KUALA LUMPUR (May 30): Alliance Bank Bhd (KL:ABMB) expects Bank Negara Malaysia to maintain the overnight policy rate (OPR) at 3% for the remainder of this year, citing strong gross domestic product (GDP) figures, well-managed inflation, and currency strength
“Our current house view is that we do expect [the] OPR to remain at 3% for various reasons," said Alliance Bank group CEO Kellee Kam on Friday.
"One is inflation, which we believe is fairly well controlled. Another is that GDP grew by 4.4% in the first quarter this year, which is still growing pretty strongly. The number three reason is that our currency performance has also been pretty strong relative to the dollar, even relative to some of our regional peers," said Kam.
He was speaking to the media after the bank’s extraordinary meeting, where shareholders approved a proposed right issue,
Shareholders holding 57.28% of voting shares, or 886.79 million shares, voted in favour of the resolution, according to the group's bourse filing on Friday.
Rights issue price fixed at RM3.33
Alliance Bank has fixed the rights issue price at RM3.33 apiece on an entitlement basis of two rights shares for every 17 existing shares held.
The issue price represents a discount of 23% compared to the stock's closing price of RM4.33 on Friday.
Alliance Bank is expected to raise RM606.5 million from the cash call exercise, according to a back-of-the-envelope calculation.
Kam said the rights issue is aimed at supporting its future growth, noting that the bank has outpaced the industry by growing loans at 12% in FY2024, compared to the market growth rate of between 5% and 6%.
Going forward, Alliance Bank has targeted a loan growth of between 8% and 10% in the financial year ending March 31, 2026 (FY2026).
“We want to position ourselves with enough capital to continue that growth,” he said. “It is actually the opposite of tougher times — we want to not slow down because we believe there’s an opportunity for Alliance Bank to continue that pace of growth.”
He added that Malaysia's banking sector remains accommodative for growth, supported by strong GDP figures, sufficient liquidity, and fiscal and monetary levers.
Meanwhile, Kam said Alliance Bank has not been informed of any potential changes to its shareholding structure, amid speculation that its largest shareholder, Vertical Theme Sdn Bhd’s (VT), may divest its stake.
According to a Bloomberg report on Jan 16, VT was planning to seek approval from BNM to start talks about selling its stake in Alliance Bank. The newswire, citing people familiar with the development, said VT was considering selling the roughly 29% stake to Singapore-based lender DBS Group Holdinhgs Ltd.
VT is 49% held by Duxton Investments Pte Ltd, which is ultimately owned by Temasek. The other 51% in VT is held by Langkah Bahagia Sdn Bhd, a private company owned by Singapore-based hotel and property tycoon Ong Beng Seng, private equity RRJ Capital founder Richard Ong Tiong Sing and corporate adviser Seow Lun Hoo. All three are Malaysians.
Beng Seng’s interest in the bank, through VT, has come into the spotlight because of his corruption probe in Singapore. He faces two charges in relation to former Singapore transport minister S Iswaran, who is currently serving time in jail for his offences.
Kam also confirmed that Beng Seng remains a shareholder of Alliance Bank via VT.
“As far as I am aware, he is still a shareholder of Alliance Bank,” Kam said, when asked about the current shareholder structure.
Other major shareholders in Alliance Bank include the Employees Provident Fund with a 9.3% stake, and Global Success Network Sdn Bhd with a 4.98% stake. Global Success is the investment vehicle of Lee Thiam Wah, founder of retail chain 99 Speed Mart Retail Holdings Bhd (KL:99SMART), Bloomberg data showed.
The bank's net profit rose 8.7% to RM750.73 million for the financial year ended March 31, 2025, from RM690.48 million in the previous year. Revenue climbed 12.3% to RM2.27 billion from RM2.02 billion.
Alliance Bank shares closed down four sen or 0.9% at RM4.33, bringing the group a market capitalisation of RM6.7 billion. The stock has fallen 15% since the announcement of the rights issue in March.