KUALA LUMPUR (Nov 28): Alliance Bank Malaysia Bhd (KL:ABMB) said its second-quarter net profit increased marginally by 2.47% year-on-year (y-o-y), mainly driven by revenue growth which was offset by higher allowances for expected credit losses and operating expenses.

Net profit for the second quarter ended Sept 30, 2024 (2QFY2025) increased to RM189.91 million from RM185.33 million, while earnings per share went up to 12.27 sen from 11.97 sen, the banking group said in a filing on Thursday.

Quarterly revenue grew 14.7% to a record high of RM605.65 million, from RM528.1 million in the same quarter last year, thanks to higher interest income from loans and other operating income.

The banking group declared a first interim dividend of 9.5 sen per share for the latest quarter, compared with 10.85 sen per share in 2QFY2024. The dividend will be paid on Dec 30.

The group's operating profit before allowances expanded to RM332 million in 2QFY2025, up 18% from RM281.36 million in the previous corresponding quarter. 

Meanwhile, its allowances for expected credit losses on loans, advances, financing and other financial assets swelled to RM93.98 million during the quarter under review, a 135% hike against RM39.69 million a year ago. 

Net credit cost was at 16.4 basis points (bps) in 2QFY2025, compared with 7.7 bps in 2QFY2024.

For the first half ended Sept 30, 2024 (1HFY2025), the group's net profit expanded 9.14% to RM366.56 million, from RM335.87 million in 1HFY2024, as revenue increased 15.2% to RM1.15 billion from RM994.36 million.

“The performance was mainly driven by a 15% growth in net interest income to RM955.9 million, attributable to higher loan volumes, with a net interest margin of 2.47%,” Alliance Bank said in a statement.

The banking group’s non-interest income increased 16.1% to RM189.5 million in 1HFY2025, led by gains in wealth management income, foreign exchange sales, trade fees, and treasury and investment income. The cost-to-income ratio also improved to 46.5%. 

“Loans continued to grow at 14.8% y-o-y to RM59.1 billion, with all business segments recording double-digit y-o-y growth — SME (small and medium enterprises) loans up 16.4%, commercial loans up 16.2%, consumer loans up 14.3%, and corporate loans up 11.6%,” it said.

The bank’s customer deposits expanded by 13.8% y-o-y, while the current account savings account (CASA) ratio remained one of the industry’s highest at 40.9%, according to Alliance Bank.

Operating expenses, meanwhile, went up 11.7% to RM532.9 million, from RM476.8 million in the prior year, due to ongoing investments in people and technology for growth and efficiency initiatives.

Nonetheless, the bank’s pre-provisioning operating profit increased by 18.4% to RM612.6 million. Net credit cost for 1HFY2025 was 24.5 bps, while the bank’s loan loss coverage ratio stood at 112.1%. 

Alliance Bank also continued to maintain strong capital and liquidity positions, with a common equity Tier 1 (CET 1) ratio of 12.4% and a total capital ratio of 17.1%. Liquidity coverage stood at 149.5%, and the loan-to-fund ratio was 88.7%. 

“The group aims to continue its loan growth momentum in FY2025 with strong integrated risk management practices, while strengthening its funding base. In addition, the group will continue to invest in upgrading its IT infrastructure and digital capabilities to enable innovative propositions for its clients,” it added.

At 2.38pm on Thursday, shares of Alliance Bank were traded two sen or 0.41% lower at RM4.89, valuing the bank at RM7.56 billion.