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Alliance Finance 1Q16 Earnings Decline 7%
Malaysia Daily Bulletin | 19 August 2015
  • Alliance Financial Group’s 1Q16 net profit fell 6.8 percent to RM121.9 million, despite a slight 2.3 percent improvement in net income to RM344.3 million, due to higher allowance for losses on loans.
  • On a better note, net interest margin (NIM), a key measure of a bank’s performance, improved to 2.2 percent, as the group focuses on higher risk-adjusted return loans, despite the rise in cost of funds due to increasing competition for deposits.
  • One of the group’s strategies for FY16 is to grow customer based non-interest income and in this aspect, it recorded a 26.4 percent hike in non-interest income in 1Q16, driven by the growth in brokerage and wealth management.

Significance: Going forward, the bank has said that it would leverage on its franchise strength to maintain profitability. In a separate report, AffinHwang Capital Research has upgraded the stock to ‘Buy’ with a target price of RM4.50, noting that the group’s operating income has continued to hold up firmly, supported by stronger fund-based income growth while the NIM remains steady.

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