Update AFG to pay 7.5 sen div as 1Q profit rises 10.6% yoy

by **Cals** Tue 06 Aug 2013, 14:53

Update AFG to pay 7.5 sen div as 1Q profit rises 10.6% yoy
Business & Markets 2013
Written by Ho Wah Foon of theedgemalaysia.com
Tuesday, 06 August 2013 13:23

Kuala Lumpur (Aug 6) - ALLIANCE FINANCIAL GROUP BHD [] (AFG) announced today that for the first financial quarter ended 30 June 2013 (1Q FY2014), it reported a net profit of RM137.8 million -- an increase of 10.6% over the corresponding quarter ended 30 June 2012.

The financial group, comprising Alliance Bank Malaysia Bhd and its subsidiaries, also saw its net income grow 14.0% year-on-year to RM364.2 million, mainly driven by higher net interest and non-interest income.

The banking group declared an interim dividend of 7.5 sen per share, versus 6.6 sen in previous year.

In a press statement accompanying the release of AFG results, group chief executive officer Sng Seow Wah said: "The Group recorded a return on equity of 13.5% and earnings per share of 9.0 sen for the first quarter.”

Sng said the improved performance was mainly due to the growth in interest income and recurring non-interest income.

Net interest income grew by 6.1% to RM184.5 million from 1Q FY2013, driven by higher-than-industry loans expansion in the consumer and business banking segments, he elaborated.

Interest margins, however, continued to remain under pressure due to increased competition.

Non-interest income posted a strong growth to RM125.9 million, driven primarily by recurring non-interest income, particularly from “Transaction Banking, Wealth Management, brokerage and Treasury activities, as well as the one-off sign-on fee of RM30 million in respect of the 10-year bancassurance arrangement with Manulife Insurance Bhd”.

"The group's non-interest income ratio has improved further to 35.4% from 27.3% a year ago. Even if we were to exclude the impact of the one-off sign on fee, we are still on track to achieve the 30% target in the medium term," said Sng.

The group's net loans, including Islamic financing, grew by 11.9% to RM28.4 billion from a year ago.

"Our two core areas of focus, specifically, the financing of residential PROPERTIES [] and SME lending, continue to register above industry growth rates. Growth has also been encouraging in the hire purchase financing portfolio since we re-entered the market slightly more than one year ago," explained Sng.

Despite the challenging external environment, AFG’s net impaired loans ratio has improved to 1.1%, from 1.3% in 1Q FY2013 while loan loss coverage ratio now stands at 84.7%. Its gross impaired loans ratio has improved to 1.9% from 2.4% a year ago, said the AFG statement.

“Barring unforeseen circumstances, the group expects to deliver a satisfactory performance for the financial year ending 31 March 2014,” said the statement.