Alliance expects modest loan growth

KUALA LUMPUR: Alliance Bank Malaysia Bhd expects total loans to grow modestly in its current financial year 2018 (FY18), primarily attributed to the lower performance of some of its loan portfolios.

According to Alliance Bank group chief executive officer Joel Kornreich ( pic), the bank is projecting higher growth for the overall loan volume in its current financial year. The bank registered a total loan growth of 1.5% in FY17, buttressed by the healthy funding position of the banking institution.

“Our loan growth is going to be very modest because we feel that we are not efficient in some of our portfolios. This includes our hire purchase and mortgage loan portfolios.

“That said, the demand for our Alliance One Account is picking up and we expect it to accelerate. Moving forward, we are positive that we will be able to record an after-tax profit of RM650mil by FY22,” said Kornreich.

According to Alliance Bank, the Alliance One Account is the first loan consolidation service of its kind in Malaysia that uses a mortgage product. The account, which was launched in April, allows customers to reduce their monthly loan repayments and interest paid on their loans.

Kornreich added that Alliance Bank has allocated RM94mil in FY18 for expenses related to transforming the bank’s services and to further enhance the digitisation of its products, among others.

“This will have an impact on our cost-to-income ratio, as it could temporarily hike the ratio to about 52%. However, we expect the cost-to-income ratio to reduce by end-FY18 to below 50%,” he said. Alliance Bank’s overall cost-to-income ratio in FY17 stood at 47.1%, well below the industry average.

Kornreich was speaking to reporters after the launch of Alliance Cash2Home, Malaysia’s first mobile foreign remittance application that offers paperless account opening and remittance services via mobile phones.

The Alliance Cash2Home primarily targets foreign workers in Malaysia and has been designed with the needs of both employers and employees. The bank’s earlier research with a focus group on Alliance Cash2Home showed an acceptance rate of 100% from foreign workers. In addition, 65% of business owners have also shown interest in signing up for Alliance Cash2Home.

“Alliance Cash2Home is part of our series of innovative value propositions that offer speed, simplicity and responsiveness, while being uniquely aligned to the needs of customers. By leveraging on technology and working on what our customers need, we have simplified the process of account openings and foreign remittance to be fast and hassle-free for both employers and employees,” said Kornreich.

With the new service, foreign workers no longer need to risk handling cash and queue up at remittance service outlets to send money home.