Alliance Financial’s third quarter profit dips on lower interest income

PETALING JAYA: Alliance Financial Group Bhd (AFG) registered a drop of 4.4% in its net profit for the third quarter ended Dec 31, 2016 with RM129.68 million against RM135.6 million in the preceding year’s corresponding quarter, mainly due to lower interest income.

However, the group’s revenue rose by 4.8% to RM378.64 million as compared with RM361.18 million.

For the first nine months of this year, AFG’s net profit rose by 0.6% to RM394.7 million as compared with the cumulative period of the previous year, which was at RM 392.2 million. Revenue grew 2.9% to RM1.1 billion compared with RM1.07 billion a year ago.

In a filing with Bursa Malaysia, AFG said its net interest margin improved 9 basis points quarter-on-quarter to 2.31%, on the back of yield improvement from higher risk-adjusted return (RAR) loans and lower funding cost from efficient funding mix.

The group’s better RAR loans within the consumer, SME, and commercial lending segments grew faster than the other segments, at an annualised rate of 14.6%. The SME loans growth remained strong at 12.3% year-on-year.

Asset quality wise, AFG’s gross impaired loans ratio stood at 1.0%, which was better than the industry average of 1.6%. Loan loss coverage, which includes regulatory reserve, improved to 137.1% from 125.4% a year ago.

AFG expects its profitability for the year 2017 to remain broadly consistent with the previous year.

“The group will continue to improve its balance sheet efficiency and risk-adjusted returns, and focus on loan origination efforts in small medium enterprise, commercial, and consumer unsecured loans as well as to optimize the funding cost and mix,” it said.