FINANCIAL SERVICES

ALLIANCE BANK
MALAYSIA
(ABMB MK EQUITY, ALLI.KL) 03 Sep 2018
MFRS 9 impact in line with expectation
Company report BUY

Kelvin Ong, CFA (Maintained)

kelvin-ong@ambankgroup.com
03-2036 2294 Rationale for report: Company results

Price RM4.13 Investment Highlight

Fair Value RM5.00
52-week High/Low RM4.49/RM3.62  We maintain our BUY recommendation on Alliance Bank
Malaysia (ABMB) with an unchanged fair value of
Key Changes
RM5.00/share. Our fair value is supported by an FY19 ROE
Fair value 
of 9.8%, pegging the stock to a P/BV of 1.3x. We fine-tune
EPS 
our net profit for FY19/20/21 by -1.4%/0%/3.8% as we
YE to Mar FY18 FY19F FY20F FY21F tweaked our loan and deposit growth assumptions.
 The group reported a net profit of RM136mil in 1QFY19
Total income (RM mil) 1,572.0 1,660.1 1,795.8 1,823.1 (+20.8%QoQ; +1.0%YoY) which was within expectations,
Core net profit (RM mil) 493.2 555.1 644.9 665.1
making up 24.0% of our and 23.8% of consensus estimates
FD Core EPS (sen) 31.9 35.9 41.7 43.0
FD Core EPS growth (%) (3.7) 12.5 16.2 3.1 respectively.
Consensus Net Profit (RM mil) - 571.5 633.4 693.5  Earnings were driven by a total income growth of 3.7%YoY,
DPS (sen) 16.4 18.5 21.4 24.3 underpinned by a stronger NII growth with a focus on
BV/share (RM) 3.53 3.82 3.96 4.09
growing higher risk-adjusted return (RAR) loans though
PE (x) 13.0 11.5 9.9 9.6
Div yield (%) 4.0 4.5 5.2 5.9 partially offset by lower NOII. NOII declined due to a drop in
P/BV (x) 1.2 1.1 1.0 1.0 wealth management income, FX trading income gain and
ROE (%) 9.3 9.8 10.7 10.7 realised gains from financial investments.

Stock and Financial Data

 Gross loan growth was decent at 3.8%YoY in 1QFY19
compared to 2.5%YoY in 4QFY18. Although the higher RAR
loans have grown, this was offset by the run-off of the lower
Shares Outstanding (million) 1,548.1
RAR loans, in particularly mortgage and HP loans. Growth
Market Cap (RMmil) 6,393.7
Book Value (RM/share) 3.53 in the Alliance One Account (AOA), a higher ROR loan is
P/BV (x) 1.2 now sufficient to cover for the intentional run-offs of its
ROE (%) 9.3 mortgage loans.

Major Shareholders Vertical Theme(29.1%)

 1QFY19 saw the group's NIM declining by 7bps QoQ at
Employees Provident Fund(12.0%) 2.43%. This was contributed by higher funding cost.
 Negative JAW persists but this has reduced from the
Free Float 39.2 previous quarters as the higher expenses for
Avg Daily Value (RMmil) 4.4
restructuring/group transformation are largely over. This
Price performance 3mth 6mth 12mth led to an improved CI ratio of 45.7% better than our
expectation of 47.0% for FY19.
Absolute (%) (3.5) 0.2 7.6  Absolute impaired loan balance rose by 10.3%QoQ or
Relative (%) (7.7) 2.3 4.8 RM59.7mil in 1QFY19. The uptick was contributed by higher
impaired non-residential property & working capital loans
6.0 2,000 (+RM43.2mil), business loans (+RM34.7mil) as well as R&R
1,800 of loans (+RM8.5mil) coupled with impairment of residential
5.0
1,600 property loans (+RM6.3mil). We understand that these
4.0
1,400 impaired loans are well collateralized, hence the net credit
1,200 cost remained stable at annualized 0.37% in line with our
3.0 1,000 estimate. This has resulted in the group GIL ratio rising to
800 1.57% vs. 1.43% in the preceding quarter, close to the
2.0
600
industry’s 1.6%.

1.0
400  Day-1 impact MFRS 9 of 20bps decline to its CET1, Tier 1
200 and total capital ratios to 13.2%, 13.6% and 18.2%
0.0 0 respectively was lower than management’s guidance of a
Sep-13 Sep-14 Sep-15 Sep-16 Sep-17 40bps decline. The increase in provisions by 22.0%
(RM147mil) from the implementation of MFRS 9 was in line
ABMB MK FBMKLCI Index with guidance of not more than 25.0% increase above its
total provisions.
 EXHIBIT 1: RESULTS COMPARISON
Income Statement (RM Mil, FYE 31 Mar) 1Q18 4Q18 1Q19 % QoQ % Yoy
Interest income 477 475 492 3.6% 3.2%
Interest expense -259 -250 -248 -1.0% -4.3%
Net interest income 217 224 244 8.7% 12.2%
Islamic banking income 78 83 83 -0.7% 6.2%
Non interest income 91 96 74 -22.4% -18.5%
Total income 387 404 401 -0.6% 3.7%
Overhead expenses -176 -212 -183 -13.6% 3.8%
Pre-provision profit 210 191 218 13.8% 3.7%
Loan impairment allowances -30 -38 -37 -1.0% 23.4%
Other allowances 0 0 0 nm nm
Associates and JV income 21 46 20 -56.5% -4.8%
Pretax profit 180 154 181 17.8% 0.6%
Income tax -45 -41 -45 9.3% -0.7%
Minority interest
Net profit 135 113 136 20.8% 1.0%
EPS (sen) 8.8 7.3 8.8 20.5% 0.0%

Profit by segments (RM Mil)

Consumer banking 37 33 8 -77.5% -79.8%
Business banking 86 52 109 112.0% 27.0%
Financial markets 56 69 60 -12.8% 8.5%
Investment banking 0 1 -1 -160.5% -313.5%
Others 2 -1 6 -553.2% 247.0%
Inter-segmental elimination -1 0 -1 282.3% 31.3%
Group profit before tax (excluding associate and JV income) 180 154 181 17.8% 0.6%

Balance Sheet (RM Mil, FYE 31 Mar) 1Q18 4Q18 1Q19 % QoQ % Yoy
Gross loans and advances 38,990 40,307 40,471 0.4% 3.8%
Net loans and advances 38,645 39,990 40,042 0.1% 3.6%
Customer deposits 44,192 42,740 41,995 -1.7% -5.0%
Gross impaired loans 435 578 637 10.3% 46.5%
Average shareholders funds 5,135 5,391 5,424 0.6% 5.6%

Ratios (%)
Net LD 87.4% 93.6% 95.3%
CASA 35.3% 37.3% 37.4%
Cost to income 45.6% 52.6% 45.7%
Annualised Credit cost 0.31% 0.37% 0.37%
GIL/Gross NPL 1.12% 1.43% 1.57%
Loan loss coverage 87.5% 64.5% 79.7%
Loan loss coverage (inclusive of regulatory reserves) 122.1% 96.5% 108.0%
Liquidity coverage ratio 143.7% 159.9% 150.3%
NIM 2.32% 2.50% 2.43%
ROE 10.5% 8.4% 10.1%
CET1 ratio 12.6% 13.4% 12.8%
CCR 12.6% 13.8% 13.3%
RWCR 17.2% 18.3% 17.8%

Source: Company, AmInvestment Bank Bhd estimates.

1QFY19 EARNINGS WITHIN EXPECTATION 1QFY19 total income grew 3.7%YoY supported by higher
net fund based partially offset by softer non-fund-based
The group reported a higher net profit of RM136mil in income. The rise in NII (including of Islamic banking) rose
1QFY19 (+20.8%QoQ; +1.0%YoY). 1QFY19 earnings were 8.0%YoY contributed by the group’s efforts in growing the
within expectations, making up 24.0% of our and 23.8% of higher risk-adjusted return (RAR) loans and changing its
consensus estimates respectively. loan portfolio mix. Meanwhile, NOII (including Islamic non-
fund based income) fell by 10.3%YoY due to a drop in wealth
management income, FX trading income gain and realised
gains from financial investments.
AOA has been gaining traction with a growth in outstanding
balances to RM1.57bil in 1QFY19. Year-on-year growth in
2
 EXHIBIT 2: BREAKDOWN OF LOANS

Loan by purpose (RM Mil) 1Q18 2Q18 3Q18 4Q18 1Q19 %QoQ %Yoy

Purchase of securities 1,170 1,183 1,241 1,246 1,245 0.0% 6.5%

Purchase of transport vehicles 1,030 993 964 934 893 -4.4% -13.3%
Purchase of landed property:-
residential 15,355 15,207 15,093 15,051 15,079 0.2% -1.8%
non-residential 6,939 6,889 6,864 7,028 7,042 0.2% 1.5%

Purchase of property, plant and equipment:-

other than land and building 301 307 304 302 324 7.3% 7.7%
Personal use 2,726 2,844 3,045 3,310 3,590 8.5% 31.7%
Credit card 598 606 632 604 611 1.1% 2.1%
Purchase of consumer durables
Construction 668 639 423 451 431 -4.6% -35.6%
Merger and acquisition 118 118 118 118 118 0.0% 0.0%
Working capital 7,833 7,861 7,954 8,833 8,704 -1.5% 11.1%
Other purpose 2,252 2,290 2,428 2,430 2,433 0.1% 8.0%
Total gross loans 38,990 38,937 39,065 40,307 40,471 0.4% 3.8%

Loan by customer type (RM Mil) 1Q18 2Q18 3Q18 4Q18 1Q19 %QoQ %Yoy
Domestic non-bank financial institutions:-
stockbroking companies
others 376 365 373 452 315 -30.2% -16.2%
Domestic business enterprises:-
small medium enterprises (SME) 9,756 9,894 9,946 10,233 10,295 0.6% 5.5%
others 7,423 7,334 7,299 8,005 7,966 -0.5% 7.3%

Government and statutory bodies 6 5 5 4 3 -11.5% -41.1%

Individuals 20,413 20,344 20,476 20,690 20,936 1.2% 2.6%
Other domestic entities 184 179 174 165 159 -3.8% -13.6%
Foreign entities 833 815 793 759 797 5.0% -4.3%
Total gross loans 38,990 38,937 39,065 40,307 40,471 0.4% 3.8%

Source: Company, AmInvestment Bank Bhd estimates.

AOA is now sufficient to cover for the run-offs of the lower

risk-adjusted return (RAR) mortgage loans. Recall that the
group plans to disburse RM500mil of loans for AOA per
month in FY19. This is to capture 8.0% of the industry’s
market share for mortgage loan origination. On the other
initiatives, we understand that the group is also gaining
traction on SME loans with loans acceptances expanding by
RM322mil while more than 5,700 local employees and 213
new company payroll accounts have been acquired in
1QFY19 for Alliance@Work. The group has launched a new
SME loan origination system.

3
 EXHIBIT 3: BREAKDOWN OF DEPOSITS
Customer deposit by type (RM'Mil) 1Q18 2Q18 3Q18 4Q18 1Q19 %QoQ %Yoy
Demand deposit 13,748 14,079 14,099 14,161 13,889 -1.9% 1.0%
Saving deposit 1,868 1,848 1,835 1,793 1,801 0.5% -3.6%
Time deposit 23,585 24,855 21,317 24,143 24,133 0.0% 2.3%
Money market deposits 2,253 1,810 2,391 2,277 1,697 -25.5% -24.7%
Negotiable instrument of deposit 2,738 156 716 367 476 29.9% -82.6%
Structured deposits
44,192 42,748 40,357 42,740 41,995 -1.7% -5.0%

Core customer deposit 39,201 40,783 37,251 40,096 39,822 -0.7% 1.6%

% of customer deposit by type

Demand deposit 31.1% 32.9% 34.9% 33.1% 33.1%
Saving deposit 4.2% 4.3% 4.5% 4.2% 4.3%
Time deposit 53.4% 58.1% 52.8% 56.5% 57.5%
Money market deposits 5.1% 4.2% 5.9% 5.3% 4.0%
Negotiable instrument of deposit 6.2% 0.4% 1.8% 0.9% 1.1%
100.0% 100.0% 100.0% 100.0% 100.0%

CASA ratio 35.3% 37.3% 39.5% 37.3% 37.4%

Source: Company, AmInvestment Bank Bhd estimates.

NIM DECLINES BY 7BPS QOQ IN 1QFY19 DUE TO

DECENT LOAN GROWTH RISE IN FUNDING COST

Gross loan grew 3.8%YoY in 1QFY19 compared to 1QFY19 saw the group's NIM declining by 7bps QoQ at
2.5%YoY in 4QFY18. On a net basis, loan growth was 2.43%. Its funding cost increased by 14bps QoQ contributed
3.6%YoY. by its full quarter impact of deposit initiatives (+7bps QoQ)
and the repricing of deposits rate higher following the OPR
Higher RAR loans (SME, commercial, share margin,
hike of 25bps in Jan 18 (+4bps QoQ). The rise in funding
consumer unsecured lending and Alliance One Account – a
cost had more than offset the increase in gross margins by
debt consolidator facility) continued to grow at a stronger
5bps QoQ driven largely by the change in loan mix in favour
pace of 21.3%YoY but this was offset by lower RAR loans
of higher RAR loans. Moving forward, we expect pressure
(mortgages business premises loans, hire purchase and
on funding cost to intensify due to a stiff competition for
corporate loans) which contacted by 4.4%YoY. Higher RAR
deposits moving closer to the implementation of NSFR. The
loans now accounts for circa 37% of the group's total gross
group is hopeful of keeping its NIM stable for FY19 with the
loans, a slight increase from 4QFY18’s 36%. We understand
tilt of its portfolio more towards the higher RAR loans to
that the growth in commercial and corporate loans is still
mitigate the pressure of a rise in funding cost.
slow.

GROWT IN CORE CUSTOMER DEPOSITS (CASA &

FD) REMAINS MODEST

1QFY19 saw the group’s core customer deposit at 1.6%YoY

vs. 1.0%YoY in the preceding quarter. Meanwhile, growth in
CASA was subdued at 0.5%YoY compared to 3.1%YoY in
4QFY18. Nevertheless, CASA ratio remained stable at
37.4%.
SavePlus deposits and Alliance@Work will remain as
initiatives for deposits to support the funding of the group’s
asset expansion. As at the end of 1Q19, growth in structured
investments eased to +44.7%YoY vs. +51.6%YoY in the
preceding quarter.
The group's gross LD ratio rose to 96.4%. The group's LCR
improved to 150.3% from 132.0% and stayed above the
industry’s 139.7%. On NSFR, the proforma ratio remained
above the minimum regulatory requirement of 100.0%.

4
 EXHIBIT 4: NON-INTEREST INCOME
Other Operating Income (RM Mil) 1Q18 2Q18 3Q18 4Q18 1Q19

Fee income
Service charges and fees 8 7 9 7 9
Brokerage 7 5 6 7 6
Portfolio Management fees
Commission 23 23 21 21 24
Processing fees 1 3 4 3 2
Cards related income 3 6 3 2 2
Unit trust fee income
Commitment fees 4 4 4 4 4
Guarantee fees 4 3 4 4 4
Underwriting and arrangement fees 0 0 0
Corporate advisory fees 1 1 0 1 1
Fund management fees
Other fee income 1 1 1 1 1
Total Fee Income 53 53 52 49 52

Investment Income
Gains/losses arising from sale/redemption of:-
Financial assets held for trading 0 0 0 0 0
Financial assets available for sale 3 0 18 0
Financial assets held to maturity

Unrealised loss/gain from revaluation of:-

Financial assets held for trading 0 0 0 0 0
Derivative assets -29 -50 -14 20 51

Unrealised gain arising from financial 2 2 14 7 -10

liabilities designated at fair value
Realised gain on revaluation of derivative instruments 56 77 22 -4 -27

Gross dividend income from:

Financial assets held to maturity
Financial assets available for sale 1 0 1 1
Total Investment and Trading Income 33 30 23 41 15

Other Income
Foreign exchange gain/(loss):- -1 -4 7 -1 -3
Underwriting surplus before management expenses

Rental income
Net gain on disposal of PPE 0 0
Gain on liquidation of associate
Other operating income
Gains/loss from disposal of foreclosed properties
Gains in disposal of non current assets
Others 7 6 8 6 10
Total Other Income 6 2 14 6 7
TOTAL OTHER INCOME / NON INTEREST INCOME 91 85 89 96 74

Source: Company, AmInvestment Bank Bhd estimates.

SOFTER GROWTH IN CLIENT-BASED FEE Client-based fee income was slower with a growth of -
INCOME 0.1%YoY in 1QFY19 due to a slowdown in wealth
management fee income.

5
 EXHIBIT 5: GROSS IMPAIRED LOAN RATIO
Gross impaired loan/NPLs by purpose (RM Mil) 1Q18 2Q18 3Q18 4Q18 1Q19 %QoQ %YoY

Purchase of securities 0 0 0 0 0 4.2% 614.3%

Purchase of transport vehicles 13 12 11 14 14 20.2% 18.9%
Purchase of landed property:
residential 181 193 184 189 195 3.0% 6.8%
non-residential 91 86 84 158 182 88.0% 188.7%
Purchase of PPE:
other than land and building 1 2 3 6 7 71.1% 367.2%
Personal use 50 54 57 57 61 -0.3% 30.8%
Credit card 10 13 14 9 9 -33.1% -11.0%
Purchase of consumer durables
Construction 4 4 4 12 9 204.6% 202.8%
Merger & Acquisition
Working capital 66 68 78 98 118 26.1% 36.8%
Other purpose 19 23 27 35 41 29.6% 80.5%
Total gross impaired loans 435 454 462 578 637 10.3% 46.5%

Gross impaired loan/ NPL ratio by economic purpose: 1Q18 2Q18 3Q18 4Q18 1Q19

Purchase of securities 0.0% 0.0% 0.0% 0.0% 0.0%

Purchase of transport vehicles 1.2% 1.3% 1.2% 1.5% 1.6%
Purchase of landed property:
residential 1.2% 1.3% 1.2% 1.3% 1.3%
non-residential 1.3% 1.2% 1.2% 2.3% 2.6%
Purchase of PPE:
other than land and building 0.4% 0.7% 1.1% 1.9% 2.1%
Personal use 1.8% 1.9% 1.9% 1.7% 1.7%
Credit card 1.7% 2.1% 2.1% 1.5% 1.6%
Purchase of consumer durables
Construction 0.6% 0.6% 0.9% 2.6% 2.2%
Merger & Acquisition
Working capital 0.8% 0.9% 1.0% 1.1% 1.4%
Other purpose 0.8% 1.0% 1.1% 1.4% 1.7%
Total gross impaired loan ratio 1.12% 1.17% 1.18% 1.43% 1.57%

Source: Company, AmInvestment Bank Bhd estimates.

UPTICK IN IMPAIRED LOANS BUT NET CREDIT Loan growth: >10%

COST REMAINES STABLE QOQ Stable NIM: 2.4%

Absolute impaired loan balance rose by 10.3%QoQ or Cost to income ratio < 50.0%
RM59.7mil in 1QFY19. This was higher than the preceding Net credit cost: circa 35bps
quarter. The uptick was contributed by higher impaired non-
residential property & working capital loans (+RM43.2mil), ROE: 10.0%
business loans (+RM34.7mil) as well as R&R of loans Dividend payout: 48% maintained.
(+RM8.5mil) coupled with impairment of residential property
loans (+RM6.3mil). We understand that these impaired
loans are well collateralized, hence the net credit cost MAINTAIN BUY
remained stable at annualized 0.37% in line with our
estimate. This has resulted in the group GIL ratio to rise to With expenses for transformation largely over, higher
1.57% vs. to 1.43% in the preceding quarter and close to the revenue with cost savings are expected to trickle in to cover
industry’s 1.6%. the cost for the initiatives implemented. This should result in
an improved CI ratio in FY19. Among the positives, AOA is
Despite the rise in impaired loans, loan loss cover improved gaining traction and its growth has already reached the
QoQ due the increase in provisions from the implementation stage of being able to cover the intentional run-offs of the
of MFRS 9. Loan loss cover (including regulatory reserves) lower ROR mortgage loans.
rose to 108.0% from 96.7% in the preceding quarter.
Excluding regulatory reserves, the group's loan loss cover We maintain our BUY rating on ABMB with an unchanged
was 79.7%. fair value of RM5.00/share.

FY19 MANAGEMENT GUIDANCE

Below is the list of management’s guidance for FY19:

6
Alliance Financial Group 01 Jun 2017

EXHIBIT 6: PB BAND CHART EXHIBIT 7: PE BAND CHART

2.50 18.00

16.00
2.00
14.00 +1δ
+1δ
Avg
12.00
1.50 Avg -1δ

-1δ 10.00

1.00 8.00

6.00
0.50
4.00

2.00
0.00
Jan-13

Jan-14

Jan-15

Jan-16

Jan-17
Jul-12

Jul-13

Jul-14

Jul-15

Jul-16
Apr-12

Oct-12

Apr-13

Oct-13

Apr-14

Oct-14

Apr-15

Oct-15

Apr-16

Oct-16
0.00
Apr-12 Apr-13 Apr-14 Apr-15 Apr-16

AmInvestment Bank Bhd 7

Alliance Financial Group 01 Jun 2017

EXHIBIT 8: FINANCIAL DATA

Income Statement (RMmil, YE31 Mar) FY17 FY18 FY19F FY20F FY21F

Net interest income 847.5 892.5 949.7 1,053.4 1,058.6

Non-interest income 324.8 361.3 381.0 401.6 415.8
Islamic banking income 297.0 318.2 329.4 340.8 348.7
Total income 1,469.4 1,572.0 1,660.1 1,795.8 1,823.1
Overhead expenses (691.9) (794.0) (780.3) (790.1) (783.9)
Pre-provision profit 777.5 778.0 879.9 1,005.6 1,039.2
Loan loss provisions (95.0) (93.4) (149.5) (157.0) (164.1)
Impairment & others (1.2) (0.1) - - -
Associates - - - - -
Pretax profit 681.3 684.6 730.3 848.6 875.1
Tax (169.3) (191.4) (175.3) (203.7) (210.0)
Minority interests - - - - -
Net profit 512.0 493.2 555.1 644.9 665.1
Core net profit 512.0 493.2 555.1 644.9 665.1

Balance Sheet (RMmil, YE31 Mar) FY17 FY18 FY19F FY20F FY21F

Cash & deposits with FIs 1,381.8 2,768.8 4,479.9 4,006.7 686.1
Marketable securities 11,578.3 9,024.3 11,404.8 12,012.8 12,540.0
Total current assets 12,960.0 11,793.0 15,884.7 16,019.6 13,226.1
Net loans & advances 38,991.7 39,989.5 42,263.0 44,247.2 46,107.3
Statutory deposits nm nm nm nm nm
Long-term investments 1,437.4 1,408.3 1,407.5 1,397.7 1,394.2
Fixed assets 73.9 69.4 109.9 109.9 109.9
Intangible assets 377.4 409.4 359.9 359.9 359.9
Other long-term assets 248.6 232.4 220.6 215.8 213.7
Total LT assets 41,129.0 42,109.0 44,360.9 46,330.5 48,185.0
Total assets 54,089.1 53,902.0 60,245.6 62,350.1 61,411.1
Customer deposits 45,228.4 42,740.5 45,304.9 47,796.7 49,947.5
Deposits of other FIs 862.9 873.9 796.5 775.7 745.8
Subordinated debts 1,226.1 1,379.6 1,254.5 1,264.0 1,228.1
Hybrid capital securities 584.6 1,257.0 1,542.9 2,144.1 2,568.7
Other liabilities 1,072.8 2,191.5 5,439.1 4,236.4 582.6
Total liabilities 48,974.9 48,442.5 54,338.0 56,217.0 55,072.8
Shareholders’ funds 5,114.2 5,459.6 5,907.6 6,133.1 6,338.3
Minority interests - - - - -

Key Ratios (YE31 Mar) FY17 FY18 FY19F FY20F FY21F

Total income growth (%) 3.2 7.0 5.6 8.2 1.5

Pre-provision profit growth (%) 5.8 0.1 13.1 14.3 3.3
Core net profit growth (%) (1.9) (3.7) 12.5 16.2 3.1
Net interest margin (%) 2.2 2.3 2.3 2.4 2.4
Cost-to-income ratio (%) 47.1 50.5 47.0 44.0 43.0
Effective tax rate (%) 24.8 28.0 24.0 24.0 24.0
Dividend payout (%) 44.7 50.2 48.0 48.0 48.0

Key Assumptions (YE31 Mar) FY17 FY18 FY19F FY20F FY21F

Loan growth (%) 1.5 2.5 6.0 5.0 4.5

Deposit growth (%) (1.7) (5.5) 6.0 5.5 4.5
Loan-deposit ratio (%) 86.2 93.6 93.3 92.6 92.3
Gross NPL (%) 1.0 1.4 1.4 1.3 1.2
Net NPL (%) 0.6 1.0 0.6 0.3 -
Credit charge-off rate (%) 0.2 0.2 0.4 0.4 0.4
Loan loss reserve (%) 136.7 96.5 115.0 144.9 179.4

Source: Company, AmInvestment Bank Bhd estimates

AmInvestment Bank Bhd 8

Alliance Financial Group 01 Jun 2017

DISCLOSURE AND DISCLAIMER

This report is prepared for information purposes only and it is issued by AmInvestment Bank Berhad (“AmInvestment”) without
regard to your individual financial circumstances and objectives. Nothing in this report shall constitute an offer to sell, warranty,
representation, recommendation, legal, accounting or tax advice, solicitation or expression of views to influence any one to buy
or sell any real estate, securities, stocks, foreign exchange, futures or investment products. AmInvestment recommends that
you evaluate a particular investment or strategy based on your individual circumstances and objectives and/or seek financial,
legal or other advice on the appropriateness of the particular investment or strategy.
The information in this report was obtained or derived from sources that AmInvestment believes are reliable and correct at the
time of issue. While all reasonable care has been taken to ensure that the stated facts are accurate and views are fair and
reasonable, AmInvestment has not independently verified the information and does not warrant or represent that they are
accurate, adequate, complete or up-to-date and they should not be relied upon as such. All information included in this report
constitute AmInvestment’s views as of this date and are subject to change without notice. Notwithstanding that, AmInvestment
has no obligation to update its opinion or information in this report. Facts and views presented in this report may not reflect the
views of or information known to other business units of AmInvestment’s affiliates and/or related corporations (collectively,
“AmBank Group”).
This report is prepared for the clients of AmBank Group and it cannot be altered, copied, reproduced, distributed or republished
for any purpose without AmInvestment’s prior written consent. AmInvestment, AmBank Group and its respective directors,
officers, employees and agents (“Relevant Person”) accept no liability whatsoever for any direct, indirect or consequential
losses, loss of profits and/or damages arising from the use or reliance of this report and/or further communications given in
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AmInvestment is not acting as your advisor and does not owe you any fiduciary duties in connection with this report. The
Relevant Person may provide services to any company and affiliates of such companies in or related to the securities or
products and/or may trade or otherwise effect transactions for their own account or the accounts of their customers which may
give rise to real or potential conflicts of interest.
This report is not directed to or intended for distribution or publication outside Malaysia. If you are outside Malaysia, you should
have regard to the laws of the jurisdiction in which you are located.
If any provision of this disclosure and disclaimer is held to be invalid in whole or in part, such provision will be deemed not to
form part of this disclosure and disclaimer. The validity and enforceability of the remainder of this disclosure and disclaimer will
not be affected.

AmInvestment Bank Bhd 9