ANALYST BRIEFING - 9 Months Ended 31 December 2011 -
Nov 12, 2014
ANALYST BRIEFING- 9 Months Ended 31 December 2011 -
Executive Summary
Financial Results for 9MFY2012
Contents
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Questions & Answers3
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CIR
ROE
DividendPolicy
… move to industry average (45% - 48%) through:• targeted revenue growth• improved productivity
… achieve industry average (14% - 16%) through:• focus on underlying earnings• effective capital management
… pay “as much as we can afford, whenever we can”, subject to maintaining strong capital ratios
In FY2012, we are setting a sound foundation to deliver on our medium term (3-5 years) targets …
… to be better than industry average
… and increase non-interest income to 30% of total revenue
Our Medium Term Targets
AssetQuality
2
InvestmentBank
InvestmentBank
• Wealth Management
• Bancassurance
• Advisory
• Stockbroking
Revenue: Driving Fee Income through Cross-Selling
CONSUMER BANKING• Mortgage Loans
• Credit Cards
• Personal Loans
• Hire Purchase
• Deposits
Existing Opportunities
BUSINESS BANKING• SME• WHOLESALE
• Transaction Banking Cash Management
Trade Finance
• Treasury Sales
• Investment Banking
Existing Opportunities
New Growth Opportunities New Growth
Opportunities
ConsumerConsumer SMESME WholesaleWholesale TreasuryTreasury IslamicIslamic
Line of Business
Major Products
Strategy
ROE; ROA; CIR
Our Business Model
FY2012 - 2015: By building sustainable growth in Consumer and SME Banking
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Earnings Performance – Net Profits up 14.8% y-o-y
RM’ m 3Q12 3Q11 Change 9M12 9M11 Change
Net interest & Islamic banking income 231.9 227.0 2.1% 704.1 684.7 2.8%
Non-interest income 79.4 57.9 37.1% 231.7 173.5 33.5%
Net income 311.4 284.9 9.3% 935.8 858.2 9.0%
Operating expenses 148.1 137.4 7.8% 435.2 398.6 9.2%
Operating profit 162.9 147.6 10.4% 499.3 459.6 8.6%
Loan impairment recovery/ (allowances) 0.2 3.2 na 0.2 -20.8 na
Pre-tax profit 163.1 150.8 8.2% 499.5 438.7 13.8%
Net Profit after Tax 121.4 111.3 9.1% 372.3 324.2 14.8%Income Net interest income grew 2.8%,
despite 12.3% y-o-y loans growth due to margin compression.
Strong growth in non-interest income from transactional fee income, FX sales and treasury trading
Expense• Positive jaws due to
improvements in productivity and moderate rise in expenses
Allowance• Lower impairment allowances
in 3Q despite collective provisions at 1.5% for the strong loan growth, as a result of RM10m recovery from CLOs.
Summarized Income Statement
4
RM’ m 3Q12 3Q11 Change 9M12 9M11 Change
Earning per Share (sen) 7.9 7.3 24.4 21.2
Net return on equity * 14.1% 13.8% 14.1% 13.8%
Net return on assets * 1.3% 1.3% 1.3% 1.3%
Net interest margin on yielding assets 2.5% 2.5% 2.6% 2.7%
Non-interest income/Total income 27.4% 21.1% 26.1% 21.0%
Cost to income ratio 47.6% 48.2% 46.5% 46.4%
* Key earnings indicators, have been annualized for comparison purposes
Income Statement: Summarized Ratios
Earnings Performance: Delivering sustainable returns consistent with Medium Term Strategy 14.1% return on equity – driven by higher non-interest income 26.1% non-interest income ratio – driven mainly by recurring transactional income 46.5% cost to income ratio – driven by productivity improvements
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Strong financial position
RM’ b 3Q12 3Q11 change
Total Assets 38.6 36.9 4.6%
Loans and Advances 23.6 21.0 12.3%
Deposit from customers 30.6 28.0 9.2%
Shareholders’ Funds 3.7 3.3 12.1%
Net assets per share (RM) 2.39 2.15 11.2%
Loans to deposits (LD) ratio (%)
77.1% 74.9% 2.2%
Gross impaired loans 2.5% 3.7% 1.2%
Loan loss coverage 107.6% 83.1% 24.5%
RWCR (%) 15.2% 15.9%
Assets• Assets expansion driven by strong loans
growthLoans• Annualized loans growth for 9 months at
12.3%, due to expansion in SME and Consumer lending activities.
• Better than industry asset quality, as gross impaired loans dropped to 2.5%. Net impaired loans at 1.4%, with loan loss coverage rising to 107.6%
Deposit• CASA ratio maintained at 35.6%.• Loans to Deposits ratio up to 77.1%,
reflecting more effective utilization of balance sheet.
Shareholders Funds• Shareholders’ funds increased to RM3.7
billionRWCR• Strong capital position at 15.2%, well above
regulatory and Basel III requirements.
SummarizedBalance Sheet
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Financial Results for 9MFY2012
Questions & Answers
Contents
Executive Summary
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3
1
7
Performance Overview – Strong Net Profit Growth
111.3 121.4
324.2 372.3
0
50
100
150
200
250
300
350
400
3Q11 3Q12 9M11 9M12
Net Profit After Tax
3Q11 4Q11 1Q12 2Q12
NPAT 111.3 84.9 129.8 121.1
EPS (sen) 7.3 5.5 8.5 7.9
14.8%
9.1%
EPS (sen) 7.3 7.9 21.2 24.4
• 9 Months results• NPAT growth 14.8%• EPS growth 15.1%
• Quarterly NPAT• YOY growth 9.1%• QoQ stable (3QFY12: 121.4m; 2QFY12: 121.1m)
• Non-interest Income growth • 3Q growth YoY 37.1%• 9M growth YoY 33.5%
• Loans book growth YoY 11.5%
PerformanceOverview
RM’m
8
585.5
2.6%
Cost of Funds (COF)
Net Interest Income
Sustainable interest income and marginInterest Income
Rise in cost of funds due mainly to the 50bps rise in OPR and 3% increase in statutory reserve ratio. There was 25bps rise each in OPR on 8 July 2010 and 5 May 2011.
2.1% 2.1%
2.3% 2.3% 2.3%
2.4% 2.4%2.5%
2.5%
1.5%
2.0%
2.5%
3.0%
3.5%
Q3 FY11 Q4 FY11 Q1 FY12 Q2 FY12 Q3 FY12
AFG Industry (computed)*RM ’m
168.0 159.8 168.7 176.0 165.6
2.5%
2.4%
2.5%
2.6%
2.5%
2.6%
2.5%2.5% 2.5%
2.0%
2.1%
2.2%
2.3%
2.4%
2.5%
2.6%
2.7%
0.0
50.0
100.0
150.0
200.0
250.0
300.0
Q3 FY11 Q4 FY11 Q1 FY12 Q2 FY12 Q3 FY12
Net Interest Income
AFG's NIM - rhs
Industry's NIM (computed)* - rhs
Note: * based on 9-listed banks (2QFY12 refers to industry data up to Sept 2011 for 8 listed banks) 9
Non-interest income contribution & growth momentum
commissions17%
Gain on sales of AFS/HTM/HFT
24%
Revaluation gain15%
Brokerage5%
Commmitment fees5%Guarantee fees
3%
Dividends income4%
Portfolio managemnet
2%
Corp advisory2%
Processing fees3%
Service charges &fees10%
Others10%
Non-interest income contribution 9MFY12
9M11 9M12
9M YTD yearly growthFees Income Gain on sales securitiesRevaluation of securities Dividend incomeOther Income
33.5%
Non-Interest Income
33.5% increase in non-interest income.
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Non-Interest Income
Commissions Fee Income Investment IncomeForeign Exchange Gain
18.5
57.8
7.2
Other Income
26.6
53.1
235.0 233.2 225.7
Non-interest income gaining momentum driven by combination of service charges, commissions from sale of wealth management products, foreign exchange and treasury trading activities.
Non-interest income gaining momentum driven by combination of service charges, commissions from sale of wealth management products, foreign exchange and treasury trading activities.
Non-interest income gaining momentum
-10
30
70
110
150
190
230
9MFY11 9MFY12
40.326.4
80.087.4
98.8
44.2
14.8
10.15.5
(2.1)
173.5
231.7
+52.6%
-8.5%
+123.7%
RM ’m
235.0 233.2 225.7 235.7
9MFY2012 major achievements9MFY2012 major achievements9MFY2012 major achievements9MFY2012 major achievements
Non-interest income trend9M YTD yearly growth
RM ’m
57.9 52.2 79.2 73.1 79.4
21.1%20.1%
26.4%
24.6%
27.4%
0%
5%
10%
15%
20%
25%
30%
0
10
20
30
40
50
60
70
80
90
Q3 FY11 Q4 FY11 Q1 FY12 Q2 FY12 Q3 FY12
Non-Interest Income - lhs NII / Total Income - rhs
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Operating Expenses and CIR TrendsOperating Expenses Trends
45.2%
45.9%
48.2%
54.1%
46.5%45.5%
47.6%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
0
40
80
120
160
200
Q1 FY11 Q2 FY11 Q3 FY11 Q4 FY11 Q1 FY12 Q2 FY12 Q3 FY12
Administration and general expensesMarketing expensesEstablishment expensesPersonnel expensesCIR %
Operating Expenses
277.5107.3
13.536.9
YTD Dec 2011
Personal expensesEstablishment expensesMarketing expensesAdminkistration and general expenses
12.0%-1.5%
• Personnel cost remain the main operating expenses as we continue to invest in human capital.
• Overall cost increased by 9.2% in line with expansion of business.
Operating Expenses
RM’m
12
Note: * based on 9-listed banks (2QFY12 refers to industry data up to Sept 2011 for 8 listed banks)
Operating Expenses
Cost to Income Ratio (CIR)9MFY12 9MFY11
RM ’m
Overheads Breakdown
Cost to Income Ratio now in line with industry average
35%
40%
45%
50%
55%
3QFY11 4QFY11 1QFY12 2QFY12 3QFY12
CIR - AFG CIR - Industry ( *computed)
0 100 200 300 400 500
Admin & GeneralExpenses
MarketingExpenses
Establishment Costs
Personnel Costs
TotalOverheadExpenses
9MFY12 9MFY11
398.6
435.2
247.7
277.5
107.3
108.9
13.5
11.2
36.9
30.7
+9.2%
+12.0%
-1.5%
+20.0%
+20.2%
46.5 45.846.344.5
46.546.046.5
48.5
46.4
• Personnel cost remain the main operating expenses as we continue to invest in human capital. • Overall cost increased by 9.2%.• Cost-to-income ratio (“C/I”) ratio maintained at 46.5% compared to 46.4% 3Q last year.
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26.6% 34.4% 28.3%6.8 8.1 8.0
14.1 12.214.6
1.61.7 1.6
6.4%
7.1%
5.8%(1.9%)
8.9
14.3
1.7
29.3%
5.5%
Gross loan grew by 11.5% Y-o-Y
Loans
0
5
10
15
20
25
30
Q3FY11 Q4FY11 Q1FY12 Q2FY12 Q3FY12
Variable Rate Fixed Rate
2.9
RM’b
24.223.5
21.622.622.4
3.3 3.1 2.9 2.9
21.320.619.719.318.3
0 5 10 15
Others
Working capital
Mergers and acquisition
Construction
Credit card
Personal use
Purchase of fixed assets
Purchase of landed property
Purchase of transport vechicles
Purchase of securities
9MFY12 9MFY11
+0.5
+1.2
+0.6
RM’b
+11.5%
Gross Loans Composition Loans by Economic Purposes
14
Loans by Economic Purpose
15% -21% 9% 16% 15% 1% -6% -13% 10% 98%
1.6% 2.4% 38.9% 13.4% 0.5% 8.9% 2.6% 0.8% 1.3% 24.6% 5.0%
- 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000
Purchase ofSecurities
Purchase oftransportVehicles
Purchase ofResidentialproperties
Purchase ofNon-Residential
properties
Purchase offixed assets(ex-landed)
Personal Use Credit Card Contruction M&A Working Capital Others
-25%
-5%
15%
35%
55%
75%
95%
3Q12 3Q11
Composition
92.6
77.2 80.0
77.3
78.9
7.9
3.3
7.6
11.5
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
Q1 FY11 Q2 FY11 Q3 FY11 Q4 FY11 Q1 FY12 Q2 FY12 Q3 FY1265.0%
70.0%
75.0%
80.0%
85.0%
90.0%
95.0%
Y-o-Y Loan Growth And LDR Trends
LDR % (LHS) Y-o-Y Loan Growth % (RHS)
5.0%4.8
82.8
6.2
Y-o-Y %
Loans
79.2
15
Strong Liquidity with Stable loan and deposit growth
92.6%
82.8%
77.2% 79.2%
80.0%
77.3%
78.9%
65%
70%
75%
80%
85%
90%
95%
1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12
Loan Deposit Ratio (%)
0
2
4
6
8
10
12
14
Consumer Business Banking Others
Gross Loan Composition by Segment
3Q11 3Q12
12.6
0
2
4
6
8
10
12
14
16
Consumer Business Banking Others
Deposit Composition by Segment
3Q11 3Q12
• LDR remained stable and healthy below 80%.• Loan growth continues to be supported through
the consumers and business banking• Deposit growth 9% with equal contribution from
Business banking
Loans
12.3
8.1 9.9
0.30.2
RM’b RM’b
15.0 15.1
8.7 9.2
5.1 6.9
16
Deposit Trend And CASA Ratio Trends
8.0 7.8 8.2 8.0 8.4 8.9 9.2
11.8 14.2 14.3 14.6 14.3 14.3 13.5
41.4%
35.4%
34.9%
34.0%
35.5% 34.8%35.6%
0.0%
15.0%
30.0%
45.0%
0
10
20
30
40
50
Q1 FY11 Q2 FY11 Q3 FY11 Q4 FY11 Q1 FY12 Q2 FY12 Q3 FY12
NID FD DD SA CASA Ratio
RM’b
• Steady growth momentum on Demand Deposit.
• CASA Ratio at a stable and healthy level.
• 9 months YTD total deposit growth 9.1% vs. prior year.
• YTD CASA balances growth 11.2% Y-o-Y.
Deposits
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Diversified Source of Customer Deposit
21,86324,109 24,422
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
3Q10 3Q11 3Q12
Type of Deposit
Customer Deposits Core Deposit NID&MMD
12,210 14,309 13,528
8,0028,192 9,233
0
5,000
10,000
15,000
20,000
25,000
30,000
3Q10 3Q11 3Q12
Source of Core Deposit
Fixed deposit Current accounts Saving accounts
12.7%
Core deposit mainly fixed deposit with steady increase in current accounts deposit
Deposits
RM’m RM’m
18
(115.1) 31.9 (33.3) 875.1 806.3 741.3
RM ’m %
Asset Quality
Loan loss coverage at 107.6% due to the 1.5% collective provisions for the loans growth Net impaired loans down to 1.4% is below the industry average of 1.9%
1.8% 1.8% 1.8%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
3QFY11 4QFY11 1QFY12 2QFY12 3QFY12
Gross impaired loan ratioNet impaired loan ratioIndustry's computed net impaired loan ratio*
3.7
3.3
3.0
2.62.5
2.2
1.91.8
1.4 1.4
30
50
70
90
110
0
200
400
600
800
1,000
FY2009 FY2010 FY2011 9MFY12
Collective Assessment Allowance - lhsIndividual Assessment Allowance - lhsAFG's LLC - rhsIndustry's LLC (computed)* - LLC - rhs
531.8 438.6 328.4 264.6
373.8
339.6
322.9
340.2
96.3%
107.6%
90.1%
96.9%99.9%
94.4%
95.1%
99.7%
1.9
2.3
2.12.2
2.0
Note: * Industry data were sourced from Monthly Statistical Bulletin November 2011 19
Capital Management
11.2
11.9 11.8 12.0
11.3
11.911.4
15.516.1 15.9 16.1
15.3
15.8
15.2
8.0%
9.0%
10.0%
11.0%
12.0%
13.0%
14.0%
15.0%
16.0%
17.0%
1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12
Core Capital Ratio RWCR
• Strong profit generation capacity
• Strong assets quality
• Continuous enhancement , emphasis on less capital intensive fee based and non interest income business
• Strong shareholders
• Basel III - meet requirements
Legal Entities
Core Capital RWCR
ABMB 13.29% 13.68%
AIS 11.28% 13.13%
AIBB 70.57% 71.20%
Capital Adequacy by Legal Entities
Capital
20
• Performed well in 9 months FY2012 despite competitive and challenging economic environment.
• Clear niche position in Consumer and Business Banking segments.
• Strong and healthy balance sheet in terms of capital and liquidity.
• Continued focus on strengthening risk management capabilities.
• Performed well in 9 months FY2012 despite competitive and challenging economic environment.
• Clear niche position in Consumer and Business Banking segments.
• Strong and healthy balance sheet in terms of capital and liquidity.
• Continued focus on strengthening risk management capabilities.
• Improving customer service, cross-selling, productivity and reducing turn around times. remains a major priority.
• Strong full senior management team now in place.
• Improving customer service, cross-selling, productivity and reducing turn around times. remains a major priority.
• Strong full senior management team now in place.
• Focus on revenue growth in core areas of expertise.
• Successfully restarted momentum in mortgage and generic personal lending.• Leverage on all our business franchises to achieve long term sustainable growth
especially in non-interest income activities.
• Focus on revenue growth in core areas of expertise.
• Successfully restarted momentum in mortgage and generic personal lending.• Leverage on all our business franchises to achieve long term sustainable growth
especially in non-interest income activities.
The Bank remains strong and well-positioned.The Bank remains strong and well-positioned.
Today,Alliance Bank Group
Clear strategy and the right team to deliver it.Clear strategy and the right team to deliver it.
Achieving continued growth.Achieving continued growth.
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Financial Results for 9MFY2012
Questions & Answers
Contents
Executive Summary
2
3
1
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Alliance Financial Group31st Floor, Menara Multi-PurposeCapital SquareNo. 8, Jalan Munshi Abdullah50100 Kuala Lumpur, MalaysiaTel: (6)03-2070 1322www.alliancebank.com.my/investorrelations.html
THANK YOU
Eric LeeGroup Chief Financial OfficerContact: (6)03-2730 2388Email: [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 theinformation 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 theCompany 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 itform 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 inconnection therewith.
For further information, please contact: Amarjeet KaurGroup Corporate Strategy & DevelopmentContact: (6)03-2034 4386Email: [email protected]
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