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ALLIANCE FINANCIAL GROUPANALYST BRIEFING
- 3QFY11 Results ended 31 December 2010 -
• Key Messages
AGENDA
• 9MFY2011 Financial Performance
• Questions & Answers
2
• Operating profit of RM147.6mil (+12.3% YoY)
• Key drivers:
higher net interest income
lower overheads
• PBT of RM150.8mil (+15.1% YoY)
Financial Performance
Robust financial position
0
100
200
300
400
500
600
9M07 9M08 9M09 9M10 9M11
PBT Operating Profit
80
100
120
140
160
180
3Q10 4Q10 1Q11 2Q11 3Q11
PBT Operating ProfitRM ’mil RM ’mil
84.6
393.7
297.6 301.5
438.8
299.6
409.4 394.6371.0
459.6
131.5
138.8
151.4
160.5
147.6
131.0
107.4
150.3137.6
150.8
• Operating profit of RM459.6mil (+23.9% YoY)
• Key drivers:
net interest income due to growth in loans and
financing, and improved NIM
lower overheads
• PBT of RM438.8mil (+45.5% YoY)
Quarterly Results Cumulative 9 Months Results
3
Quarterly
3QFY10 3QFY11 % YoY
147.7 168.0 13.7%
65.7 59.0 -10.2%
64.9 58.0 -10.6%
278.3 285.0 2.4%
• Higher net interest income due to +3.3% loans growth and improved asset quality
• Islamic banking income affected by planned slowdown in “Koop” loans and prior PER adjustment
• Non-interest income eased due to tough market conditions and softer treasury income
Financial Performance
Growth in net interest income
Cumulative 9 Months
(RM ’mil) 9MFY10 9MFY11 % YoY
Net Interest Income 430.0 511.3 18.9%
Islamic Banking Income 174.8 173.4 -0.8%
Non-Interest Income 182.2 173.5 -4.7%
Net Income 787.0 858.2 9.1%
4
2.1%
2.4%
2.7%
3.0%
3.3%
Jul-09 Nov-09 Mar-10 Jul-10 Nov-10
Group Corporate
3.3%
3.7%
4.1%
4.5%
4.9%
Jul-09 Nov-09 Mar-10 Jul-10 Nov-10
Commercial
3.9%
4.2%
4.5%
4.8%
5.1%
Jul-09 Nov-09 Mar-10 Jul-10 Nov-10
SME
2.3%
2.7%
3.1%
3.5%
3.9%
4.3%
Jul-09 Nov-09 Mar-10 Jul-10 Nov-10
Consumer
KEY DRIVERS OF NIM
NIM NIM NIM NIM
Financial Performance
Competition drives lower NIM
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11
GIM 4.4% 4.3% 4.4% 4.4% 4.7% 4.5% 4.6%
4.0%
4.2%
4.4%
4.6%
4.8%
5.0%
GIM NIM
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11
NIM 2.3% 2.5% 2.6% 2.8% 2.8% 2.8% 2.5%
1.8%
2.0%
2.2%
2.4%
2.6%
2.8%
3.0%
5
0%
1%
2%
3%
4%
5%
3,500
3,800
4,100
4,400
4,700
2Q10 3Q10 4Q10 1Q11 2Q11 3Q11
RM 'mil - lhs
% QoQ - rhs
-10%
-5%
0%
5%
10%
3,600
3,800
4,000
4,200
4,400
2Q10 3Q10 4Q10 1Q11 2Q11 3Q11
RM 'mil - lhs
% QoQ - rhs
Loans breakdown by businesses
• AFG loans growth of 3.3% in 3QFY2011
• AFG loans growth was driven by SME and supported by Consumer
Banking loans, which grew by 11.6% and 3.2% respectively
• Corporate and Commercial Banking loans affected by a few lumpy
repayments/maturities
• Exit book loans have decreased to RM188mil in 3QFY2011 from
RM276mil in 3QFY2010
Financial Performance
Loans growth driven by SME
(RM ’mil)FYE
31/3/10
Consumer 12,800
SME 4,235
Corporate & Commercial 4,123
Exit Books 252
Total 21,410
FYE 2010 FYE 2011% YoY
3Q 3Q
12,621 13,026 3.2%
4,059 4,528 11.6%
4,016 3,920 -2.4%
276 188 -31.9%
20,972 21,662 3.3%
-1%
1%
3%
5%
10,500
11,500
12,500
13,500
2Q10 3Q10 4Q10 1Q11 2Q11 3Q11
RM 'mil - lhs
% QoQ - rhs
Consumer
SME
Corporate & Commercial
6
Financial Performance
Overhead expenses continue to be tightly managed
9MFY20119MFY2010
59.0%27.3%
2.7% 11.0%
62.1%
27.3%
2.9%7.7%
Personnel Costs Establishment Costs Marketing Expenses Admin & General Expenses
• We continue to manage our cost productivity without stifling out our overall business
productivity
• Personnel costs, which account to 62.1% of total costs, is the main operating cost as the
Group continues to invest in its people
• Establishment costs remain stable in tandem with the Group’s business strategy
RM415.9mil RM398.6mil
7
70
75
80
85
90
95
3.4
3.8
4.2
4.6
3Q10 4Q10 1Q11 2Q11 3Q11
Gross Impaired Loans Ratio - Old GP3 - lhs
Gross Impaired Loans Ratio - FRS 139 - lhs
Loan Loss Coverage - rhs
Further improved asset quality
% %
91.0%
85.6%
94.4%
83.2%
3.9%
3.8% 3.8% 3.8%
0.1%
• The Group adopted FRS 139 w.e.f.
1 April 2010
• Asset quality remains stable at
3.7% in 3QFY2011 with focus to
improve on collection system and
credit risk
• Loan loss coverage reduced from
83.2% to 83.1% in 3QFY2011
3.7%
83.1%
Financial Performance
FRS 139
Note: Collective allowance for domestic loans is computed
based on 1.5% requirement under the transitional
provisions of the BNM guidelines on Classification and
Impairment Provisions for Loans/Financing issued in
January 2010
8
-10%
0%
10%
20%
30%
1.4%
1.8%
2.2%
2.6%
3.0%
3Q09 1Q10 3Q10 1Q11 3Q11
Cost of Funds - lhs Deposit Growth - rhs
70%
75%
80%
85%
90%
95%
3Q09 1Q10 3Q10 1Q11 3Q11
AFG Industry
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
3Q10 4Q10 1Q11 2Q11 3Q11
CASA Fixed Deposits Money Market Deposits Others
Financial Performance
AFG’s L/D ratio below industry average
L/D ratio superior to industry average
Cost of funds stable despite stronger deposit growth
82.8%
76.6%
90.3% 90.6%
73.5%
78.2% 77.9%
81.4%
2.6%
2.1% 1.7%
2.1%
CASA at top quartile of industry
79.2%
81.2%
1.9%
92.6%
82.4%
84.1%
88.9%
73.7%
78.9%
77.2%
81.4%
2.4%
2.0%
1.7%
2.1%
RM ’mil
40.9% 41.5% 41.5% 35.4% 34.9%
51.8% 51.7% 50.8% 53.8% 51.0%
4.7% 4.9% 5.9%
9.9% 9.7%
2.6% 1.9% 1.8%
0.9%4.4%
11.9%
19.8%
11.9%
0.0%
2.1%-7.6%
-4.0%
15.8%19.0%
9
3QFY10 3QFY11 % YoY
2,429.1 2,603.2 7.2%
3,328.7 3,520.6 5.8%
15.2 15.9 +0.7
11.0 11.8 +0.8
Financial Performance
Capital position remains strong
(RM ’mil) FY 2009 FY 2010
Tier I Capital 2,234.1 2,429.2
Total Capital Base 3,167.3 3,339.3
RWCR (%) 14.7 15.4
Core Capital Ratio (%) 10.3 11.1
• AFG’s core capital and risk-
weighted capital ratio (RWCR)
continued to improve to 11.8%
and 15.9% in 3QFY2011
compared to 11.0% and 15.2%
in 3QFY2010
• Total capital base of RM3.5bil,
increased by 5.8% YoY. Tier 1
capital represents 74% of total
capital, improved further to
RM2.6bil
• Healthy capital position and is
in line with BASEL III
requirements
10
FY 2009 FY 2010
Profitability• Net Interest Margin
• Cost of Funds
2.8
2.7
2.7
1.9
Business
Performance
• NII / Total Income
• Cost Income Ratio
• LD Ratio
• RWCR
22.4
53.0
76.6
14.7
24.0
52.1
90.6
15.4
Asset
Quality
• Gross Impaired Loans
• LLC
4.5
99.7
3.8
94.4
Shareholder
Value
• ROAA
• ROAE
• P / BV
0.8
8.6
0.9x
0.9
10.5
1.5x
Financial Performance
Key financial ratios
FY 2010 FY 2011
3Q 4Q 1Q 2Q 3Q *
2.6
1.9
2.8
1.7
2.8
1.7
2.8
2.1
2.5
2.1
24.5
52.7
88.9
15.2
24.0
50.0
90.6
15.4
19.4
45.2
92.6
15.5
20.9
45.9
82.8
16.1
21.0
48.2
77.2
15.9
3.9
91.0
3.8
94.4
3.8
85.6
3.8
83.2
3.7
83.1
0.9
10.5
1.4x
0.9
10.5
1.5x
1.4
14.5
1.4x
1.3
13.8
1.5x
1.3
13.8
1.5x
* Note: comparison made between FY2010 against 3QFY2011 11
• Key Messages
AGENDA
• 9MFY2011 Financial Performance
• Questions & Answers
12
Organisational Chart
Key roles being filled
Raymond Leung
Group Chief Operating Officer
Eric Lee
Group Chief Financial Officer
Low Choon Seong
Group Chief Credit Officer
Timothy Daniels
Corporate Strategy &
Corporate Communications
Group Human Resource
Michelle Chow
Group Legal
S. Gerard Anand A/L S.
Sinnappah
Leong Sow Yoke
Group Internal Audit
Pang Choon Han
Group Chief Risk Officer
Group Compliance
Teow Leong Wah
Ronnie Lim
Consumer Banking
Choo Joon Keong
Corporate & Commercial
Banking
Steve Miller
SME Banking
Nik Azhar Bin Abdullah
Investment Management
Tuan Haji Yahya Ibrahim
Islamic Banking
New CEO Identified
Investment Banking
Yeo Chin Tiong
Financial Markets
13
Building sustainable growth
Key Focus
NEM
&
ETP
Talent
Management
Framework
Shared
Expertise
CONSUMER
• Mortgage Loans
• Credit Cards
• Personal Loans
• Deposits
Very
Competitive
SME
CORPORATE &
COMMERCIAL
• Transaction Banking
• Treasury Sales
• Cash Management
• Syndicated Deals
Existing
Opportunities
• Wealth Management
• Bancassurance
• Asset Management
• Treasury Sales
• Stockbroking
New
Growth
High
Household
Debts
Driving Fee Income and Cross-Selling
14
Gross
Impaired
Loans
CIR
ROE
Dividend
Policy
Over the medium term (3-5 years) we will ...
… to be in line with industry average
… move to industry average (45 - 48%) through Y-o-Y
improvements, driven by:
• targeted revenue growth
• productivity focus
… achieve industry average (14 - 16%) through Y-o-Y
improvements, driven by:
• focus on underlying earnings
• prudent capital management
… pay “as much as we can afford, whenever we can”
Q1 Q2 Q3 Q4
Looking Ahead
15
Key Messages
Bank is strong and performing well
Delivering value to our shareholders
We are gaining momentum
• The Group has performed well in 3QFY2011 despite a competitive operating environment
• We are executing based on transformation and investments made, and will leverage on and
aggressively expand our prudent suite
• Growth to be in-line with the economic cycle supported by sustainable loans growth and higher
customer acquisition capacity to build further on fee income growth
• We remain well-capitalised
• We pay good dividends
• All our business decisions will be evaluated based on a long-term perspective
• We are ensuring growth is value creating and give best customers’ experience16
Investor Relations
Alliance Financial Group7th Floor, Menara Multi-Purpose, Capital Square
8 Jalan Munshi Abdullah
50100 Kuala Lumpur, Malaysia
www.alliancebank.com.my/investorrelations.html
THANK YOU
17
Income Statement (RM ’mil) 9MFY11 9MFY10 % YoY
Interest Income 901.5 803.6 12.2%
Interest Expense (390.2) (373.5) 4.5%
Net Interest Income 511.3 430.1 18.9%
Islamic Banking Income 173.4 174.7 -0.8%
Non-Interest Income 173.5 182.2 -4.7%
Net Income 858.2 787.0 9.1%
Operating Expenses (398.6) (416.0) -4.2%
Operating Profit 459.6 371.0 23.9%
Write Back/Allowance for NBD (24.0) 51.4 -146.7%
Allowance for Impairment 3.2 (120.9) -102.6%
Loan Impairment Allowances (20.8) (69.5) -70.0%
Profit before Taxation &
Zakat438.8 301.5 45.5%
Taxation & Zakat (114.5) (77.3) 48.2%
Profit after Taxation & Zakat 324.3 224.2 44.6%
3QFY11 2QFY11 % QoQ 3QFY10 % YoY
313.2 311.6 0.5% 265.2 18.1%
(145.2) (137.4) 5.7% (117.5) 23.6%
168.0 174.2 -3.5% 147.7 13.7%
59.0 58.7 0.5% 65.7 -10.2%
58.0 64.0 -9.4% 64.8 -10.5%
285.0 296.9 -4.0% 278.2 2.4%
(137.4) (136.4) 0.7% (146.8) -6.4%
147.6 160.5 -8.0% 131.4 12.3%
(0.7) (22.8) -96.9% (2.4) -70.8%
3.9 (0.1) -4,000.0% 2.0 95.0%
3.2 (22.9) -114.0% (0.4) -900.0%
150.8 137.6 9.6% 131.0 15.1%
(39.5) (35.2) 12.2% (31.0) 27.4%
111.3 102.4 8.7% 100.0 11.3%
Financial Performance
18
Economic PurposeLoan
(RM ’mil)% YoY
Gross
Impaired
Loans
(RM ’mil)
% Share
Gross
Impaired
Loans Rate
(%)
Purchase of Securities 342.1 -3.0% 12.9 1.6% 3.8%
Purchase of Transport Vehicles 746.7 -22.8% 10.2 1.3% 1.4%
Purchase of Landed Property 11,411.7 4.0% 313.0 39.0% 2.7%
Purchase of Fixed Assets 97.4 63.1% 0.2 0.0% 0.2%
Personal Use 2,141.9 14.4% 37.0 4.6% 1.7%
Credit Cards 679.8 -2.5% 14.5 1.8% 2.1%
Construction 222.2 -15.5% 13.5 1.7% 6.1%
Working Capital 5,413.8 4.0% 351.0 43.8% 6.5%
Others 606.7 3.1% 49.6 6.2% 8.2%
Total 21,662.3 3.3% 801.9 100.0% 3.7%
Financial Performance
19
Economic Purpose % Share
Gross Impaired Loans Rate (%)
*
3Q10 4Q10 1Q11 2Q11 3Q11
Purchase of Securities 1.6% 4.6% 4.7% 5.4% 5.0% 3.8%
Purchase of Transport
Vehicles1.3% 1.7% 1.5% 1.6% 1.3% 1.4%
Purchase of Landed Property 39.0% 3.3% 3.0% 2.8% 2.8% 2.7%
Purchase of Fixed Assets 0.0% 0.3% 0.3% 0.2% 0.2% 0.2%
Personal Use 4.6% 2.5% 2.0% 2.0% 1.9% 1.7%
Credit Cards 1.8% 2.3% 2.1% 2.2% 2.2% 2.1%
Construction 1.7% 7.5% 5.1% 8.9% 6.2% 6.1%
Working Capital 43.8% 5.9% 5.8% 6.3% 6.6% 6.5%
Others 6.2% 7.5% 9.8% 8.0% 7.9% 8.2%
Total 100.0% 3.9% 3.8% 3.8% 3.8% 3.7%
Financial Performance
* Note: comparison made between FY2010 against 3QFY2011 20
Breakdown of loans by LOB
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11
Consumer 59.4% 59.2% 60.2% 59.8% 59.5% 59.1% 60.1%
Corporate & Commercial 19.3% 19.8% 19.1% 19.2% 19.4% 19.7% 18.1%
SME 19.8% 19.6% 19.4% 19.8% 20.0% 20.2% 20.9%
Exit Books 1.5% 1.4% 1.3% 1.2% 1.1% 1.0% 0.9%
Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Financial Performance
21
0
30
60
90
120
150
180
210
9M10 9M11
-5
5
15
25
35
45
55
65
75
3Q10 3Q11
Non-interest income - driven by challenging market conditions
17,45318,811
4,5514,701
9,812
RM ’000
5,005 4,943
24,038 20,326
5,069
2,866
-2,748-1,138
64,790
57,933
9,034
% YoY
+7.8%
+3.3%
-7.9%
-1.2%
-15.4%
-43.5%
-141.5%
Commission & Fees
(32.5%)
Wealth Management
(8.1%)
Credit Cards
(15.6%)
Brokerage Fees
(8.5%)
Investment Sales Gain
(35.1%)
Other Non-Operating
(4.9%)
Forex
(-4.7%)
Note: ( ) denotes share of each component to total non-interest income
Financial Performance
61,941
13,750
12,393
44,181
10,071
5,496
173,521
25,689
RM ’000
52,668
12,245
20,853
42,488
17,141
7,010
182,174
29,769
22
CASA ratio vs. industry
20.0%
25.0%
30.0%
35.0%
40.0%
45.0%
3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11
AFG - lhs Industry - rhs
24.9%
33.0%
34.6%
25.3%
40.9%41.5% 41.5%
35.4% 34.9%35.5%
24.6%25.3% 25.2% 25.0% 25.0% 25.0% 25.4%
38.1%
Financial Performance
23
AFG’s deposit profile
By Type of Deposits % Share
% YoY
3Q10 4Q10 1Q11 2Q11 3Q11
CASA 34.9% 17.7% 16.1% 14.9% 7.8% 1.5%
- Demand Deposits 29.2% 22.3% 19.2% 18.6% 10.2% 2.4%
- Savings Deposits 5.7% -0.5% 3.1% -0.6% -2.7% -2.6%
Fixed/Investment Deposits 51.0% -3.9% -13.3% -12.8% 8.8% 17.2%
Money Market Deposits 9.7% 1.0% -43.7% -11.0% 376.9% 149.4%
Negotiable Instruments of Deposits 4.2% -46.5% -58.2% -47.1% -55.5% 98.7%
Structured Deposits 0.2% - 1,030.8% 32.1% -33.9% 34.9%
Total Deposits 100.0% 2.1% -7.6% -4.0% 15.8% 19.0%
Financial Performance
24
Collateralised Loan Obligations (CLOs) are a matter of the past
• As at March 2010, the
Group had made a
100% provision
Key points: • Matured
• AFG’s exposure at
super senior level
• Matured
• AFG’s exposure is fully
covered
(RM ’mil) Kerisma Idaman Capital CapOne
Total
Issuance
AFG’s
Exposure
Total
Issuance
AFG’s
Exposure
Total
Issuance
AFG’s
Exposure
• Total Issuance 1,000mil175mil
(17.5%)800mil
240mil
(30%)1,000mil
10mil
(1%)
• Maturity Date Jun-09 Oct-11 Sep-10
Financial Performance
25