PETALING JAYA: Alliance Bank Malaysia Bhd’s net profit for the second quarter ended Sept 30, 2019 (Q2 20) fell 17.8% to RM115.52 million from RM140.52 million in the corresponding quarter a year ago, mainly due to higher net credit cost.
However, its revenue expanded 7.5% to RM429.28 million from RM399.19 million.
The bank has declared a first interim dividend of 6 sen per share for the quarter under review.
“In Q2, the bank’s net credit cost (including impairment) moderated to 17.5 basis points (bps). We will continue to intensify our collection efforts to contain net credit cost, remain vigilant in managing our credit portfolio, and prudent in our provisioning going forward,” said Alliance Bank group CEO Joel Kornreich.
For the six-month period, Alliance’s net profit was 30.6% lower at RM192.21 million versus RM276.89 million in the same period last year, largely attributed to credit losses stemming from the impairment of a few large accounts during Q1 20 and increased credit costs in the mortgage portfolio.
Six-month revenue grew 4.5% to RM836.22 million from RM800.26 million, mainly contributed by the growth in non-interest income.
During the period, the bank’s gross loans and advances grew 5.9% to RM43.2 billion, but net interest margin (NIM) declined 7 bps to 2.37%, mainly affected by the OPR, mitigated by the bank’s stronger volume growth and enhanced loan mix, from better risk adjusted return loans.
The bank will revise its FY20 NIM guidance to around 2.38%.
Gross impaired loans ratio increased 36 bps quarter-on-quarter to 1.66%, arising from the residential properties portfolio, as well as a few large business accounts. Loan loss coverage was maintained at a stable ratio of 105.0%.
Its common equity tier-1, tier 1 and total capital ratios stood at 13.5%, 14.3% and 18.6%, respectively.
source https://www.thesundaily.my/business/higher-credit-cost-drags-down-alliance-bank-s-q2-earnings-YF1667331
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