Sunday, 26 May 2024

Alliance Bank continues to provide financial assistance and forges ahead with growth and sustainability initiatives

5 min read

Alliance Bank Malaysia Berhad continues to extend help to customers requiring financial assistance. Loans under payment relief amounted to MYR9.25 billion ($2.2 billion), approximately 21% of its total loan portfolio, as of 16 February 2022.  

The bank has forged ahead with its strategic priorities of acquiring more clients in the small and medium-sized enterprise (SME) and consumer segments, deepening customer engagement and improving efficiencies. 

The bank posted a 46% growth quarter-on-quarter in new-to-bank customers, surpassed 1,300 digital account openings a month through its electronic know your customer (eKYC) solution, and expanded consumer banking relationships with over 4,000 business owners.  

Joel Kornreich, group CEO of Alliance Bank said, “In tandem with the re-opening of the economy, the bank’s customer acquisition has accelerated. Our market share in SME loans has increased to 5% from 3.7% in 2019, and we are confident of reaching the top four position over the next four years through our expansion efforts. In fact, we are opening more business accounts now compared to pre-COVID levels, thanks to our digital marketing focus and partnerships”.

“Our vision is also to serve the personal banking needs of business owners, their families and other stakeholders such as their employees. We are enhancing the benefits for our business clients when they also open a personal account with us, and making it very easy for them to do so. About 45% of our business clients have personal banking relationships with us today. We aim to increase that to at least 70%,” Kornreich said.

The adoption of digital channels among the bank’s customers has also increased significantly. Today, about three quarters of all customer transactions are done digitally, contributed by a three-fold increase in digital volumes compared to three years ago. This is driven by the bank’s continued focus on digital innovation to provide fast, simple and responsive service. For example, the bank has recently enhanced its multi-award-winning BizSmart eTrade platform to enable businesses to transact with over 85 countries in all major currencies. Today, BizSmart eTrade accounts for 40% of the bank’s trade transactions.

The bank has made it easy for customers to apply for loans digitally. Personal loans originated digitally now constitute about 30% of total personal loans booked over the past year. Similarly, the digital SME loan launched over the past year enables businesses to apply for small ticket loans without any branch visits. 

Accelerating sustainability initiatives
The bank plans to achieve MYR5 billion ($1.19 billion) in new sustainable banking business by the end of financial year 2025, reduce its greenhouse gas emissions, and help its business clients transition towards more sustainable practices. It recently launched a sustainability microsite to provide transparency on its sustainability disclosures.

“We have achieved MYR1.6 billion ($381 million) in new sustainable business financing and will be launching several sustainable financing and investment propositions in 2022,” explained Kornreich. The bank has implemented environmental, social and governance (ESG) screening in its loan underwriting process, following Bank Negara Malaysia’s Climate Change and Principal-based Taxonomy to monitor the impact of climate risks. 

“We will also continue reducing greenhouse gas emissions in our operations, and will disclose the reduction plans and targets soon,” added Kornreich. 

The bank has established strategic alliances with Bursa Malaysia Berhad and Malaysian Green Technology Corporation to assist businesses with their sustainability plans. 

Meanwhile, the bank’s flagship programmes (such as the EcoBiz Challenge, Economic Empowerment Programme, Solidarity with Community Programme and AEIOU Challenge), continue to empower SMEs and individuals via training and relevant upskilling courses. 

Financial performance
For the first nine months of the financial year ending 31 March 2022, Alliance Bank reported revenue of MYR1.42 billion ($338.2 million), a 3.2% YOY growth. Pre-provision operating profit grew to MYR812.2 million ($193.4 million) and net profit after tax for the period was MYR469.8 million ($111.9 million).

The rise in revenue was largely due to net interest income growth of 11% YOY, driven by deposit mix optimisation and repricing of fixed deposits. Net interest margin increased 24 basis points (bps) from 2.30% on 31 March 2021 to 2.54%.

Client-based fee income (excluding brokerage) grew by 3.2%, driven by increased wealth management, trade and foreign exchange (FX) income.

The bank’s cost-to-income ratio is among the top three in the industry at 42.6%. 

The bank’s net credit cost in the first nine months of the financial year was 32.5 bps, including a management overlay of 26.4 bps. Business-as-usual net credit costs was 33.7 bps lower YOY due to lower provisions for the mortgage and personal loan portfolios in addition to lower business banking net credit cost of 14.1 bps. The bank continues to extend the Financial Management and Resilience Programme (URUS) to the B50 borrower base.

Gross loans increased to MYR44.5 billion ($10.6 billion), mainly from growth in SME, commercial and corporate banking. “We will provide MYR2 billion ($476.36 million) in financing comprising term loan, working capital and government assistance schemes before the end of this financial year to help businesses move towards recovery and revival,” said Kornreich. 

CASA deposits rose 13.1% YOY, contributed mainly by Alliance SavePlus Account and Alliance@Work sign-ups. CASA ratio improved to 50%, keeping the bank at the top of the industry.

The bank’s capital positions remained strong. Common equity tier-1 ratio was at 16.5%, tier-1 capital ratio was at 17.5%, and total capital ratio was at 21.7%. The bank’s loan to fund ratio stood at 87.5%. The liquidity coverage ratio was 167.7%. 

Re-disseminated by The Asian Banker



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