Sng leaves Alliance Bank in better shape

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Sng: In my 30 years of banking, I have done many aspects of banking. I love banking. - Photo by Patrick Goh

That Alliance Bank Malaysia Bhd’s group chief executive officer Sng Seow Wah is a practical man cannot be overstated. The graduate of the National University of Singapore chose accounting as his field of study because it was the “shortest route” to an honours degree.

“All I knew was that I would come out as soon as possible and make a living,” he shares with The Edge in an exclusive interview.

“Even for my first job — I had more than one. I was in audit and I taught night classes where I was paid S$8 an hour because I had to help my family,” he says.

But it didn’t take long for the Singaporean to realise that accounting wasn’t his cup of tea.

“After six months I realised, ‘wow… wrong job, wrong fit!’,” he says, laughing.

“After 18 months, I did well and they wanted to send me overseas for an articleship and I did not proceed. That was when I joined a bank. I got a job in credit and marketing at a local bank. It is today’s equivalent of relationship banking. In my 30 years of banking, I have done many aspects of banking. I love banking. I cannot imagine myself doing anything else. I never thought of leaving banking.”

The career banker is nevertheless leaving the top post at Alliance Bank on Oct 4 to attend to family matters.  

“The thing about banking is that it is a combination of many businesses. In a way, it has taught me about people and leadership skills, how to find the right people for the right job and how to make sure nothing falls through the cracks,” the 55-year-old Sng reminisces.  

A candid Sng also shares that the banking landscape “doesn’t get any better” with time.

“Every year it gets more competitive. I have never heard of a year where ‘wow, NIMs (net interest margin) have gone up, it is a great year’. That is why I keep telling our people, like a broken record, that we are on a treadmill and every year, the treadmill is turned up a little faster. You have no choice. That is the way it is. If not, you will fall off the treadmill and you will not be in the running anymore,” he says.

“I think when we are faced with a landscape that is getting more regulated and you have external threats and you never know where it is going. All these are challenges for us in banking. But the bank that is nimble, the bank that can move and communicate quickly and have the buy-in of the folks; that is where the advantage is,” he notes, adding that this is why he sees Alliance Bank’s small size as an advantage rather than a disadvantage.

“It will be a survival of the fittest. And ‘fittest’ has to do not with size, but with the quality of human capital. And the faster the managers figure this out, the better,” he says.

In 2001, Alliance Bank was formed through the merger of seven financial institutions: Multi-Purpose Bank, International Bank Malaysia, Bolton Finance, Bumiputra Merchant Bankers, Sabah Bank, Sabah Finance and Amanah Merchant Bank. It is the smallest bank in terms of assets in the country; while using market capitalisation of listed parent Alliance Financial Group Bhd (AFG) as a benchmark, it is second smallest.

Despite its relatively small size, AFG has caught the eye of both local and foreign investors.  AFG’s foreign shareholding stands at 32.9% as at end-August — which is at par with bigger players such as Malayan Banking Bhd (23.1% in early-September 2014) and CIMB Group Holdings Bhd (34.5% in May 2014). The 32.9% foreign shareholding of AFG excludes Singapore’s Temasek Holdings’ effective 14.8% stake.  

Banking on people

Sng is a vocal advocate of human capital development. He believes that key to a successful business is its people.

“Most people are misled by the fact that it (success) is just in the numbers but no, it is the people. It is human resources. Human capital. In my first three months, I time-logged myself. Based on my appointment book, 75% of my work was spent with people. I couldn’t have accomplished all these things without my team of seniors,” he says.

“And in the last three to four months, I have been like a little prophet going around telling everybody that this is the most important part of our game — to continue motivating our staff and the need for this journey. It creates and

reinforces a sense of purpose for our team and staff. Of course there is no running away from something that is most fundamental — that is, hard work and grit. If one is not prepared to work hard and doesn’t have the determination and grit, then don’t come into banking because it can become very stressful,” he adds.

Sng believes that staff engagement is essential at all levels. Since taking over the top job in 2010, he has actively engaged with the staff, holding frequent townhall meetings, pulse lunches and tea sessions.

When he first took over the helm in 2010, Sng saw the need to get the staff together and engage with them.

“We had to explain, be transparent and communicative and explain as much as we can about where the bank is going, doing an important job of persuading people that we can succeed. In order to do that, communication is required. We also had to develop a robust performance management system,” he shares, adding they also introduced a more meritocratic system.

In terms of the bank’s offerings, Sng made sure Alliance Bank has carved a niche for itself.

“What I don’t like is competing on pricing and products as it can be easily copied. You can’t win. What you can win on are things that require a lot of proprietary knowledge and processes. Our SME business model is not easy to copy — you can take one part but all the other parts are needed too for they work together.  The second thing is service — that is not easily replicated. For us, it is very important to know where we have chosen to play are areas that require a lot of hardwork, grit and not easily replicable.”  

Those who have interacted with him agree that he has delivered.

“Mr Sng has done a good job. When he first came, people didn’t know him and as he was not a bank CEO before. We had our reservations but all of that has changed now. Together with his team, he and they have proven themselves. Under his watch, the bank’s cost and capital management ratio has been very effective. CASA (current account, savings account) deposit ratio is about 35% which is good… for a small bank, that is quite rare,” says a senior banking analyst with a foreign research house.

‘Business as usual’

Sng is confident that Alliance Bank is a well-oiled machine and will continue on its growth momentum after his departure. Upon his exit and until a successor is announced, the bank will form a relief committee, comprising key members of management, led by a relief officer.

“I want to assure [everyone] that it will be pretty much business as usual. This time around, we have a strong and stable management team,” Sng says.

Back in July 2010, Sng took over when the group was in the thick of the controversial exit of his predecessor Datuk Bridget Lai.

Under Sng’s watch, Alliance Bank underwent some organisational alignment which included consolidating and centralising support functions across various business units such as consumer banking and business banking to improve efficiency. The group also merged SME and wholesale banking divisions into business banking. Reporting lines at regional and branch levels were also restructured with the introduction of regional heads and a “single captain model” at branches.

The numbers show that Sng is leaving the bank in good shape. The banking group’s total assets grew to RM48.1 billion in its financial year 2014 from RM36.1 billion in FY2010. During this period, the group’s net profit rose at a compound annual growth rate (CAGR) of 16.9% to RM564 million in FY2014 from RM302 million in FY2010.

Meanwhile, dividend per share quadrupled to 29.5 sen from 6.4 sen while cost-to-income ratio improved to 46.6% from 52.1%. Return on equity (ROE) rose to 13.8% from 10.5%.

Nevertheless, Sng admits that the banking group may not be able to hit its 16% ROE target next year.  “We set an ambitious target. But the 16% at that point in time was based on revenue trends but we had to invest quite a bit into a couple of things such as information technology and human resources. Nevertheless, this year I’m confident we will go above 14%. It will be a nice improvement. Fifteen percent remains reachable in the next two to three years at the rate that we are going,” he says.

This article first appeared in The Edge Malaysia Weekly, on September 29 - October 5, 2014.