Sound basics help Alliance bring up profit by 21%

Alliance Financial Group recorded a quarter on quarter improvement of 21 percent with an operating profit of US$33.2 million for the second quarter. This is an increase of US$5.67 million or 21 percent from the last quarter ended 31 March 2009.

"Our sound business fundamentals which are embedded in our three-year business transformation plan are beginning to yield rewards for us. As a result, we have seen income from Islamic Banking increased 49.6 percent, our non-interest income on the fee-based has improved tremendously, and the positive capital market activity has helped us chart through turbulent times successfully," said Datuk Bridget Lai, Group Chief Executive Officer of Alliance Bank Malaysia Berhad and Director of Alliance Financial Group Berhad.

Comparing with the immediate preceding quarter, the Group recorded a profit before taxation of US$17.78 million for quarter ending 30 June 2009, an increase of US$16.18 million compared to US$1.59 million recorded for the preceding quarter ended 31 March 2009. The improvement is mainly due to higher operating profit, lower allowances for losses on loans and advances, and lower impairment on securities.

The Group also registered a net income of US$72.28 million, a decline of US$10.2 million or 12.4 percent compared to the corresponding period last year; its net interest income was impacted slightly on the back of the drop in Overnight Policy Rate by Bank Negara Malaysia. In addition, the corresponding period last year also consists of a written-back amount due to over-provision of deposit insurance premium. However, this is partially offset by improved performance from the Islamic banking business, with higher net income of US$5.6 million compared to the same period last year.

The Group's other operating income decreased by US$4.6 million which is largely attributed to lower gain on revaluation of forex derivatives instruments. In the corresponding period last year, there was a lumpy gain of US$3.8 million from redemption of a debt-converted security.

For the first quarter ended 30 June 2009, the Group's gross loans and advances increased by 2 percent to US$5.7 billion compared to the preceding quarter ended 31 March 2009. On a year-on-year basis, loans grew 15.5 percent outpacing industry's average of 8.3 percent as at June 2009.

"Overall, the Group is cautiously optimistic of its prospects for the coming financial year. Our business fundamentals remain intact even as we prudently manage our cost management for greater efficiency," said Datuk Bridget Lai.