KUALA LUMPUR (Aug 18): Alliance Financial Group Bhd reported a 7% drop in first quarter net profit from a year earlier mainly on significantly higher bad loan allowance.

In a statement to the exchange today, Alliance (fundamental: 1.5; valuation: 2.25) said net profit fell to RM121.93 million in the first quarter ended June 30, 2015 (1QFY16) from RM130.81 million. Revenue, however, rose on higher interest and Islamic banking income.

Alliance said 1QFY16 net profit fell "primarily due to higher allowance for losses on loans".

Its income statement showed that bad loan allowance rose to RM17.11 million from RM1.75 million a year earlier.

Looking ahead, Alliance said it would focus on its strength in corporate loans to grow revenue. Alliance said it was eyeing loans from small and medium enterprises.

On the consumer banking segment, Alliance said its emphasis would be on wealth management, cards and unsecured lending.

"The focus areas for financial year 2016 will be to improve asset efficiency as measured by risk adjusted returns, ensure that deposit growth exceeds loan growth and continue to grow customer based non-interest income," the group said.

At 12.30pm today, Alliance shares rose three sen or 0.8% to settle at RM3.69 for a market value of RM5.71 billion.

The stock had fallen 21% this year, underperforming the FBM KLCI's 10% decline.

(Note: 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.)