KUALA LUMPUR, Nov 27 — Alliance Bank Malaysia Bhd expects its net profit to improve in the second half (H2) of its current financial year ending March 31, 2020 (FY20), compared with the first half, underpinned by reducing credit cost.
Group chief executive officer Joel Kornreich said higher credit cost dragged down the bank’s net profit during the second quarter ended Sept 30, 2019 (Q2).
“We believe that our credit costs will ease in the second half (FY20) as we see a lot of writebacks and recoveries from business accounts happening in the next two quarters,” he told a press conference on the bank’s Q2 financial performance here, today.
He said the higher credit cost of 17.5 basis points was temporary and would likely range between 13 and 18 basis points in H2 FY20.
However, when compared year-on-year, Kornreich expected the net profit in H2 FY20 would not be higher than the net profit in H2 FY19, because of the significantly higher credit cost in the first quarter of this year of 24.6 basis points.
Alliance Bank’s net profit in Q2 declined 17.8 per cent to RM115.52 million from RM140.52 million in the corresponding quarter a year ago.
Revenue rose 7.5 per cent to RM429.28 million from RM399.19 million previously.
On loan growth, he said the bank expected it to be between five per cent and seven per cent, supported by its small and medium-sized enterprise (SME) portfolio, with SME financing making up 26 per cent of its portfolio.
He expected loan growth to be slower over the next two to three quarters, weighed down by the property sector which continued to experience soft prices and sales given the property overhang situation.
Going forward, Kornreich said Alliance Bank planned to maintain its focus on being the preferred bank for business owners.
“As a result of that, we anticipate our SME book will be the one that is going to grow the fastest, followed by consumer book held by business owners, their families, and stakeholders,” he added. — Bernama
