KUALA LUMPUR: Alliance Financial Group Bhd (AFG) recorded a 7.4% decrease in net profit to RM126.37 million for the third financial quarter ended Dec 31, 2014 (3QFY15) from RM136.51 million a year ago, mainly due to higher allowances for losses on loans, advances, and financing.

In a filing with Bursa Malaysia yesterday, AFG (fundamental: 2; valuation: 2.2) said revenue, however, grew 6.5% to RM349.83 million from RM328.63 million. Earnings per share was lower at 8.3 sen from nine sen in 3QFY14.

AFG’s income statement showed bad loan allowance rose to RM26.95 million, from RM3.42 million.

For the nine-month period (9MFY15), net profit rose 7.9% to RM437.51 million from RM405.54 million a year ago. Revenue increased 6.6% to RM1.07 billion from RM1.01 billion.

In a statement yesterday, AFG attributed the improved financial performance in 9MFY15 to growth in interest income and recurring non-interest income.

AFG said net interest income grew 9.8% to RM634.5 million, driven mainly by 16.7% net loan expansion. Non-interest income rose to RM273.7 million.

Interest margins, however, continued to remain under pressure due to increased competition for loans and deposits.

Moving forward, AFG expects to deliver “satisfactory performance” for the financial year ending March 31, 2015. The group said it expects to generate sustainable revenue from consumer and corporate loans.

The bank expects loan growth in consumer banking driven mainly by mortgage schemes and personal loans, while corporate loans are expected to grow in tandem with continuing demand for credit by businesses, due implementation of projects under the Economic Transformation Programme.

AFG shares closed down 1.65% to RM4.78 yesterday, bringing a market capitalisation of RM7.34 billion.

The Edge Research’s fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations. Go to www.theedgemarkets.com for more details on a company’s financial dashboard.

This article first appeared in The Edge Financial Daily, on February 17, 2015.