This article first appeared in The Edge Financial Daily on March 1, 2019

KUALA LUMPUR: Alliance Bank Malaysia Bhd, which reported improved earnings for third quarter of financial year 2019 (3QFY19)ended Dec 31, 2018, expects its profitability growth to be on track.

“In FY19, we will continue to scale up for growth in our core businesses, that is consumer lending and small- and medium-enterprise (SME) banking. For these businesses, we will drive productivity and increase our sales capacity to accelerate loan growth, aiming to outpace industry growth,” the bank said in a filing with Bursa Malaysia.

“Notwithstanding the challenging economic outlook, we expect the group’s FY19 profitability growth to remain on track,” it added.

The group’s net profit rose 21.5% to RM148.93 million in 3QFY19, from RM122.55 million a year earlier. Revenue increased 7.8% to RM418.4 million from RM388 million previously.

The bank said net income grew by 7.8% or RM30.4 million, mainly from net interest income, while other operating income was recorded at RM76.2 million.

Operating expenses were better off by 8.6% or RM18.5 million, cost to income ratio improved by 8.5% to 47% and expected credit loss was recorded at RM32.6 million, it said.

For the accumulative nine months ended Dec 31, 2018, the group recorded a net profit of RM425.82 million, up 12% compared with RM380.36 million in the corresponding period in the previous year.

Revenue rose 4.3% to RM1.22 billion from RM1.17 billion previously, driven by stronger volume growth, improved loan mix from better risk-adjusted return loans, and higher rate from asset repricing post overnight policy rate hike.

Gross loans and advances grew 6% year-on-year (y-o-y) to RM41.4 billion, the group said in a statement.

“The better risk-adjusted return loans increased 26.6% while the lower risk adjusted return loans contracted by 4.6%.

“The better risk-adjusted return loans expanded to 41% of the overall loan portfolio when compared to 27% recorded for FY15,” it added.

The bank said the improved performance was primarily due to its Alliance One Account, SME, commercial and unsecured consumer loans.

SME loans grew 12% y-o-y, it said.

Looking forward, the group said: “Throughout the FY19 period our focus is to strengthen our key strategic pillars. They have been, and will continue to be, our catalyst to grow and achieve our midterm growth plan, which is to strengthen our position in the SME and consumer space.”

“As a local and SME-focused bank, we believe our strength is in owning a deep insight into the specific needs and challenges of our customers. Our goal is to provide an inclusive financial advisory and funding support to help SMEs and the community grow to their full potential,” it added.