Alliance Financial Group Berhad announced its results for the second quarter ended September 30, 2015. The group reported a net profit after tax of RM134.7 million, a 10.4% improvement compared to the preceding quarter ended June 30, 2015.
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Excluding the one-off non-recurring gains of RM31.6 million from the sale of land and bancassurance fees last year, net profit after tax at RM256.6 million for H1 2016 was 12.2% lower year-on-year due to fewer write backs of loan loss provisions. However, the credit cost excluding recoveries remained stable.
Revenue Growth: +6.3% q-o-q and +2.4% y-o-y. Net income for the quarter at RM365.9 million and RM710.3 million for H1 2016 driven by improvement in net interest margins, loans growth and higher non-interest income.
Net interest margin (NIM): Net interest margin improved by 3 bps q-o-q to 2.19%, with focus on better risk-adjusted return loans, despite the rise in cost of funds from intensified competition for deposits. NIMs contracted 7 bps y-o-y.
Non-interest income (NII): +17.6% q-o-q and 3.3% y-o-y driven by the growth in client based transaction fees and treasury trading. The non-interest income ratio improved to 25.9% for the quarter and 24.7% for H1 2016.
Operating Expenses: Operating expenses were well contained, declining 0.8% q-o-q, but rising marginally 2.6% y-o-y. The cost to income ratio stood at 46.9% for H1 2016.
Pre-Provision Profit: Pre-provision profit grew 12.9% q-o-q, but was 0.7% lower against 1HFY2015.
Impairment Provisions: Impairment provisions increased marginally q-o-q by RM2.9 million. However, in H1 2016, there was a net charge of RM35.6 million in impairment provisions due to fewer recoveries. In 1HFY2015, there was a net write back of impairment provisions of RM9.8 million, due to recoveries of RM46.5 million from a few large legacy loans.
Return on Equity ("ROE"): Return on Equity rose to 11.7% for the quarter, up from 10.9% in the preceding quarter. Return on equity for H1 2016 was 11.5%. ■