q-o-q +1.8% growth Share +50.5% q-o-q 43.7 margi

9. Slide 9: FY20 Performance Highlights

   Executive Summary Key Results FY20 Performance Highlights  Revenue grew 4.1% y-o-y to RM1.69 billion 1  Net interest income was flat y-o-y despite OPR cut impact Revenue &  Net interest margin at 2.40%, within original guidance Franchise  Gross loans growth slowed down to 2.2% y-o-y Development

10. Slide 10: Revenue grew 4.1% y-o-y to RM1.69 billion

    Revenue & Franchise Development Revenue grew 4.1% y-o-y to RM1.69 billion a) Revenue grew 4.1% y-o-y to RM1.69 bil: Revenue  Non-interest income: +25.2% or RM73.7 mil y-o-y RM mil Net interest income Client-based fee income  Client-based fee income: +4.5% or RM13.9 mil y-o-y Non-client based fee i

11. Slide 11: Net interest income was flat y-o-y

    Revenue & Franchise Development Net interest income was flat y-o-y a) Net interest income was flat y-o-y: Net Interest Income  Excluding OPR cut impact & delinquency pricing RM mil revision, net interest income grew +4.0% y-o-y RM mil +23.5 -21.9 -19.1 Flat +70.8 -12.0 -47.6 1,323.5 1,330.0 y-o-y 1

12. Slide 12: NIM at 2.40%, within original guidance

    Revenue & Franchise Development NIM at 2.40%, within original guidance a) NIM: 2.40%, within original guidance, helped by lower Interest Margin Trend COF in 4QFY20 mainly from Saveplus repricing Gross Interest Margin Cost of Funds Net Interest Margin +4bps nil -4bps -2bps 2.50% -9bps 2.40% 5.15% 5.0

13. Slide 13: Continue to focus on SME, AOA and personal financing

    Revenue & Franchise Development Continue to focus on SME, AOA and personal financing a) 4QFY20: Slower loans growth at 0.3% q-o-q impacted by Gross Loans QoQ Growth COVID-19: (RM’bil) Dec-19 Mar-20 ∆ QoQ ∆ QoQ%  Share margin financing: -RM223 mil/ -22.2% Consumer Banking 23.4 23.3 -0.1 -0.9%  Comm

14. Slide 14: Non-interest income grew 25.2% y-o-y

    Revenue & Franchise Development Non-interest income grew 25.2% y-o-y a) Non-interest income grew 25.2% or +RM73.7 mil y-o-y: Non-interest income RM mil Client Based Fee Income: +4.5% +28.5 +24.4 +0.4 -2.6 -8.3 365.8 RM mil Client based fee income Non-client based fee income 292.1 +20.4 +10.9 +25.2%

15. Slide 15: FY20 Cost to Income Ratio at 47.8%, within guidance

    Revenue & Franchise Development FY20 Cost to Income Ratio at 47.8%, within guidance a) FY20 cost to income ratio at 47.8%, within guidance Operating Expenses b) FY20 operating expenses: +RM32.1 mil or 4.1% y-o-y: RM mil OPEX CIR  Prioritised recruitment in collection & SME expansion (+RM4.8 mil) 47

16. Slide 16: Customer based funding grew 6.5% y-o-y

    Effective Risk Management Customer based funding grew 6.5% y-o-y a) Customer based funding grew 6.5% y-o-y Customer Based Funding b) CASA grew RM2.1 bil or 13.6% y-o-y mainly from: RM bil CASA Structured Investments Retail Negotiable Instrument of Deposits (NID)  Alliance SavePlus: +RM1.7 bil y-o-y

17. Slide 17: FY20 Liquidity Coverage Ratio at 156.7%

    Effective Risk Management FY20 Liquidity Coverage Ratio at 156.7% a) Healthy liquidity position: Liquidity: LCR, LFR  Liquidity coverage ratio (LCR) at 156.7% Loan to Fund Ratio (LFR) % (industry*: 141.4%) Liquidity Coverage Ratio (LCR)  Loan to fund ratio at 83.6% (industry*: 83.2%) 154.3% 171.3%

18. Slide 18: FY20 net credit cost at 72.1 bps

    Effective Risk Management FY20 net credit cost* at 72.1 bps a) FY20 net credit cost* at 72.1 bps Net Credit Cost* (bps) bps +2.5 +8.0 72.1 bps Early Covid19 impact One large account Debt-sale +5.0 +2.5 +0.7 64.1 49.5 +3.9 72.1 13.8 9MFY20 Business Personal Mortgage Other ECL model 12MFY20 Early Repo

19. Slide 19: Residential credit cost improved with lower GIL net inflow

    Effective Risk Management Residential credit cost improved with lower GIL net inflow a) Credit cost for both classic mortgage and AOA has Classic Mortgage GIL improved q-o-q contributed by: R&R (RM mil) GIL ratio (%) 30+ dpd (%) Credit Cost (%)  Lower gross impaired loans (GIL) q-o-q due to 2.9% 3.

20. Slide 20: Post-Jun18 AOA asset quality performing better

    Effective Risk Management Post-Jun18 AOA asset quality performing better a) Lower GIL & delinquency ratios for Post-Jun18 AOA (vs AOA: Pre-Jun18 Pre-Jun18 AOA), thanks to credit tightening: GIL (RM mil) Total GIL ratio (%) 30+ dpd (%) Credit Cost (%) # Date Origination 1 Jun18  Revised OD amortizat

21. Slide 21: SME & Personal Financing asset quality under control

    Effective Risk Management SME & Personal Financing asset quality under control a) SME: lower credit cost q-o-q; GIL ratio stable SME b) SME delinquency increased q-o-q due to moratorium GIL (RM mil) Total GIL ratio (%) 30+ dpd (%) Credit Cost (%) anticipation but improved post Mar-20 2.6% 2.1% c) Ac

22. Slide 22: PPOP grew 4.1% y-o-y; FY20 NPAT at RM424.3 million

    Key Results PPOP grew 4.1% y-o-y; FY20 NPAT at RM424.3 million a) FY20 Pre-Provision Operating Profit (PPOP) grew 4.1% Pre-Provision Operating Profit y-o-y to RM882.3 million RM mil +4.1% b) FY20 PBT at RM567.9 million mainly impacted by: y-o-y 847.2 882.3  OPR cut & delinquency pricing revision of

23. Slide 23: Prioritising capital conservation

    Key Results Prioritising capital conservation a) Capital position remains strong: Capital Position  CET-1 ratio: 13.8% % CET 1 Tier 1 Total Capital  Tier 1 ratio: 14.6% 18.5% 18.3% 18.9%  Total capital ratio: 18.9% b) Prioritising capital conservation in order to support 14.1% 14.0% 14.6% future

24. Slide 24: Contents

    Key Results Contents 1 COVID-19 Supports & Early Impact 2 FY20 Financial Performance  Revenue & Franchise Development  Effective Risk Management  Key Results 3 Going Forward  Our Strategy  FY20 Achievements  FY21 Priorities & Sustainability 4 Appendix  4QFY20 & FY20 Financial Result 23

25. Slide 25: Results of FY20 Priorities

    Our Strategy Results of FY20 Priorities FY20 Achievement 1 2 Partnerships + 3 Branch in a Accelerate core businesses Digital Tablet / Streamlining a. AOA: +54% y-o-y to >RM5.0 billion a. Ecosystem a. Digital / Straight- partnerships Through Processing (STP) account opening) Consumer b. Personal Loan

26. Slide 26: FY20 Achievement: AOA grew 54% y-o-y to RM5.0 billion

    Our Strategy FY20 Achievement: AOA grew 54% y-o-y to RM5.0 billion Alliance ONE Account (“AOA”) FY20 Performance Pre-Jun18 AOA ENR (RM ‘bil) Loan balances (RM bil) 1.7% 1.7% 1.8% 1.8% 1.6% 1.5% 1.5% 1.4% 5.01 +54% Revenue% 2.0 2.1 2.2 2.2 2.2 2.1 2.1 3.25 1.5 45% 44% 45% 45% 45% 44% 44% Overdraft 44

27. Slide 27: FY20 Achievement: Personal Loans grew +10% y-o-y

    Our Strategy FY20 Achievement: Personal Loans grew +10% y-o-y FY20 Performance Simple Personal Loan Application Loan balances1 (RM bil) 1  Semi-STP for Personal  Dec ‘19 Loans via web 2.17  Submit application and +10% income documents via web 1.97  TAT: 1-2 working days  Approved RM16.8 million

28. Slide 28: FY20 Achievement: SME grew +8% y-o-y while industry contracted

    Our Strategy FY20 Achievement: SME grew +8% y-o-y while industry contracted FY20 Performance Alliance Way: Fulfilled via Tablet / Smartphone Loan balances1 (RM bil) 9.41 1 “1-day, 1 visit” 8.73 +8%  Business CASA account  Pilot: opening Nov ‘19  BizSmart online banking activation  Dec ‘19 2 Mo

29. Slide 29: FY20 Achievement: Alliance@Work

    Our Strategy FY20 Achievement: Alliance@Work Acquired >29k new local employees & >1.7k new payroll companies New local employees CASA New company payroll accounts CASA growth acquired acquired Number of new accounts Number of new accounts CASA balances (RM ‘mil) 29,776 487.1 1,747 +18% +26% 25,230 1

30. Slide 30: COVID-19: Key impacts to the Bank in FY21

    Our Strategy COVID-19: Key impacts to the Bank in FY21 COVID-19 impact to Automatic moratorium OPR cut net credit cost  Automatic 6-month moratorium for  Full year impact of each 25 bps cut will  Conducted scenario analysis to assess consumer and SME loan / financing reduce NIM by 4 – 5 bps. Perm

31. Slide 31: FY21 Key Priorities

    Our Strategy FY21 Key Priorities Financials Gross loans Revenue Operating expenses 1 Covid-19 management 2 Accelerate remote banking & branch transformation Financial assistance:  Accelerate remote banking (e.g. e-KYC for deposits, digital loans, migration of transactions to online channels)  Diff

32. Slide 32: Non-financial assistance: Connect SMEs to e-commerce

    Our Strategy Non-financial assistance: Connect SMEs to e-commerce Phase 1: Phase 2: Phase 3: Digital marketing and branding #SupportLokal Online Bazaar for B2Cs Access to popular e-commerce sites support BizSmart® Solution Portal for B2Bs • Help SMEs create social media • Provide free digital market

33. Slide 33: Accelerate remote banking to widen digital propositions

    Our Strategy Accelerate remote banking to widen digital propositions & serve our customers better Scale up existing innovation Build new digital capabilities  Scale up existing digital products (e.g.  Develop new digital products via e- semi-STP personal loan, RM-assist digital KYC (e.g. new-to-Ba

34. Slide 34: Manage liquidity risk & cash availability

    Our Strategy Manage liquidity risk & cash availability a) All entities’ liquidity ratio above internal threshold during Loan to Deposits ratio (LDR) Movement Control Order (MCO) Target ABG b) With expected increase in undrawn commitments and collection shortfall for 6-month moratorium of ~RM280 mill

35. Slide 35: Manage financial & capital impact

    Our Strategy Manage financial & capital impact Key Performance Strategic Action Plans FY21 Guidance Indicators 1 Managing growth Gross loans growth Focus on Tighten credit >2% green sectors policies 2 Cost-savings initiatives Manage 0% Operating expenses Stringent discretionary opex growth hiring ex

36. Slide 36: Continue high sustainability standards: Businesses and Community

    Sustainability Continue high sustainability standards 1 Supporting the Businesses 2 Supporting the Community Alliance Islamic Halal in One Programme AEIOU 5 - Financial literacy program for young children  Halal enterprise ecosystem that offers end-to-end solutions for  Introduced a new digital el

37. Slide 37: Continue high sustainability standards: Employees and Governance

    Sustainability Continue high sustainability standards 3 Supporting the Employees 4 Strengthening Corporate Governance Smart Casual Dress Code Everyday MSWG Malaysia-ASEAN Corporate Governance  Inculcates an open and flexible work culture.  Improved ranking to 26th position (Jul-19) from 28th posit

38. Slide 38: Contents

    Key Results Contents 1 COVID-19 Supports & Early Impact 2 FY20 Financial Performance  Revenue & Franchise Development  Effective Risk Management  Key Results 3 Going Forward  Our Strategy  FY20 Achievements  FY21 Priorities & Sustainability 4 Appendix  4QFY20 & FY20 Financial Result 37

39. Slide 39: 4QFY20 PPOP grew 7.4% q-o-q to RM229.0 mil

    Key Highlights Q-o-Q: Financial Performance 4QFY20 PPOP grew 7.4% q-o-q to RM229.0 mil Net Interest Income & Non Interest Income & Revenue Islamic Net Financing Income NOII Ratio RM mil RM mil RM mil Client Based Non Client Based NOII Ratio 24.2% 427.4 434.4 22.0% 21.6% 403.4 405.0 422.5 18.6% 339.8

40. Slide 40: 4Q FY2020: Q-o-Q Income Statement

    4Q FY2020: Q-o-Q Income Statement Q-o-Q Change  Revenue grew by RM12.0 mil or 2.8% q-o-q: 3QFY20 4QFY20 Better / (Worse)  Net interest income continue to grow by RM10.9 mil Income Statement RM mil RM mil or 3.3% q-o-q from loan & treasury growth and lower RM mil % funding cost Net Interest Income

41. Slide 41: FY20 PPOP grew 4.1% y-o-y to RM882.3 million

    Key Highlights Y-o-Y: Financial Performance FY20 PPOP grew 4.1% y-o-y to RM882.3 million Net Interest Income & Non Interest Income & Revenue Islamic Net Financing Income NOII Ratio RM mil RM mil RM mil Non Client Based NOII Ratio 1,622.1 1,689.3 1,330.0 1,323.5 21.6% 21.7% 18.0% 15.8% 365.8 46.2 292

42. Slide 42: 4Q FY2020: Y-o-Y Income Statement

    4Q FY2020: Y-o-Y Income Statement Y-o-Y Change  Higher revenue of RM31.0 mil or 7.7% y-o-y: 4QFY19 4QFY20 Better / (Worse)  Non-interest income increased RM30.4 mil y-o-y: Income Statement RM mil RM mil RM mil %  Higher client based fee income mainly driven by insurance & bancassuance business Ne

43. Slide 43: FY2020: Y-o-Y Income Statement

    FY2020: Y-o-Y Income Statement  Revenue grew 4.1% y-o-y to RM1.69 bil: Y-o-Y Change FY19 FY20 Better / (Worse)  Higher non-interest income by RM73.7 mil or Income Statement RM mil RM mil +25.2% y-o-y due to: RM mil %  Higher client based fee income mainly from Net Interest Income 998.1 980.8 weal

44. Slide 44: Q-o-Q Summarised Balance Sheet

    Q-o-Q Summarised Balance Sheet Q-o-Q Change  Net loans grew 0.1% q-o-q Dec 19 Mar 20 Balance Sheet  SME loans growth of 3.0% (vs industry: RM bil RM bil RM bil % -8.8%#)  Continued strong build up for Alliance ONE Total Assets 58.5 61.0 2.4 4.2% Account (+RM304 mil or 6.4% q-o-q). Treasury Assets

45. Slide 45: Y-o-Y Summarised Balance Sheet

    Y-o-Y Summarised Balance Sheet Y-o-Y Change  Net loans grew by 1.9% y-o-y. Mar 19 Mar 20 Balance Sheet  SME loans growth of 8.0% y-o-y (industry: RM bil RM bil RM bil % -10.4%#) Total Assets 56.5 61.0 4.5 7.9%  Continued strong build up for Alliance ONE Account (+RM1.8 bil) Treasury Assets* 10.0

46. Slide 46: Key Financial Ratios

    Key Financial Ratios Financial Ratios 4QFY19 3QFY20 4QFY20 FY19 FY20 Return on Equity 8.1% 9.3% 7.1% 9.9% 7.3% Shareholder Value Earnings per Share 7.2sen 8.7sen 6.6sen 34.7sen 27.4 sen Net Assets per Share RM3.70 RM3.82 RM3.87 RM3.70 RM3.87 Net Interest Margin 2.57% 2.39% 2.46% 2.50% 2.40% Efficien

47. Slide 47: Thank You.

    Thank You. Disclaimer: This presentation has been prepared by Alliance Bank Malaysia Berhad (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, express

Alliance Bank Malaysia Berhad — FY2020 Earnings Presentation on 6ix