first quarter analyst briefing as at 30 june 2010

26
ANALYST BRIEFING - 3 Months Ended 30 June 2010 -

Upload: alliance-financial-group-berhad

Post on 15-Jan-2015

405 views

Category:

Investor Relations


0 download

DESCRIPTION

This is the First Quarter Analyst Briefing as at 30 June 2010 for Alliance Financial Group Berhad (AFGB).

TRANSCRIPT

Page 1: First Quarter Analyst Briefing as at 30 June 2010

ANALYST BRIEFING- 3 Months Ended 30 June 2010 -

Page 2: First Quarter Analyst Briefing as at 30 June 2010

• Key Messages

AGENDA

• 1QFY2011 Financial Performance

• Questions & Answers

2

Page 3: First Quarter Analyst Briefing as at 30 June 2010

2

3

4

5

6

7

8

20

40

60

80

100

120

1Q10 2Q10 3Q10 4Q10 1Q11

PAT - lhs EPS - rhs

40

60

80

100

120

140

160

1Q10 2Q10 3Q10 4Q10 1Q11

PBT Operating ProfitRM ‟mil

RM ‟mil

• 1QFY2011 operating profit grew

30.4% YoY from RM116.1mil to

RM151.4mil

• Lower allowance for impairment of

loans, advances & financing and

other losses

• The Group recorded profit-after-

taxation (PAT) of RM110.5mil,

+139.2% YoY

• Earnings per share (EPS) of 7.2 sen

in 1QFY2011, compared to 3.0 sen in

the same period last year

Financial Performance

Strong earnings growth

sen

46.2

78.1

100.0

77.2

116.1122.3

130.3138.8

151.4

110.5

62.4

108.1

131.0

107.4

150.3

3.0

5.1

6.5

5.0

7.2

3

Page 4: First Quarter Analyst Briefing as at 30 June 2010

• 23.2% increase in net interest income on the back of 7.9% YoY loans growth

• Income of Islamic Banking was affected by slower growth in „Koop‟ loans and Profit Equalisation

Reserve (PER). If the PER was normalised, Islamic Banking income will rise by 35.3%

• Non-interest income grew slower than expectation driven by lower business volume and stringent risk

management

Financial Performance

Growth momentum in net income continued

(RM ’mil) 1QFY10 2QFY10 3QFY10 4QFY10 1QFY11 % YoY

Net Interest Income 137.3 152.9 153.8 165.6 169.1 23.2%

Islamic Banking Income 59.4 49.6 65.6 71.0 55.6 -6.4%

Non-Interest Income 60.3 46.7 57.7 41.0 51.5 -14.6%

Net Income 257.0 249.2 277.1 277.6 276.2 7.5%

4

Page 5: First Quarter Analyst Briefing as at 30 June 2010

2.1%

2.4%

2.7%

3.0%

3.3%

Apr-09 Jul-09 Oct-09 Jan-10 Apr-10

Group Corporate

3.4%

3.7%

4.0%

4.3%

Apr-09 Jul-09 Oct-09 Jan-10 Apr-10

Commercial

3.8%

4.1%

4.4%

4.7%

5.0%

Apr-09 Jul-09 Oct-09 Jan-10 Apr-10

SME

3.0%

3.3%

3.6%

3.9%

4.2%

Apr-09 Jul-09 Oct-09 Jan-10 Apr-10

Consumer

KEY DRIVERS

NIM NIM NIM NIM

Financial Performance

NIM improved to 2.8% from 2.3% a year ago

2.2%

2.4%

2.6%

2.8%

3.0%

3.2%

Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10

Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10

AFG 3.1% 3.1% 3.0% 2.9% 2.6% 2.3% 2.6% 2.7% 2.8% 2.8%

2.3%

2.8%

5

Page 6: First Quarter Analyst Briefing as at 30 June 2010

-15%

-5%

5%

15%

25%

35%

3,500

4,000

4,500

5,000

5,500

6,000

Jun-07 Mar-08 Dec-08 Sep-09 Jun-10

RM 'mil - lhs

% YoY - rhs

0%

10%

20%

30%

40%

6,000

7,500

9,000

10,500

12,000

13,500

Jun-07 Mar-08 Dec-08 Sep-09 Jun-10

RM 'mil - lhs

% YoY - rhs

Loans breakdown by businesses Consumer

Commercial / SME

Corporate

• AFG loans growth of 7.9% in 1QFY2011

• AFG loans growth was driven by Commercial and SME loans, which grew

by 12.6% and 8.9% respectively

• Exit book loans have decreased to RM246mil in 1QFY2011 from

RM306mil in 1QFY2010

Financial Performance

Loans growth driven by Commercial and SME

(RM ’mil)FYE

31/3/09

FYE

31/3/10

Consumer 10,832 12,800

Commercial 1,407 1,400

SME 4,452 4,235

Corporate 2,567 2,723

Exit Books 333 252

Total 19,591 21,410

FYE 2010 FYE 2011% YoY

1Q 1Q

11,869 12,821 8.0%

1,281 1,443 12.6%

3,951 4,301 8.9%

2,577 2,745 6.5%

306 246 -19.6%

19,984 21,556 7.9%

-60%

-40%

-20%

0%

20%

40%

60%

1,500

1,800

2,100

2,400

2,700

3,000

Jun-07 Mar-08 Dec-08 Sep-09 Jun-10

RM 'mil - lhs

% YoY - rhs

6

Page 7: First Quarter Analyst Briefing as at 30 June 2010

70%

75%

80%

85%

90%

95%

1Q09 3Q09 1Q10 3Q10 1Q11

AFG Industry

1.4%

1.8%

2.2%

2.6%

3.0%

1Q09 3Q09 1Q10 3Q10 1Q11

Cost of Funds (%)

Financial Performance

AFG‟s L/D ratio is higher than industry average

High loan to deposit ratio mitigated by high deposit qualityLow cost of funds helps us to remain competitive

79.8%

84.1%

82.4%

88.9%

92.6%

72.2%

73.5%

78.2%77.9%

81.4%

2.6%

2.1% 1.9%

1.7%

2.6%

CASA ratio is at top quartile of the industry

0%

20%

40%

60%

80%

100%

1Q10 2Q10 3Q10 4Q10 1Q11

CASA Fixed Deposits Others

9.4%4.6% 7.3% 6.8% 7.7%

56.0%57.3%

51.8% 51.7% 50.8%

34.6% 38.1%40.9% 41.5% 41.5%

7

Page 8: First Quarter Analyst Briefing as at 30 June 2010

Non-Impaired Impaired

• Corporate

• Large Comm

• SME

Retail/

Consumer

• Mortgage

• HP

• Credit card

• P/Loan

• Stock broking

FULL BLOWN FRS 139

Individual Assessment

Using DCF Method

CA = PD x LGD x

LIP x O/S

CA = PD x LGD x LIP x O/S

CA = PD x LGD x

LIP x O/S

Large

loan

>RM1mil

Portfolio -

small loan

<RM1mil

Individual Assessment (IA)

Legend:

TRANSITIONAL PROVISION

Non-Impaired Impaired

Individual Assessment

using DCF Method

CA = 1.5% x

[O/S – IA

Using DCF -

IA using BNM

GP3]

Large

loan

>RM1mil

Portfolio -

small loan

<RM1mil

Individual Assessment

using BNM GP3‟s time-

based method

Collective Assessment (CA)

PD Probability of Default

LGD Loss Given Default

O/S Outstanding Balance

LIP Loss Identification Period

Loans Impairment Methodology

8

Page 9: First Quarter Analyst Briefing as at 30 June 2010

Financial Performance

Adoption of FRS 139: Financial Instruments

• Positive impact on opening reserves:

• No significant impact on current earnings due to 1.5% collective impairment on loans as required under

the transitional provisions of the BNM guidelines on Classification and Impairment Provisions for

Loans/Financing issued in January 2010

• Impaired loans have been restated due to more stringent criteria on impaired loan classification under

FRS 139, as follows:

Total Equity (RM ‘mil)

As at 1 April 2010, as previously stated 2,952

Effect of adopting FRS 139 103

As at 1 April 2010, as restated 3,055

Enhancement to reserves 3.5%

Impaired Loans

(RM ‘mil)

Gross Impaired Loans

Ratio

As at 1 April 2010, as previously stated 806 3.8%

Effect of adopting FRS 139 38 0.1%

As at 1 April 2010, as restated 844 3.9%

Note: Under the more stringent criteria, certain loans which are less than 3 months in default are now classified as

impaired loans

9

Page 10: First Quarter Analyst Briefing as at 30 June 2010

Income Statement (RM ’mil) FY 2010 FY 2009

Interest Income 1,094.4 1,250.6

Interest Expense (477.5) (596.0)

Net Interest Income 616.9 654.6

Islamic Banking Income 245.8 165.1

Non-Interest Income 201.8 235.0

Net Income 1,064.5 1,054.7

Operating Expenses (554.6) (559.4)

Operating Profit 509.9 495.3

Write back/Allowance for NBD 31.9 (115.1)

Allowance for Impairment (132.9) (76.9)

Loan Impairment Allowances (101.0 ) (192.0)

Profit before Taxation & Zakat 408.9 303.3

Taxation & Zakat (107.4) (74.4)

Profit after Taxation & Zakat 301.5 228.9

1QFY11 4QFY10 % QoQ 1QFY10 % YoY

276.7 269.6 2.6% 269.8 2.6%

(107.6) (104.0) 3.5% (132.5) -18.8%

169.1 165.6 2.1% 137.3 23.2%

55.6 71.0 -21.8% 59.4 -6.4%

51.5 41.0 25.6% 60.3 -14.6%

276.2 277.6 -0.5% 257.0 7.5%

(124.8) (138.8) -10.1% (140.9) -11.4%

151.4 138.8 9.0% 116.1 30.4%

(0.5) (19.4) -97.4% (26.0) -98.0%

(0.6) (12.0) -95.0% (27.7) -97.8%

(1.1) (31.4) -96.4% (53.7) -97.9%

150.3 107.4 39.9% 62.4 140.9%

(39.8) (30.2) 31.8% (16.2) 145.7%

110.5 77.2 43.1% 46.2 139.2%

Financial Performance

10

Page 11: First Quarter Analyst Briefing as at 30 June 2010

1QFY10 1QFY11 % YoY

2,212.8 2,444.7 10.5%

3,152.5 3,366.7 6.8%

14.9 15.5 +0.6

10.5 11.2 +0.7

Financial Performance

Capital position remains strong

(RM ’mil) FY 2009 FY 2010

Tier I Capital 2,234.1 2,429.2

Total Capital Base 3,167.3 3,339.3

RWCR (%) 14.7 15.4

Core Capital Ratio (%) 10.3 11.1

• AFG‟s core capital and risk-

weighted capital ratio (RWCR)

continued to improve to 11.2%

and 15.5% in 1QFY2011

compared to 10.5% and 14.9%

in 1QFY2010

• Total capital base of RM3.4bil,

increased by 6.8% YoY. Tier I

capital represents 72.6% of

total capital, improved further to

RM2.4bil

• Healthy capital position and is

in line with BASEL requirement

11

Page 12: First Quarter Analyst Briefing as at 30 June 2010

FY 2010 FY 2011

1Q 2Q 3Q 4Q 1Q

2.3

2.1

2.6

2.0

2.7

1.9

2.8

1.7

2.8

1.7

27.8

54.0

82.4

14.9

24.0

50.9

90.3

15.4

24.5

53.0

88.9

15.2

24.2

50.0

90.6

15.4

19.4

45.2

92.6

15.5

4.5

97.7

4.1

89.0

3.9

91.0

3.8

94.4

3.8

85.6

0.6

6.6

1.3x

0.8

8.8

1.4x

0.9

10.5

1.4x

0.9

10.5

1.5x

1.4

14.5

1.5x

FY 2009 FY 2010

Profitability• Net Interest Margin

• Cost of Funds

2.8

2.7

2.7

1.9

Business

Performance

• NFI / Total Income

• Cost Income Ratio

• LD Ratio

• RWCR

22.4

53.0

76.6

14.7

24.2

52.1

90.6

15.4

Asset

Quality

• Gross Impaired Loans

• LLC

4.5

99.7

3.8

94.4

Shareholder

Value

• ROAA

• ROAE

• P / BV

0.8

8.6

0.9x

0.9

10.5

1.5x

Financial Performance

Key financial ratios

12

Page 13: First Quarter Analyst Briefing as at 30 June 2010

• Key Messages

AGENDA

• 1QFY2011 Financial Performance

• Questions & Answers

13

Page 14: First Quarter Analyst Briefing as at 30 June 2010

Moving from transformation journey to sustainable growth

Today

Transformation

Execution

• Focus on Execution

• Sustainable Growth

• Leveraging on Existing Strengths

• Synergising Lines of Business

• Productivity Management

AFG’s Journey

• Restructure and Improve Portfolio

Quality

• Improve Risk and Operational

Controls

• Invest in People and Technology

• Branch Expansion

• Branding

14

Page 15: First Quarter Analyst Briefing as at 30 June 2010

Building sustainable growth

Looking Ahead

Priority Growth Areas

Consumer SME Commercial & Corporate

Favourable Economic Environment

• Net beneficiary of rising interest rates

• Streamlining industry focus

Strong Bank Assets

• Deep customer relationships

• Strong risk culture and framework

• Good asset quality and strong balance sheet

• Strong and dependable management team

Segment-driven growth, leveraging shared expertise

Asset Mgt.Islamic TreasuryInv. Bank

Drive Fee

Income

Synergising

Lines of

Business

Build Wealth

Management

Enhance

Cross-Selling

15

Page 16: First Quarter Analyst Briefing as at 30 June 2010

Business banking

Business Realignment

ModelNow

Bilateral

Relationship

Managed

Corporate

and

Commercial

Banking

Corporate

Commercial

SME SME

16

Program

Lending

Page 17: First Quarter Analyst Briefing as at 30 June 2010

NPLs

CIR

ROE

Dividend

Policy

Key Guidance

Over the medium term (3-5 years) we will ...

… remain better than industry

… move to industry average (45 - 48%) through Y-o-Y

improvements, driven by:

• targeted revenue growth

• productivity focus

… achieve industry average (14 - 16%) through Y-o-Y

improvements, driven by:

• focus on underlying earnings

• prudent capital management

… pay “as much as we can afford, whenever we can”

17

Page 18: First Quarter Analyst Briefing as at 30 June 2010

Key Messages

Bank is strong and performing well

Delivering value to our shareholders

We are gaining momentum

• The Group has performed well in 1QFY2011 despite a competitive operating environment

• Transformation has taken place and we are delivering sustainable growth

• Adoption of FRS 139 had a positive impact on opening reserves and asset quality continued to

improve

• We will continue to improve productivity

• We remain well-capitalised

• We pay good dividends

• All our business decisions will be evaluated based on a long-term perspective

• Underlying business momentum is intact and we are well positioned to take advantage of the current

economic cycle18

Page 19: First Quarter Analyst Briefing as at 30 June 2010

Investor Relations

Alliance Financial Group7th Floor, Menara Multi-Purpose, Capital Square

8 Jalan Munshi Abdullah

50100 Kuala Lumpur, Malaysia

www.alliancebank.com.my/investorrelations.html

THANK YOU

19

Page 20: First Quarter Analyst Briefing as at 30 June 2010

Economic PurposeLoan

(RM ’mil)% YoY

Gross

Impaired

Loans

(RM ’mil)

% Share

Gross

Impaired

Loans Rate

(%)

Purchase of Securities 325.3 28.3% 17.7 2.2% 5.4%

Purchase of Transport Vehicles 834.8 -25.0% 13.6 1.7% 1.6%

Purchase of Landed Property 11,230.0 5.1% 310.9 38.0% 2.8%

Purchase of Fixed Assets 82.4 41.6% 0.2 0.0% 0.2%

Personal Use 2,015.1 45.6% 41.2 5.0% 2.0%

Credit Cards 680.0 3.2% 14.7 1.8% 2.2%

Construction 248.8 -23.2% 22.1 2.7% 8.9%

Working Capital 5,524.1 16.8% 349.1 42.6% 6.3%

Others 615.2 -21.3% 49.4 6.0% 8.0%

Total 21,555.7 7.9% 818.9 100.0% 3.8%

Loans & Asset Quality

20

Page 21: First Quarter Analyst Briefing as at 30 June 2010

5

9

13

17

21

25

Sep-07 Dec-07 Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10

% Y

oY

Ch

an

ge

Sep-07 Dec-07 Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10

AFG 9.8 12.1 14.2 17.7 22.1 22.1 18.4 15.5 9.8 8.0 9.3 7.9

Industry 9.8 8.9 10.3 12.0 10.7 13.0 11.2 8.4 7.3 8.1 10.3 13.0

MIER Consumer Confidence IndexInterest Rates MovementReal GDP Growth (%YoY)

KEY DRIVERS

*

* after interest-in-suspense

Loan Drivers

21

Page 22: First Quarter Analyst Briefing as at 30 June 2010

Non-Interest Income

Weak market conditions impacted non-interest income

0

10

20

30

40

50

60

70

1Q10 1Q11

18,821 17,273

4,3004,137

10,109

RM ‟000

9,466

3,651

11,091

11,749

4,755

3,690

2,784

1,795

60,337

51,510

8,226

% YoY

-8.2%

-3.8%

-18.6%

-61.4%

+5.9%

-22.4%

+55.1%

Commission & Fees (33.5%)

Wealth Management(8.0%)

Credit Cards(16.0%)

Brokerage Fees(7.1%)

Investment Sales Gain(22.8%)

Other Non-Operating(7.2%)

Forex(5.4%)

Note: ( ) denotes share of each component to total non-interest income 22

Page 23: First Quarter Analyst Briefing as at 30 June 2010

70

80

90

100

3.4

3.8

4.2

4.6

1Q10 2Q10 3Q10 4Q10 1Q11

Gross Impaired Loans Ratio - Old GP3 - lhs

Gross Impaired Loans Ratio - FRS 139 - lhs

Loan Loss Coverage - rhs

Asset Quality

Asset quality continues to improve as economy recovers

% %

97.7%

89.0%

91.0%

94.4%

85.6%

4.5%

4.1%

3.9%3.8% 3.8%

3.9%

• The Group adopted FRS 139 w.e.f. 1 April 2010.

As a result of more stringent criteria on

classification of impaired loans, gross impaired

loans ratio increase by 0.1% to 3.9% as at 1 April

2010

• Asset quality continued to improve to 3.8% in

1QFY2011 compared to 3.9% in 4QFY2010

• Loan loss coverage reduced from 94.4% to

85.6% due to write-back of specific allowances

of RM49mil arising from the effect of adopting

FRS 139

Note: For 1QFY2011 onwards, domestic loan impairment allowance is

computed based on the revised BNM guidelines, which

incorporates the FRS 139 accounting principles

Collective allowance for domestic loans is computed based on

1.5% requirement under the transitional provisions of the BNM

guidelines on Classification and Impairment Provisions for

Loans/Financing issued in January 2010

23

Page 24: First Quarter Analyst Briefing as at 30 June 2010

Transitional provision - On 26 January 2010, BNM issued the revised BNM Garis Panduan 3 („BNM/GP3‟) -

“Classification and Impairment Provisions for loans/Financing” which sets out the minimum requirements on the

classifications of impaired loans/financing and allowances for loan/ financing impairment effective for annual

Accounting period beginning on or after 1 January 2010. The principles in the revised BNM/GP3 are consistent with

those applicable under FRS 139, except that there is a transitional provision.

Under FRS 139 Transitional provision Existing GP3

Individual impairment

allowances

For individually significant accounts, net present

values of future cashflows are discounted based on

original effective interest rates and compared

against carrying amount

Individual allowances (FRS 139) + Specific

allowances (GP3)

Existing GP3 allowances

Collective impairment

allowances

Estimating losses of a homogenous pool by deriving

Probability of Default and Loss Given Default

All loans, advances and financing

1.5% x {Total outstanding loans/financing –

Individual impairment allowances (FRS 139) –

Specific allowances (GP3)}

Stock broking and Share margin financing

No change to existing GP3 basis

Alliance Bank Group had elected for transitional provision and set the threshold for individual impairment assessment for

Corporate Banking, Commercial and SME loans, advances and financing.

For collective assessments, the transitional provision methodology has been agreed, i.e. under the transitional provision, for

loans, advances and financing, there is no change to the existing BNM GP3 basis.

Transitional FRS 139

24

Page 25: First Quarter Analyst Briefing as at 30 June 2010

Communities

We are increasing our Corporate Responsibility activities

Corporate Responsibility

Environment

Employee Charity Day

• Employee teams help local charities

• Work day and financial support

provided by the Bank

Donation Matching Programme

• Staff select from approved charity list

• Funding set aside for corporate

matching

Carbon Audit

We will

• … measure our impact

• … set targets and improve over time

• … and report transparently

Sustainable Lending Policies

• Voluntary standards under development

• Encourage good practices/mitigate

negative impacts

• Equator principles a key reference

2010/11 Initiatives

25

Page 26: First Quarter Analyst Briefing as at 30 June 2010

Month/Year AWARD AWARDED BY

May

2009

o Best Enterprise Transformation Award 2008

o Best Data & Analytics Project Award 2008

The Asian Banker

October

2009

oMalaysia‟s Top 30 Most Valuable Brands

(MMVB09) 2009

Association of

Accredited

Advertising Agents

Malaysia (4As), The

Edge & Interbrand

December

2009

o2009 National Award for Management

Account (NAfMA 2009)

Malaysia Institute of

Accountants (MIA)

and The Chartered

Institute of

Management

Accountants (CIMA)

Malaysia

December

2009

o Finalist for Best New Card Launch

oFinalist for Most Innovative Card Marketing

Programme

MasterCard Hall of

Fame

February

2010

oSpecial Citation for Product Innovation

(You:nique Card)

Financial Insights

March

2010

oExcellence in Business Model Innovation

Award for 2009

The Asian Banker

April

2010

o Malaysia‟s Top 50 Brands Brand Finance

Key Awards

Recognition of our transformation and investments

26