2014 annual report - Alliance Bank Malaysia Berhad · 2016. 6. 9. · in Malaya with its first...

2014 annual report

CORPORATE PROFILEalliance Financial Group Berhad was incorporated in Malaysia on 7 april 1966 and was listed on the Main Market of Bursa Malaysia Securities Berhad on 6 July 1979. the Group is principally involved in the provision of banking and financial services through alliance Bank Malaysia Berhad.

alliance Bank Malaysia Berhad, together with its subsidiaries, alliance Investment Bank Berhad and alliance Islamic Bank Berhad, provide a wide range of financial products and services in commercial banking, financing, investment banking, investment advisory, stockbroking, Islamic banking and other related financial services.

“THE BEST CUSTOMER SERVICE BANK”

OUR MISSION

respect, Integrity, teamwork, excellence

performance Management, recruitment & retention, personal Development, reward & recognition

CORE VALUES

OUR PEOPLE STRATEGY

KEY DRIVER leaDerSHIp

to Build Consistent and

Sustainable Financial

performance

to Deliver Superior Customer experience

to Develop engaged

employees With the right Values

CORPORATE SECTION

Corporate profile Vision, Mission and Values2 History of alliance Financial Group4 Corporate Information5 Corporate Structure6 products and Services10 Financial Highlights

LEADERSHIP12 Directors20 Senior Management

PERSPECTIVES24 Statement by Chairman of alliance Financial

Group Berhad26 Statement by Chairman of alliance Bank

Malaysia Berhad30 Business and operations review by Group Chief executive officer of

alliance Bank Malaysia Berhad40 awards and recognition42 Calendar of Significant events48 Media Highlights

FINANCIAL SECTION

73 Financial Statements• Statement of Board of Directors’

responsibilities• Directors’ Report• Statement by Directors• Statutory Declaration

• Independent Auditors’ Report• Statements of Financial Position• Statements of Comprehensive Income• Consolidated Statements of Changes in

equity

ACCOUNTABILITY52 Statement on Corporate Governance60 Corporate responsibility63 audit Committee report67 Statement on risk Management and

Internal Control68 risk Management72 additional Compliance Information

ADDITIONAL INFORMATION

241 list of properties244 Directory250 analysis of Shareholdings252 Substantial Shareholders253 Directors’ Shareholdings

contents

• Statements of Changes in Equity• Consolidated Statements of Cash Flow• Statements of Cash Flow• Notes to the Financial Statements

195 Basel II pillar 3 Disclosure

NOTICE AND FORM254 notice of annual General Meeting Form of proxy

2

2014 Annual Report • Alliance Financial Group Berhad (6627-X)

History of Alliance Financial Group

1958Banque de L’Indochine commenced operations in Malaya with its first branch in the Selangor Kwangtung association Building, Jalan pudu, Kuala lumpur. this branch was subsequently relocated to Jalan raja Chulan, Kuala lumpur, in 1975.

1985the Bank established its “first” branch in taman Maluri, Kuala lumpur. In the same year, eight more branches were opened throughout the country.

1996Malaysian French Bank Berhad changed its name to Multi-purpose Bank Berhad.

1998By February 1998, the Bank had a network of 34 branches nationwide, including Sabah and Sarawak.

1999Multi-purpose Bank Berhad was selected to be one of the anchor banks in the Malaysian government’s bank consolidation initiative. Multi-purpose Bank Berhad successfully anchored the merger with International Bank Malaysia Berhad, Sabah Bank Berhad, Sabah Finance Berhad, Bolton Finance Berhad, amanah Merchant Bank Berhad, and Bumiputra Merchant Bankers Berhad.

1986-95During this time, 16 branches were established nationwide.

2001the alliance Banking Group was established on 19 January with the successful merger of seven financial institutions. the newly-merged entity’s name and logo were unveiled to the public for the first time as the alliance Banking Group comprising alliance Bank Malaysia Berhad (alliance Bank), alliance Finance Berhad, alliance Merchant Bank Berhad and alliance unit trust Management Berhad.1959

Banque de L’Indochine opened a sub-branch at Jalan Batu, Kuala lumpur (now known as Jalan tunku abdul rahman).

1975the name of the Bank was changed to Banque de L’Indochine et de Suez (Banque Indosuez). In the same year, Banque Indosuez acquired a building in Jalan raja Chulan, Kuala lumpur, to serve as its headquarters.

1982Malaysian French Bank Berhad was incorporated to assume the banking business of the two local branches of Banque Indosuez. The incorporation was the result of the French government’s nationalisation of Banque Indosuez and also of the subsequent restructuring of the Bank’s businesses in Malaysia to comply with local banking regulations.

2004 on 1 august, alliance Finance Berhad merged with alliance Bank. Consequently, Hire purchase is now offered at all Alliance Bank’s retail branches nationwide.

2005on 1 January, alliance Merchant Bank Berhad acquired 100% equity interest in Kuala lumpur City Securities (KlCS).

2006In august, alliance Merchant Bank Berhad changed its name to alliance Investment Bank Berhad (aIBB). In December, KlCS merged with aIBB to offer a full suite of investment banking services.

3


2007In april, alliance unit trust Management Berhad merged with alliance Capital asset Management Berhad to form alliance Investment Management Berhad (aIMB). under the terms of the agreement, alliance Bank owns 70% equity stake in aIMB.

In June, alliance Islamic Bank Berhad (aIS) was incorporated as a wholly-owned subsidiary of alliance Bank.

In conjunction with the change of name of its holding company from Malaysian plantations Berhad to alliance Financial Group Berhad on 31 august, alliance Banking Group underwent a major rebranding exercise and was renamed alliance Financial Group (the Group).

2008aIS commenced its Islamic banking business on 1 april after assuming the entire Islamic banking business portfolio of alliance Bank.

2013In March, alliance Bank completed the sale of its 30% equity stake in aIa aFG takaful Berhad.

In april, alliance Bank completed the sale of its 70% shareholding in aIMB to KaF-Seagroatt Campbell Berhad. aIMB ceased to be part of the Group following the completion of the sale. In June, alliance Bank entered into a 10-year bancassurance partnership with Manulife Insurance Berhad. With this partnership, alliance Bank is now able to provide a comprehensive bancassurance product suite to its customers.

2014In May, aIBB acquired a 51% equity stake in HwangDBS Vickers research Sdn Bhd (HDBSV). HDBSV was later re-named allianceDBS research Sdn Bhd.

2011In January, alliance Bank and aIa Berhad entered into a joint venture to form aIa aFG takaful Berhad which offers a range of takaful savings, protection and investment products. under the terms of agreement, alliance Bank owns 30% equity stake in aIa aFG takaful Berhad.

todaythe alliance Financial Group, comprising alliance Bank Malaysia Berhad, alliance Investment Bank Berhad and alliance Islamic Bank Berhad is a dynamic, integrated financial services group offering banking and financial services through its consumer banking, business banking, Islamic banking, investment banking and stockbroking businesses.

It provides easy access to its broad base of customers throughout the country via multi delivery channels which include retail branches, privilege Banking Centres, Islamic Banking Centres, Business Centres, Investment Bank branches and direct marketing offices located nationwide as well as mobile and Internet banking.

With over five decades of proud history in contributing to the financial community in Malaysia with its innovative and entrepreneurial business spirit through its principal subsidiaries, the Group is committed to delivering the best customer experience and creating long-term shareholder value.

4


GROUP COMPANYSECRETARY

Lee Wei Yen (MaICSa 7001798)

REGISTERED OFFICE

3rd Floor, Menara Multi-purposeCapital Squareno. 8, Jalan Munshi abdullah50100 Kuala lumpur, Malaysia

tel : 03-2604 3333Fax : 03-2694 6200Website : www.alliancefg.comemail : [email protected]

REGISTRAR

Shareworks Sdn Bhdno. 2-1, Jalan Sri Hartamas 8Sri Hartamas50480 Kuala lumpur, Malaysia

tel : 03-6201 1120Fax : 03-6201 3121

Corporate Information

DIRECTORS

Datuk Oh Chong PengChairman, Independent Non-Executive Director

Dato’ Thomas Mun Lung LeeSenior Independent Non-Executive Director

Stephen Geh Sim WhyeIndependent Non-Executive Director

Tan Yuen FahIndependent Non-Executive Director

Megat Dziauddin bin Megat MahmudIndependent Non-Executive Director

Lee Ah BoonNon-Independent Non-Executive Director

Ou Shian WaeiIndependent Non-Executive Director

Kung Beng HongNon-Independent Non-Executive Director

Sng Seow WahNon-Independent Non-Executive Director

AUDITORS

PricewaterhouseCoopersChartered accountantslevel 10, 1 SentralJalan traversKuala lumpur Sentralp.o. Box 1019250706 Kuala lumpur, Malaysia

PRINCIPAL BANKER

alliance Bank Malaysia Berhad

BURSA MALAYSIA STOCK NAME/CODE

aFG/2488

INTERNATIONAL SECURITIES IDENTIFICATION NUMBER (ISIN)

MYl2488oo004

5


this chart features the main operating companies and does not include inactive companies and companies that are under members’ voluntary liquidation.

Corporate Structureas at 30 May 2014

100%alliance Bank

Malaysia Berhad

51%allianceDBS research

Sdn Bhd (formerly known as HwangDBS Vickers

research Sdn Bhd)

100%alliance Investment

Bank Berhad

100%alliance Islamic

Bank Berhad

100%alliance Direct

Marketing Sdn Bhd

100%allianceGroup

nominees (tempatan)Sdn Bhd

100%allianceGroup

nominees (asing)Sdn Bhd

100%alliance trustee Berhad

100%aIBB nominees

(tempatan) Sdn Bhd

100%aIBB nominees(asing) Sdn Bhd

6


Personal Banking

Wealth Management Deposits

• Savings Account/Basic Savings Account• AllianceSave Pendidikan• Alliance Buddy• Alliance Senior Savers• Alliance My eSaving Account• Current Account/Basic Current Account• AllianceSave• Alliance Hybrid Account• Fixed Deposit• Alliance FDGold• eFD (via allianceonline)• Alliance XChange Account (via allianceonline)• Alliance XChange FD (via allianceonline)• allianceonline Banking

Products and Services

Investment Lending & Share Services

• Alliance Share Margin Financing− Margin + trading 2-in-1 account− external Margin account− Foreign Share Margin Financing

• Alliance Share Trading− Cash trading account− Collaterised trading account− t+7 trading account

• ESOS/IPO/Placement Financing• Portfolio Lending• Dedicated Omni-Channels to Serve Alliance

Bank Customers− Call N Trade through Alliance Bank’s

Share trading Centre (StC) via account relationship Manager

− Internet trading via allianceonline Stockbanking

− Mobile trading via alliance iStock application

Bancassurance

• Alliance Motor Insurance• Alliance Travel Protector• Alliance Premier Protector• Alliance Senior Protector• Alliance Safe Assure• Home Assure• Mortgage Reducing Term Assurance• Mortgage Level Term Assurance• Mortgage Reducing Term Takaful• Elite Auto Care• Elite Global Bond Plan• Elite Global Bond Plan 2• Elite Wealth Saver• Elite Wealth Saver Plus• Elite Global Select Plan• Elite Cash Saver• Elite Smart Life• Fire Takaful/House

owner takaful• Smart Protector• Motor Takaful• Elite PA Plus (Telemarketing)• Critical Illness Plan

(telemarketing)

Conventional Mortgage/ Hire Purchase• Alliance Conventional Home Loan• Alliance Conventional Commercial Property

loan• Alliance SaveLink Home Loan• Alliance SaveLink Interest Payment Option• Alliance SaveLink Commercial Property Loan• Alliance Home Complete Personal Loan• Alliance Home Complete Plus -

Solar panel Financing• Alliance Oil Palm Plantation

Financing• Alliance SaveLink Oil Palm

plantation Financing• Alliance Hire Purchase

Cards• Alliance Visa Infinite Credit Card• Alliance Platinum Credit Card• Alliance Gold and Classic Credit Cards• Alliance You:nique Rates Credit Card• Alliance You:nique Rewards Credit Card• Alliance You:nique Rebates Credit Card• Alliance You:nique Prepaid Card• Tiger Football Club Credit Card• Tiger Football Club Debit Card• Alliance Allianz Insurance Gold & Platinum

Credit Cards• Alliance Chinese Independent School (CIS)

Credit Card• Alliance Chinese Independent

School (CIS) prepaid Card• Alliance CNI Gold Credit Card• Alliance CNI Gold Prepaid Card• Alliance CPA Australia Gold

Credit Card• Alliance Business Platinum

Card

Personal Loan

• Alliance CashFirst Personal Loan

ALLIANCE BANK MALAYSIA BERHAD

Unit Trust

• Money Market Funds• Bond Funds• Balanced Funds• Equity Funds • Alternative Funds i.e. REITs

Retail Bond

• MYR-denominated Retail Bond• Foreign Currency Retail Bond (available in all

major currencies)

Structured Investment

• Interest-rate Linked Structured Investment • Equity Linked Structured Investment • Equity Linked Convertible Structured

Investment • Dual Currency Investment • Gold-AUD Linked Structured Investment

7


Business Banking

SME• Credit Facilities

− Working Capital Financing− equipment Financing− Business premises Financing− Schemes promoted by CGC/BnM/

Government− Foreign exchange− Biz Express Financing


− Business Foreign Currency Fixed Deposit

− Biz-Xpress Card: Deposit cum Withdrawal function via Self-Service terminals (atM, CDM and CeS)

− Collection Management− payee Corporation Service− auto Debit Service− iBayar Facility− Bulk Cheque Collection Service− Cash in transit

− liquidity Management− auto Sweeping Service− Bounce Cheque protection Service− Business rewards Services

− payment Management− prepaid reload− payroll (Salary/epF/SoCSo/Monthly

Contribution/pCB-lHDn payment)− Bulk payment− Bulk payment with remittance advice− remittances (Co/DD/Ftt/FDD/IBG/

rentaS)− Fund transfer (own account transfer/

Group account transfer/Designated 3rd party transfer)

− Bills payment− BizSmart Online Banking

• Trade Facilities− letter of Credits− trust receipts− Foreign Currency trade loan− Bankers acceptances− export Bills purchased/Discounting− export Credit refinancing− export lC negotiation− Collection Bills− Shipping Guarantees− export lC advising/Confirmation− Bank Guarantees (BGs)− promissory notes− Foreign Currency trade loan

• Foreign Exchange• Cash Management

− account Management− Business Current account− Business Fixed Deposit− Business Foreign Currency Current

account− Business Foreign Currency Fixed

Deposit− Collection Management

− payee Corporation Service− auto Debit Service− Bulk Cheque Collection Service− Cash in transit− Cash Concentration Solution− Biz-Xpress Card: Deposit cum

Withdrawal function via Self-Service terminals (atM, CDM and CeS)

− liquidity Management− auto Sweeping Service− Business rewards Services

− payment Management− prepaid reload− payroll (Salary/epF/SoCSo/Monthly

Contribution/pCB-lHDn payment)− Bulk payment− Bulk payment with remittance advice− remittances (Co/DD/Ftt/FDD/IBG/

rentaS)− Fund transfer (own account transfer/

Group account transfer/Designated 3rd party transfer)

− Bills payment− BizSmart Online Banking− Interest rate Swap− Bancassurance

Corporate & Commercial • Credit Facilities

− Working Capital Financing− term loan− Bridging loan− Syndicated loan− Business premises Financing− Supplier Financing− Business platinum Card− Foreign Currency loan

• Trade Facilities− letter of Credits− trust receipts− Foreign Currency trade loan− Bankers acceptances− export Bills purchased/Discounting− export Credit refinancing− export lC negotiation− Collection Bills− Shipping Guarantees− export lC advising/Confirmation− Bank Guarantees (BGs)− promissory notes− Supplier Credit Financing

• Bancassurance− Commercial line General Insurance− Keyman Credit-life Insurance− Alliance Business Shield/Biz Assure

• Business Credit Card− My Business platinum− Business platinum Card

• Cash Management− account Management

− Business Current account− Business Fixed Deposit− Business Foreign Currency Current

account

8



ALLIANCE ISLAMIC BANK BERHAD

Financial Markets

• Foreign Exchange Transactions• Hedging Solution

− Currency options− Interest rate Swap− Cross-currency Swap

• Structured Investments• Money Market Deposit• Money Market Deposit - Islamic• Negotiable Instrument of Deposit• Negotiable Islamic Deposit Certificate• Banker Acceptances• Islamic Acceptance of Bills

Deposits• Basic Savings Account-i• Basic Current Account-i• Wadi’ah Yad Dhamanah Savings Account-i• Mudharabah Savings Account-i• Alliance My eSaving Account-i• Alliance Junior Smart Saver-i• Wadi’ah Yad Dhamanah Current Account-i• Mudharabah Current Account-i• Alliance Hybrid Account-i• General Investment Account-i• Wakalah Investment Account-i• eIA (via allinceonline)• allianceonline Banking

Financing• Alliance CashVantage Personal Financing-i• Alliance i-Wish Home Financing-i• Alliance i-Wish Flexi Home Financing-i• Alliance Hire Purchase-i• Alliance Pension Financing-i• Alliance Home Complete-i• Alliance Oil Palm Plantation Financing-i

Business Financing• Term Financing-i• Leasing-i• Business SaveLink Premises Financing-i• CashLine-i• Revolving Credit-i• Bridging Financing-i• Contract Financing-i• Project Financing-i• Business Premises Financing-i• Schemes promoted by CGC/BNM/

SMe Corp/Government

Trade Financing• Letters of Credit-i• Trust Receipt-i• Shipping Guarantee-i• Accepted Bills-i• Bills of Exchange Negotiated/Purchase-i• Export Credit Refinancing-i

pre-Shipment & post-Shipment • Bank Guarantee-i• Murabahah Working Capital Financing-i

Cards• Alliance My eSaving Debit MasterCard-i• Alliance Hybrid Standard Debit MasterCard-i• Alliance Hybrid Platinum Debit MasterCard-i• Alliance Hybrid AP Platinum Debit MasterCard-i• Alliance Hybrid Premium Debit MasterCard-i

Unit Trust Investment

• Islamic Equity Funds• Islamic Balanced Funds• Islamic Bond Funds• Islamic Money Market Funds

Financial Markets• Islamic Acceptance of Bills-i• Negotiable Islamic Deposits Certificate• Islamic Profit Rate Swap• Islamic Money Market Deposits

Products and Services (cont’d)

9


ALLIANCE INVESTMENT BANK BERHAD

ALLIANCEDBS RESEARCH SDN BHD(formerly known as HWANGDBS VICKERS RESEARCH SDN BHD)

ALLIANCEGROUP NOMINEES (TEMPATAN) SDN BHD

ALLIANCEGROUP NOMINEES (ASING) SDN BHD

ALLIANCE TRUSTEE BERHAD

Corporate Finance• Initial Public Offerings

– involving public issues of new securities and/or offers for sale of existing securities in companies seeking listing and quotation on the Main Market and the aCe Market of Bursa Malaysia Securities Berhad as well as listing of real estate Investment trusts (reIts).

• Secondary Offerings– involving raising of funds subsequent

to the initial public offering through rights issues, restricted issues, private placements and special issues of both equity and equity-linked instruments.

• Corporate Restructuring Advisory• Merger, Takeover and Acquisition Advisory• Independent Advice to Minority Shareholders• Valuation of Companies

Debt Capital Market Customised solutions via Conventional and Islamic:• Structured Financing• Asset Securitisation• Project Financing• Fixed/Floating Rate Bonds• Commercial Papers/Medium Term Note

programmes• Loan Syndication

Equity Capital Markets• Underwritings and Private Placements of

Initial public offerings• Underwritings of Rights Issues• Primary and Secondary Private Placements

of equity and equity-linked Instruments• Underwriting and Private Placements of Real

estate Investment trusts (reIts)• Book-Building/Accelerated Book-Building of

equity and equity-linked Instruments

Islamic Banking• Bal’ Bithaman Ajil• Murabahah Working Capital Financing• Islamic Accepted Bills• Mudharabah Investment Account Deposits• Kafalah Bank Guarantee

Stockbroking Products & Services• Institutional and Retail Share Trading

– Cash trading account– Collaterised trading account– alliance Flexi 7

• Share Margin Financing

• Online Share Trading Services– eallianceShare– Mobile Share trading

• E-Services– Direct Credit– e-dividend

• Foreign Share Trading• Nominees and Custodian Services

• Equity Research• Economic Research• Industry Research• Corporate Research• Investment Advisory Services

• Nominee and Custody Services

• Trustee Services

10


Financial Highlights

FINANCIAL YEAR ENDED 31 MARCH 2014 2013 2012 2011 2010

OPERATING RESULTS (RM million)net income 1,349 1,333 1,244 1,129 1,065Profit before taxation and zakat 749 714 675 553 409Net profit after taxation and zakat 564 538 503 409 302

KEY BALANCE SHEET DATA (RM million)total assets 48,075 43,692 39,719 36,145 31,664Gross loans, advances and financing 32,199 28,225 25,012 22,474 21,410total liabilities 43,909 39,657 35,947 32,715 28,712Deposits from customers 39,237 36,004 32,187 28,385 23,628paid-up capital 1,548 1,548 1,548 1,548 1,548Shareholders’ equity 4,166 4,030 3,767 3,425 2,947Commitments and contingencies 24,146 19,079 18,741 15,909 14,293

SHARE INFORMATION AND VALUATIONSShare Informationearnings per share (sen) 37.2 35.3 33.0 26.7 19.7Diluted earnings per share (sen) 37.1 35.3 32.9 26.7 19.6Dividend per share (sen) 29.5 16.6 13.3 7.0 6.4net assets per share (rM) 2.69 2.60 2.43 2.21 1.91Share price as at 31 March (rM) 4.41 4.40 3.89 3.17 2.88Market capitalisation (rM million) 6,827 6,811 6,022 4,907 4,458

Share ValuationsDividend yield (%) 6.69 3.77 3.42 2.21 2.22Dividend payout ratio (%) 79.5 46.9 42.3 26.2 32.5price to earnings multiple (times) 11.9 12.5 11.8 11.9 14.6price to book multiple (times) 1.6 1.7 1.6 1.4 1.5

FINANCIAL RATIOS (%)Profitability Ratiosnet interest margin on average interest-earning assets 2.2 2.4 2.5 2.7 2.7 net return on average equity 13.8 13.8 14.0 12.8 10.5 net return on average assets 1.2 1.3 1.3 1.2 0.9 net return on average risk-weighted assets 1.9 2.0 2.1 1.9 1.4 Cost to income ratio 46.6 47.9 47.6 48.3 52.1

Asset Quality Ratiosloan loss coverage 92.7 82.5 87.7 78.0 94.4 Gross impaired loans ratio 1.4 2.1 2.5 3.5 3.8 net impaired loans ratio 0.7 1.1 1.4 1.9 1.8 Gross loan to deposit ratio 82.1 78.4 77.7 78.8 90.6

Capital Adequacy RatiosCore capital ratio - - 11.88 12.39 11.13risk-weighted capital ratio - - 15.13 16.18 15.40Common equity tier I (“Cet I”) capital ratio 10.38 10.62 - - - tier I capital ratio 11.43 11.91 - - - total capital ratio 13.67 14.63 - - -

1 Including special dividend of 10.5 sen; should special dividend be excluded, the dividend yield and dividend payout ratio are 4.31% and 51.3%

respectively.2 the restatement is in relation to Basel III requirements to gradually phase out the Irredeemable Convertible preference Shares as tier I Capital.

1

1

1

2

2

11


Net Assets Per Share(RM)

Deposits from Customers(RM million)

Earnings Per Share(sen)

Dividend Per Share(sen)

Total Assets(RM million)

Gross Loans, Advances and Financing(RM million)

Profit After Taxation and Zakat(RM million)

Net Return on Average Equity(%)

Market Capitalisation(RM million)

29.5

16.6

13.3

7.0

6.4

6,82

7

6,81

1

6,02

2

4,90

7

4,45

8

2.69

2.60

2.43

2.21

1.91

48,0

75

43,6

92

39,7

19

36,1

45

31,6

64

32,1

99

28,2

25

25,0

12

22,4

74

21,4

10

39,2

37

36,0

04

32,1

87

28,3

85

23,6

28

2010 2011 2012 2013 2014

564

538

503

409

302

13.8

13.8

14.0

12.8

10.5

37.2

35.3

33.0

26.7

19.7

2010 2011 2012 2013 20142010 2011 2012 2013 2014

2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014

2010 2011 2012 2013 2014 2010 2011 2012 2013 20142010 2011 2012 2013 2014

Directors


12


From left to right:

Megat Dziauddin bin Megat Mahmud • tan Yuen Fah • Sng Seow Wah • Dato’ Thomas Mun Lung Lee Datuk oh Chong peng • Kung Beng Hong • Stephen Geh Sim Whye • ou Shian Waei • lee ah Boon

13

14


Dato’ Thomas Mun Lung Lee(Chairman/Independent Non-Executive Director)

Lee Ah Boon(Non-Independent Non-Executive Director)

Megat Dziauddin bin Megat Mahmud(Independent Non-Executive Director)

Datuk Oh Chong Peng(Chairman/Independent Non-Executive Director)

Dato’ Thomas Mun Lung Lee(Senior Independent Non-Executive Director)

Stephen Geh Sim Whye(Independent Non-Executive Director)

Dato’ Thomas Mun Lung Lee(Chairman/Independent Non-Executive Director)


Megat Dziauddin bin Megat Mahmud(Chairman/Independent Non-Executive Director)

Foziakhatoon binti Amanulla Khan(Chief Executive Officer)

Directors of Alliance Financial Group Berhad

Directors of Major Subsidiaries

ALLIANCE BANK MALAYSIA BERHAD (ABMB)

ALLIANCE FINANCIAL GROUP BERHAD (AFG)

ALLIANCE INVESTMENT BANK BERHAD (AIBB)

ALLIANCE ISLAMIC BANK BERHAD (AIS)

Kung Beng Hong(Non-Independent Non-Executive Director)

Tan Yuen Fah(Independent Non-Executive Director)

Ou Shian Waei(Independent Non-Executive Director)

Tan Yuen Fah(Independent Non-Executive Director)


Lee Ah Boon(Non-Independent Non-Executive Director)


Kuah Hun Liang(Independent Non-Executive Director)

Assoc. Prof. Dr Abdul Rahman bin Awang(Independent Non-Executive Director)

Tuan Haji Md Ali bin Md Sarif(Independent Non-Executive Director)

Kuah Hun Liang(Independent Non-Executive Director)

Sng Seow Wah(Group Chief Executive Officer)

Ou Shian Waei(Independent Non-Executive Director)


Sng Seow Wah(Non-Independent Non-Executive Director)

Sng Seow Wah(Non-Independent Non-Executive Director)

Dato’ Majid bin Mohamad(Independent Non-Executive Director)

Directors (cont’d)

15


Datuk Oh Chong Peng(Chairman, Independent Non-Executive Director)Chairman of Nomination Committee, Remuneration Committee and Employees’ Share Participating Scheme Committee

aged 69, a Malaysian, was appointed Chairman of the Board of aFG on 21 april 2006. He had his accountancy training in london from 1964 and qualified as a Chartered accountant in 1969. He is a Fellow of the Institute of Chartered accountants in england and Wales as well as a member of the Malaysian Institute of Certified public accountants (MICpa) and Malaysian Institute of accountants.

Datuk oh joined Coopers & lybrand (now called pricewaterhouseCoopers) in london in 1969 and in Malaysia in 1971. He was a partner of Coopers & lybrand Malaysia from 1974 and retired as a Senior partner in 1997. He was with rashid Hussain Berhad Group of Companies between 1998 and 2003.

Datuk oh is a Government-appointed member of labuan Financial Services authority. He is a Council Member of universiti tunku abdul rahman (utar) and a trustee of the utar education Foundation.

His past appointments included stints as a Government-appointed Member of the Kuala lumpur Stock exchange, now called Bursa Malaysia Berhad (1990-1996), member of the Malaysian accounting Standards Board (2004-2009) as well as a Council Member (1981-2001) and president of MICpa (1994-1996).

Datuk oh currently sits on the Boards of British american tobacco (Malaysia) Berhad, Kumpulan europlus Berhad, Malayan Flour Mills Berhad, Dialog Group Berhad and several other companies.

Stephen Geh Sim Whye(Independent Non-Executive Director)Chairman of Audit Committee and Member of Nomination Committee

aged 58, a Malaysian, was appointed to the Board of aFG on 5 May 2004. He is a Chartered accountant with the Malaysian Institute of accountants, and a member of the Malaysian Institute of Certified public accountants and Malaysian Institute of taxation.

Since 1984, Mr Geh has been a practising accountant and consultant to several companies. He has wide experience in the financial management of companies involved in tin mining, oil palm and rubber plantations, manufacturing, property development and construction.

Mr Geh was involved in the financial management of a number of Malaysian manufacturing and trading companies with overseas investments, besides serving as their tax adviser.

He is currently the Managing Director of GSW Consultants Sdn Bhd.

Dato’ Thomas Mun Lung Lee(Senior Independent Non-Executive Director)Member of Nomination Committee, Remuneration Committee and Employees’ Share Participating Scheme Committee

aged 76, a Malaysian, was appointed to the Board of aFG on 26 September 2005. He has been in legal practice as an advocate and solicitor for over 40 years. He is a Barrister-at-law (england) and holds a Master of arts (Ma) and Master of law (llM) degrees from Cambridge university, united Kingdom. He is a member of the appeals Committee of Bursa Malaysia Berhad and the Steering Committee of Financial Institutions Directors’ Education (FIDe) programme. He is also an arbitrator with the Court of arbitration for Sport based in Lausanne, Switzerland.

Dato’ Lee is currently a Senior Partner of Lee Hishammuddin allen & Gledhill. He is the Chairman of aBMB and aIBB and a Director of alliance trustee Berhad. He is also the Chairman of aIa Berhad, aIa public takaful Berhad and aIa pension and asset Management Sdn Bhd and a Director of aIG Malaysia Insurance Berhad.

16


Tan Yuen Fah(Independent Non-Executive Director)Member of Audit Committee

aged 69, a Singaporean, was appointed to the Board of aFG on 1 July 2005. He holds a Bachelor of accountancy degree from the former university of Singapore and a Bachelor of law degree from university of Wolverhampton, united Kingdom. He also holds a post-Graduate Diploma in Business administration from Manchester Business School, united Kingdom. He is a Fellow of the Institute of Singapore Chartered accountants, Fellow of the Certified practising accountants in australia, Fellow of the association of Chartered Certified accountants in the united Kingdom and an associate of the Chartered Institute of Management accountants, united Kingdom.

Mr tan had 11 years of experience in the commerce and industry sector prior to joining the banking and finance sector. He joined overseas union Bank ltd, Singapore in 1979, holding various senior positions and retired in 2002 as executive Vice president.

He is currently a Director of aBMB, union (2009) limited, Wildlife reserves Singapore pte ltd, Singapore Zoological Gardens and the Jurong Bird park pte ltd.

Megat Dziauddin bin Megat Mahmud(Independent Non-Executive Director)Member of Audit Committee, Nomination Committee, Remuneration Committee and Employees’ Share Participating Scheme Committee

aged 68, a Malaysian, was appointed to the Board of aFG on 26 September 2005. tuan Haji Megat holds a Bachelor of Science (econs) (Hons) degree from the Queen’s University of Belfast, northern Ireland, united Kingdom and is a Fellow of the Institute of Chartered accountants in Ireland as well as a Chartered accountant with the Malaysian Institute of accountants.

He has more than 30 years of experience in senior management capacities. He had served Golden Hope plantations Berhad as Group Director (Finance), arab-Malaysian Merchant Bank Berhad as General Manager (operations) and as General Manager (Investment), Bank Simpanan nasional as Finance Manager and the Accountant-General’s Department as Treasury accountant.

He currently sits on the Boards of aBMB, aIBB, aIS, MnrB Holdings Berhad, MnrB retakaful Berhad, Malaysian reinsurance Berhad, pernec Corporation Berhad and several private limited companies.

Lee Ah Boon(Non-Independent Non-Executive Director)Member of Nomination Committee, Remuneration Committee and Employees’ Share Participating Scheme Committee

aged 63, a Singaporean, was appointed to the Board of aFG on 18 april 2012. He holds a Bachelor of accounting (Hons) degree from the former university of Singapore.

Mr lee joined Citibank in 1990 and served in a variety of roles in Consumer Banking in Singapore which included Chief Financial officer, Senior operations officer, Head of Credit Card business and Business Manager. In 2005, he started up Citibank’s Consumer Business in China and returned to Singapore as regional operations Head of Citibank before joining Barclays Bank in early 2009 as International technology Head for its Global retail and Commercial Bank businesses.

In September 2010, Mr lee left Barclays Bank and joined Fullerton Financial Holdings (International) pte ltd, a subsidiary of temasek Holdings (private) limited, as the Chief operating officer where he stayed for three years until his retirement in november 2013.

Mr lee is currently the advisor of Fullerton Financial Holdings (International) pte ltd and sits on the Boards of aBMB, Mekong Development Bank and several other companies.


17


Ou Shian Waei (Independent Non-Executive Director)Member of Audit Committee, Remuneration Committee and Employees’ Share Participating Scheme Committee

aged 63, a Malaysian, was appointed to the Board of aFG on 1 July 2010. He holds a Bachelor of Science degree in Chemistry from university of Malaya. Mr ou started his career with a local bank as a management trainee from 1976 to 1980. He joined IBM Malaysia in 1981 as a trainee System engineer and held various technical and management positions before retiring as Managing Director of IBM Malaysia in January 2010 after almost 30 years of service.

Mr ou was the pIKoM (association of Malaysia Computer Industry) Councillor from 1997 to 1998 and was awarded the ‘Key Industry Leader Award’ in 2006 by PIKOM (now called the national ICt association of Malaysia) for his contributions to Malaysia’s IT industry. He was also the Chairman of the national International technology Council (nItC) taskforce for It literacy in 1997 and adjunct professor for the Department of economics & Business administration at universiti putra Malaysia from 1998 to 1999.

He currently sits on the Boards of aBMB, aIG Malaysia Insurance Berhad and private pension administrator Malaysia.

Kung Beng Hong(Non-Independent Non-Executive Director)Member of Audit Committee, Nomination Committee, Remuneration Committee and Employees’ Share Participating Scheme Committee

aged 69, a Malaysian, was appointed to the Board of aFG on 21 april 2006. He holds a Bachelor of arts (Hons) degree in economics from university of Malaya. He is a Fellow of the Institute of Bankers Malaysia.

Mr Kung has 45 years working experience in the banking industry and has held numerous senior management positions, mainly in Malaysia, including Chief executive officer (Ceo)/Directorship positions in three banks. His experience includes positions held in Citibank n.a. in the united States and Singapore.

He is currently the advisor of Fullerton Financial Holdings pte ltd and sits on the Boards of aBMB and aIBB. He also holds directorships in uoa asset Management Sdn Bhd, Quill Motorcars Sdn Bhd, asian Institute of Finance Berhad and Financial Institutions Directors’ Education (FIDE) Forum.

Sng Seow Wah (Non-Independent Non-Executive Director)

aged 55, a Singaporean, was appointed to the Board of aFG on 18 november 2010. He was appointed as Group Chief executive officer and Director of aBMB on 5 July 2010. Mr Sng has a Bachelor’s degree in Accountancy from the national university of Singapore. He attended the advanced Management programme at the Wharton School, university of pennsylvania, united States, as well as the Corporate & Investment Banking programme at Macquarie university, australia. Mr Sng is an experienced commercial banker with more than 30 years of delivering high performance in a few well respected regional and international banks. He was the Managing Director of the local Corporate Group, Citibank Singapore and joined oCBC Bank Singapore as the Head of enterprise Banking where he led the successful transformation of the business into a sustainable, high performing unit with a strong reputation for employee engagement, customer focus and service. prior to joining aBMB, Mr Sng was the executive Vice president, Head of Human resources and Special projects at Fullerton Financial Holdings, a wholly-owned subsidiary of temasek Holdings, where he held several directorships across the asian region. Mr Sng is currently a Council Member of the association of Banks in Malaysia and Director of aIBB, Malaysian electronic payment Systems Sdn Bhd and aSean Finance Corporation ltd.

18



Kuah Hun Liang

aged 52, a Malaysian, was appointed to the Board of aBMB on 15 December 2011.

He holds a Bachelor of Science (Hons) degree in applied economics from university of east london, united Kingdom. He was former treasurer and Director of the Malaysian-German Chamber of Commerce and former Chairman of the Star publications (Malaysia) Berhad.

Mr Kuah has 30 years of experience in the financial services industry having started his career in public Bank. He subsequently joined Deutsche Bank aG as treasurer and was promoted as Head of Global Markets when the bank ventured into investment banking. He was appointed executive Director of Deutsche Bank (M) Berhad in 2000 and in 2002, he assumed the role of Managing Director and Ceo.

Mr Kuah currently sits on the Boards of aIBB, rexit Berhad and MpHB Capital Berhad.

Assoc. Prof. Dr Abdul Rahman bin Awang

aged 68, a Malaysian, was appointed to the Board of aIS on 11 February 2011.

Dr abdul rahman holds a phD in Islamic law from university of edinburgh, united Kingdom, Master of laws (Comparative laws) from temple university, philadelphia, and a Shariah and Law degree from Al-Azhar University, egypt.

He has more than 30 years of experience in Islamic law and served in various universities in Malaysia. He is currently an associate professor at the Department of Islamic law, ahmad Ibrahim Faculty of laws at International Islamic university Malaysia.

Tuan Haji Md Ali bin Md Sarif

aged 60, a Malaysian, was appointed to the Board of aIS on 23 March 2011.

tuan Haji Md ali holds a Bachelor of economics degree from university of Malaya and an MBa (Finance) from universiti Kebangsaan Malaysia (uKM). He also holds a Diploma in Islamic Studies and a post-Graduate Diploma in Islamic law from uKM.

He was with Maybank Group from 1976, holding various senior positions until his retirement as Head of planning, Maybank Islamic Berhad. He has extensive experience in the areas of Islamic banking, corporate planning, asset and liability management as well as banking operations.

He is currently a Distinguished academic Fellow of the Institute of Islamic Banking and Finance (IIBF) at International Islamic university Malaysia, since 2008.

19


Dato’ Majid bin Mohamad

aged 60, a Malaysian, was appointed to the Board of aIS on 6 September 2013.

He holds a Bachelor of arts (Honours) degree from university of Malaya and a Master of Business administration degree from Manchester Business School, england. He also attended senior management programmes at Harvard Business School, united States, and InSeaD, France.

He has extensive experience in the setting up, regulatory planning and rehabilitation of finance and insurance institutions. He started his banking career in Bank negara Malaysia in 1977 and held various supervisory roles across key departments, from audit to economics, and bank and insurance regulation. He was Ceo of several life and general insurance companies in Malaysia including pacific and orient Insurance Berhad, Malaysia national Insurance Berhad, The People’s Insurance Co. (Malaysia) Berhad and talasco Insurance Berhad. In 2001, he facilitated the successful merger of talasco Insurance Berhad and The People’s Insurance Co. (Malaysia) Berhad. Dato’ Majid retired as CEO and president of labuan reinsurance (l) ltd at the end of 2010.

He is currently the Managing adviser of MBM advisers (l) ltd, a consultancy outfit based in labuan International Business and Financial Centre.

He is an independent board member of aIa public takaful Berhad and uni.asia General Insurance Berhad as well as technical adviser to labuan International Insurance association.

Foziakhatoon binti Amanulla Khan

aged 46, a Malaysian, was appointed as Ceo and Director of aIS on 24 September 2012.

Puan Fozia holds a Bachelor of Arts (Hons) in accounting and Finance from the university of Humberside, Hull, united Kingdom.

Puan Fozia has over 19 years of experience in the banking industry. She was formerly the Ceo and executive Director of a local Islamic Bank. She had led the Islamic Capital Markets Division of one of the largest banks in Malaysia, where she was instrumental in structuring and advising on fixed income Islamic investment banking products. She also headed the team that concluded the first residential Mortgage Backed Securities transaction in Malaysia as well as the first Islamic sub debt issuance; her work on these two projects have won numerous awards both locally and regionally.

Puan Fozia is a frequent speaker at local and international seminars and roadshows on matters related to Islamic banking.

Other Information of Directors of AFG

(i) Family Relationship none of the Directors have any family

relationship with each other and/or major shareholders of the Company.

(ii) Conflict of Interest none of the Directors have any conflict of

interest with the Company.

(iii) List of Convictions for Offences none of the Directors have been convicted

for any offences within the past 10 years.

(iv) Attendance of Directors at Board Meetings

there were 11 Board Meetings held during the financial year ended 31 March 2014. Details of attendance of Directors at Board Meetings are as follows:

Name of Director Attendance

Datuk oh Chong peng 11/11

Dato’ Thomas Mun lung lee

10/11

Stephen Geh Sim Whye 10/11

tan Yuen Fah 11/11

Megat Dziauddin bin Megat Mahmud

10/11

lee ah Boon 9/11

ou Shian Waei 11/11

Kung Beng Hong 11/11

Sng Seow Wah 11/11

20


Senior Management

From left to right:

Steve K. MillerHead, Group Business Banking

Raymond Leung Chun-KowGroup Chief operating officer

Sng Seow WahGroup Chief executive officer

Yeo Chin TiongHead, Group Financial Markets

Aaron Loo Boon SengHead, Group Consumer Banking

Mahesh P RupawallaChief executive officeralliance Investment Bank Berhad

Fozia AmanullaChief executive officeralliance Islamic Bank Berhad

Victor Khor Eng SweeHead, Group transaction & alternate Banking

Gary Teo Wee CheeGroup Chief Financial officer

21


From left to right:

Pang Choon HanGroup Chief risk officer

Chew Siew SuanHead, Group Human resource

Peter Fong Seow LoongHead, Group Corporate Credit

Mary JamesGroup Chief Information officer

Leong Sow YokeGroup Chief Internal auditor

Amarjeet KaurHead, Group Corporate Strategy and Development

Yong Kok MunHead, Group operations

Lee Wei YenGroup Company Secretary

BUILDING RELATIONSHIPS WITH OUR CUSTOMERS AT EVERY LIFE STAGE

24


Statement by Chairman ofAlliance Financial Group Berhad

Dear Shareholdersagainst the background of the unsettling global economic recovery and greater challenges in the domestic industry, I am pleased to report that alliance Financial Group Berhad has again achieved good and sustainable progress for the financial year ended 31 March 2014.

our net profit after tax rose to rM563.5 million, and we reported a return on equity of 13.8% as our core Consumer and Business Banking operations continue to perform well.

Operating Environment

During the year, the international financial markets continued to be volatile amid a slow recovery in the united States and europe, and slower growth in China. In Malaysia, growth moderated to 4.7% in 2013, from 5.6% a year earlier, as resilient domestic demand was offset by weak exports and soft commodity prices.

as loans growth in the industry moderated to 10.6% in 2013, price-based competition for loans and deposits has intensified further, putting more pressure on margins.

Our Performance

amidst these challenges, the Group continues to build a sound foundation for sustainable profitability and value creation for shareholders. We do this by remaining focused on our business goals, streamlining our processes, delivering excellent services and leveraging on our competitive strengths to deepen our presence in the marketplace, as well as strengthening long-term relationships with our customers.

the alliance brand has also achieved greater visibility and equity as we garnered more prominent industry accolades. this continued recognition reinforces our status as a trusted and strong financial institution. It also underscores the success of our innovative initiatives to bring meaningful benefits and experience to our customers, in line with our vision to be “the Best Customer Service Bank in Malaysia”.

Creating Shareholder Value

We are committed to continuously enhance shareholder value by paying a meaningful dividend to shareholders.

I am happy to report that the Board has proposed a special dividend of 10.5%. this brings the total dividends for the year to 29.5 sen, which is 77.7% higher than last year’s total dividends of 16.6 sen. this represents a total payment of rM451.6 million or 80.1% payout from this year’s net profits.

as a reflection of a much stronger and profitable franchise, the Board has also revised the dividend policy to now pay up to 60% of net profits, subject to regulatory approvals, while ensuring that the Group has the financial flexibility for future expansion.

Corporate Development

on 15 april 2013, the Group completed the sale of its 70% shareholding in alliance Investment Management Berhad to KaF-Seagroatt Campbell Berhad for rM12.25 million.

Growing in Malaysia

While systems and processes are important, ultimately, it is our people who drive our mission. We believe that outstanding customer service will be the key to the growth and long-term success of our franchise. Hence, our continued emphasis will be on embedding the r.I.t.e. core values of respect, Integrity, teamwork and excellence, and the creation of an environment that fosters continuous learning and career development. We are confident that the high levels of employee engagement will continue to augur well for building our franchise and the financial performance.

25


Corporate Responsibility

We remain committed to building sustainable and meaningful business and community partnerships. We do this by leveraging on our skills and expertise as a financial institution, provide support to the communities that we serve, and to minimise the environmental impact of our business practices. our initiatives during the year included the launch of the alliance Bank BizSmart Academy, a first-of-its-kind business academy to inspire and nurture a new generation of young businesses in Malaysia, and the inaugural alliance Bank SMe Innovation Challenge 2013 for young entrepreneurs. We became the first bank in Malaysia to provide “green financing” with loans to home owners to install solar panels in their homes.

Looking Forward

although the global economy is showing signs of recovery, the external environment remains challenging with downside risks from political events, inflationary pressures and liquidity flows.

We remain cautiously optimistic that Malaysia will be able to sustain Gross Domestic product growth within the range of 4.5% and 5%, supported by the momentum of the economic transformation projects, resilient domestic demand and recovery of exports.

We aim to remain agile, adaptive and responsive to capture new growth opportunities, and to continue to leverage on our competitive strengths in Consumer and Business Banking to deliver better returns to our stakeholders.

Acknowledgements

I am grateful to stakeholders and customers and deeply appreciate their continuing support and trust. We remain committed to increasing the value of your equity.

once again, the management and staff of whom we depend on for our success had performed their roles with invaluable dedication and high level of competence to deliver service excellence to our customers. the Board joins me in thanking them for their hard work and efforts.

I would also like to extend my appreciation to Bank negara Malaysia, Securities Commission Malaysia, Bursa Malaysia Securities Berhad and other regulatory authorities for their guidance and support, and to my fellow directors for their strategic counsel and commitment to the Group.

DATUK OH CHONG PENGChairman, alliance Financial Group Berhad

26


Statement by Chairman ofAlliance Bank Malaysia Berhad

I am pleased to report that the alliance Financial Group achieved another year of solid business growth and improved earnings despite the tougher than expected economic conditions and business environment.

The Year In Review

the global financial markets – equities, bonds, currencies, and derivatives – continued to be volatile, arising from the uncertainty over the United States’ Federal Reserve’s quantitative easing measures and expectations that interest rates would rise. on the domestic front, Bank negara Malaysia implemented several initiatives to curb rising household debt and to slow credit growth. these included putting a cap on the tenure for home and personal loans, reducing the margin of financing for home loans, as well as prohibiting offers for pre-approved personal loans. the combined effect of these measures was a slowing down of consumer loan demand.

However, despite such conditions, the Bank achieved solid business growth accompanied by better asset quality.

Platform for Sustained Growth

You may recall that for FY2014, we outlined three key long-term strategic priorities:

• To build a consistent and sustainablefinancial performance;

• To be Malaysia’s Best Customer ServiceBank;and

• To develop engaged employees with theright values.

this required us to focus on some specific initiatives, namely, growing the core business, continuous improvement in productivity, and change in culture to ensure high performance.

I am happy to report that we continue to make good progress on these long-term strategic priorities and have further strengthened our position in the banking industry. the key factor underpinning our aspiration of consistent and sustainable financial performance is top-line revenue growth, both from net interest income and recurring revenues from non-interest income. I am pleased that our efforts have resulted in rising market share in deposits and loans in the Consumer and SMe customer segments, and we are one of the leaders in the industry for loan growth.

as part of our initiatives to grow recurring non-interest income, we entered into a ten-year exclusive bancassurance arrangement with Manulife Insurance Berhad to distribute the company’s life insurance products at our branches which will give us growing income.

During the year, we invested substantially in the upgrading of our technology infrastructure and the re-engineering, centralisation and automation of processes to improve customer experience. In particular, the credit process re-engineering initiative to streamline processes from origination to disbursement for both Consumer and SMe lending resulted in a significant reduction in processing time and improvement in sales productivity and service delivery. We have seen progress on certain productivity indicators such as improvement in turnaround time which have translated into higher customer satisfaction scores, and the decline in cost-to-income ratio to 46.6%.

our Islamic Banking subsidiary, alliance Islamic Bank Berhad, also gained a stronger foothold in the local market as it continued to build its capabilities to grow new customer segments and enhance product offerings.

In the equities business, our subsidiary, alliance Investment Bank Berhad is gaining greater market recognition for its research capabilities, emerging overall 5th in the asiaMoney Brokers poll and was ranked no. 5 as the “Most Improved research House” and will continue to be even better with our partnership with DBS Vickers Securities Holdings pte ltd. our institutional and retail broking business has also increased its share of the trading volume on Bursa Malaysia.

We recognise that human capital is a key enabler to our success and that is the reason we continue to invest substantially in training, talent retention, and the creation of an environment that fosters continuous learning and development. In FY2014, we leveraged on our respect, Integrity, teamwork and excellence (r.I.t.e.) values to further instill a new sense of pride and passion in our employees as we work towards reinforcing a high performance culture of meritocracy.

all these developments, and more, are steadily reinforcing our capabilities to deliver innovative products to meet the evolving needs of customers across all touch points, as we move towards positioning ourselves as “the Best Customer Service Bank in Malaysia”.

27


the success of these initiatives is evident from the many awards received during the year, which recognised, amongst others, the Bank’s well defined franchise in Consumer and SMe Banking in areas such as business, service excellence and operational processes and technology.

Congratulations

I would like to congratulate our Group Ceo Mr Sng Seow Wah, and the staff for the major awards won by the Bank during the year:

• “Best Self Service Banking Project” at The asian Banker technology Implementation awards 2014

• “Service Excellence in SME Banking” at the Retail Banker International Asia Trailblazer awards 2014

• “Asia’s Most Customer Friendly Bank” and “Asia’s Best Online Banking” at the Financial Insights Innovation awards 2014

• “Sahabat SME” by the SMI Association of Malaysia

• “Best SME Bank Malaysia 2013” by Global Banking & Finance review

• “Credit Card Initiative of the Year – Malaysia” at the asian Banking & Finance retail Banking awards 2013

• “Best Brand Loyalty Campaign – Alliance oneBank rewards” by the promotions Marketing awards of Malaysia 2013

Challenges Ahead and Strategic Priorities

to round up my report, I would like to share our plans going forward.

In 2014, the Malaysian economy is expected to sustain its growth momentum underpinned by continued strength of private investment and domestic demand as well as improving export performance. However, households and businesses will have to adjust to the rising cost of living and potential interest rate hikes. these, coupled with the responsible financing guidelines, are likely to lead to more moderate consumer loans growth, while ongoing competition for loans and deposits are likely to impact margins.

While the economic backdrop will be challenging, I believe the Group’s good financial performance, strong asset quality, liquidity and capital position, puts us in a position of strength to further expand our business operations. at the same time, we shall continue to observe and strengthen all our risk and governance processes.

Serving our customers well will remain the cornerstone of our strategy. We will continue to invest in our infrastructure platforms and the branch network, to improve our customer service, but more importantly, deliver more innovative products to meet our customers evolving needs consistently across all channels.

We will roll out programmes to strengthen our brand positioning, Banking Made Personal, through integrated marketing campaigns, and improve customer experience through re-engineering of processes under Project APEX.

We will reinforce our core values of r.I.t.e. and behaviors required to achieve the Bank’s vision and mission: to become a high performance organisation. We will step up on training, job rotation, talent management, and further strengthen our performance management systems to reward staff for their hard work, creativity and team work.

Appreciation

on behalf of the Board of Directors, I would like to thank our shareholders and the growing number of customers, stakeholders and business partners, for their support and confidence in the Bank. I would also like to thank my fellow Directors of alliance Bank for their strong support and hard work.

to Datuk oh Chong peng and the Board of Directors of our holding company, alliance Financial Group Berhad, I would like to record my sincere appreciation of their insights, advice and support.

I would also like to express my sincere thanks and gratitude to Bank negara Malaysia, the Securities Commission Malaysia, Bursa Malaysia Securities Berhad and other government agencies and regulatory authorities for their continued support, guidance and assistance.

DATO’ THOMAS MUN LUNG LEEChairman, alliance Bank Malaysia Berhad

EMPOWERING AND ENRICHING BUSINESSES

30


the strategic initiatives included addressing the needs of identified customer segments, increasing cross-selling and product bundling, greater awareness of risk-based pricing, and enhancing the efficiency of business processes to deliver superior customer service. the other priorities on our agenda for the year were other channels of distribution including digital banking, as well as the effective use of technology for product and service innovation.

We also continued to invest in the development of our human capital. today, our staff are more engaged and conscious of the need to constantly raise customer service standards in order to stay ahead of the competition.

Financial Performance

The Group’s FY2014 net profit after tax of rM563.5 million is 4.7% higher than that achieved in the previous year. total income reached a new high of rM1,349.0 million as

the alliance Financial Group continued to perform well for the financial year ended 31 March 2014, turning in net profit after tax of rM563.5 million for the Group. earnings were driven by a stronger than industry loans growth, and the implementation of strategic initiatives that led to broadened revenue streams.

our focus on growing current accounts and saving accounts (CaSa) deposits yielded results. the CaSa ratio was sustained at 34% and continued to outpace the industry, despite the fierce competition in this area.

net loans growth accelerated to 14.6%, with both Consumer and Business lending growing at a faster pace this year. Consumer loans growth continued to be driven by our core segment of residential mortgages, which grew 14.9% year-on-year. In the Business segment, the key driver was lending to the small and medium enterprises (“SMe”), which expanded by 17.0%, despite the challenges in the local economy.

our loans-to-deposit ratio increased to 82.1%, from 78.4% a year ago, as the Group continued to focus on more effective utilisation of our liquidity. our capital levels are consistently strong with Common equity tier 1, and total Capital ratio is at 10.4% and 13.7% respectively.

Business and Operations Review by Group Chief Executive Officer of Alliance Bank Malaysia Berhad

the Group’s core businesses of Consumer and Business Banking continued to deliver steady results amidst a challenging operating environment. this improvement was partially offset by lower contribution from trading and investment income due to rising yield curves for fixed income securities.

the improved earnings enabled the Group to register a return on equity of 13.8% whilst maintaining a strong core capital ratio that is well above the minimum Basel III requirements.

With prudent management of expenses, we also brought the cost-to-income ratio down to 46.6%, despite taking a one-off non-recurring rationalisation cost.

our asset quality improved further, with gross impaired loans ratio declining to 1.4% as at 31 March 2014 due to better recoveries and our prudent and disciplined credit underwriting standards.

Share vol

25

20

15

10

5

0

RMVolume (m)

Share Price

6

5

4

3

2

0

1

Apr-

11

May

-11

Jun-

11

Jul-1

1

Aug-

11

Sep-

11

Oct-

11

Nov-

11

Dec-

11

Jan-

12

Feb-

12

Mar

-12

Apr-

12

May

-12

Jun-

12

Jul-1

2

Aug-

12

Sep-

12

Oct-

12

Nov-

12

Dec-

12

Jan-

13

Feb-

13

Mar

-13

Jan-

14

Feb-

14

Mar

-14

Apr-

13

May

-13

Jun-

13

Jul-1

3

Aug-

13

Sep-

13

Oct-

13

Nov-

13

Dec-

13

AFG Share Price and Volume

31


Financial Performance

FY2014 FY2013 Growth Growth

Summarised Income Statement RM million RM million RM million %

net Interest & Islamic Banking Income 989.6 972.6 17.0 1.7

non-Interest Income 359.4 360.4 (1.0) (0.3)

net Income 1,349.0 1,333.0 16.0 1.2

operating expenses (628.2) (639.3) 11.1 1.7

Write-back of losses on loans and impairment 28.6 25.0 3.6 14.3

profit Before taxation and Zakat 749.4 714.0^ 35.4 5.0

net profit after taxation 563.5 538.1 25.4 4.7

^ includes associates’ share of results - loss of RM4.7 million.

Summarised Balance Sheet RM million RM million RM million %

net loans, advances and Financing 31,819.0 27,771.7 4,047.3 14.6

treasury assets 11,864.0 12,652.4 (788.4) (6.2)

total assets 48,074.7 43,692.0 4,382.7 10.0

Deposits from Customers 39,237.1 36,004.3 3,232.8 9.0

CaSa Deposits 13,322.2 12,099.2 1,223.0 10.1

Shareholders’ Funds 4,166.0 4,030.4 135.6 3.4

Shareholder Value Continues To Grow

the intrinsic value of the Group, as reflected in the earnings per share, continued to grow by 5.2% in FY2014 to 37.2 sen. net asset per share rose to rM2.69 per share as at end-March 2014, from rM2.60 in the previous year.

For the year under review, the Group’s Total Shareholder return, which takes into account the capital gains of share price and dividends to measure enhancement of value to shareholders, stood at 6.9%.

Business Performance

In FY2014, the Group continued with our strategic priorities in order to further enhance our franchise:• Leveraging on multiple distribution channels

to expand revenue growth in interest income and non-interest income across all businesses. this was achieved through bundling and cross-selling of innovative products that help our customers to transact, save, borrow and invest intelligently.

• Leveraging on analytics to understand and provide for customers’ expectations and needs. this is applied to all aspects of our business, from product and service offerings to marketing campaigns.

• Serving our customers well by providing innovative, fast, simple, secure, and convenient services. We continued with investments to further upgrade the infrastructure and re-engineer our operations via alliance Process Excellence (APEX); and

• Strengthening our human capital and reinforcing our core values. We recognise that the successful implementation of the Group’s plans hinges on the combined knowledge, skills and commitment of our people.

Consumer Banking

Consumer Banking performed well during the year, despite the backdrop of fierce competitive pricing. Interest income was higher due to the 17.8% robust loans growth. the non-interest income also grew well with stronger performance from our credit cards, bancassurance and wealth management business. Consumer Banking has grown to account for 60.6% of the Group’s loan portfolio and 46.2% of the deposit portfolio. the asset quality has also improved and the gross impaired loans ratio is at 1.4%.

During the year, we strengthened our value proposition by enhancing the features of our full suite of products, and analytics-driven marketing campaigns. We also streamlined the credit processes from loan origination all the way to disbursements. We rewarded our customers based on their total relationship with the Bank through the alliance oneBank rewards. this comprehensive points-based loyalty programme enables customers to earn timeless Bonus points through their credit card usage, mortgages, deposits and investments placed with the Bank. the points can be redeemed for travel, cash certificates and other popular gifts.

32


Business and Operations Review by Group Chief Executive Officer of Alliance Bank Malaysia Berhad (cont’d)

Hire Purchase

the hire purchase business growth registered a robust growth as we recently placed heavier emphasis on our hire purchase business, focusing mainly on the financing of new vehicles, both national and non-national marques. During the year, we reinforced our presence in the vehicle financing market through marketing initiatives, participation in road shows, and offers of value-added financing packages in collaboration with our distributors. We also expanded our panel of dealers and established strategic alliances with major car manufacturers and dealers nationwide.

Wealth Management

our wealth management business offers three categories of products namely, Investment/treasury, Investment lending & Share Services, and Bancassurance. We have been able to grow this business in a consistent manner because we understand our customers’ needs and have been able to present the “right solution to the right customer”.

During the year, we focused on:

• Expanding the suite of wealth management products and services as well as cross-selling to meet the different risk appetite and investment objectives of customers;

• Increasing the number of relationship managers, financial consultants and insurance specialists for better customer engagement and experience;

• Implementing a one-stop system for all treasury products as part of our effort to improve wealth management services; and

• Providing insights on investment trends with more than 15 “Wealth Series” seminars held throughout the year.

our investment approach has been well-received and unit trust sales volume doubled during the year. the distribution of ten new unit trust funds during the year was aimed at providing our customers regular income with low correlation to market volatility. the total asset under management stood at rM1.78 billion at end-March 2014.

to serve our customers in direct equities trading better, we extended our omni-channels platform to include Mobile trading. this complements the existing channels which includes phone orders via Share trading Centers at branches and Internet trading via allianceonline.

In Bancassurance, we established a strategic alliance with Manulife Insurance Berhad to offer a wide array of innovative and extensive products to cater to the different needs of our customers at different life stages.

Housing Loans

although market conditions for the property sector softened in the second half of 2013, housing loans registered a strong growth of 14.5%, due to demand for housing from the younger working population as well as trends in urbanisation.

During the year, we offered customers an enhanced product called the Home Complete, which bundles personal loan with mortgage to cater for customers’ renovation needs. We also launched the Home Complete plus that offers financing for the purchase and installation of home solar panels.

Credit Cards

our credit cards business expanded, helped by intensified new customer acquisitions via cross-selling and tactical campaigns. revenue rose 10.7% year-on-year while merchant sales volumes expanded 9.0%, as we leveraged on our relationships with merchants to create greater benefits for our card members to enhance the Bank’s branding and product positioning.

Personal Loans

personal loans continued to contribute positively to the Consumer Banking’s revenue, largely driven by alliance Cash Vantage personal Financing-i and alliance CashFirst products. Concurrently, we continue to improve on our credit risk framework to ensure that impaired loans ratio is kept low.

33


Business Banking

Business Banking remains a core focus for the Group. our strategy of targeting the right market segments and sharpening our industry helped the Group achieve loans and deposits growth of 9.8% and 11.6% respectively in FY2014. loans to the SMe segment, in particular, grew 17.0%, outpacing the industry average growth of 13.0%. We also enhanced our credit discipline via rigorous adherence to borrower risk rating framework, thereby resulting in better quality loans being booked.

the strength of our Business Banking division was recognised many times over last year when the Bank was awarded the retail Banker International Asia Trailblazer’s “Excellence in SMe Banking 2014” for the second consecutive year, “Asia’s Most Customer Friendly Bank 2014” by IDC Financial Insights, and “Best SMe Bank in Malaysia” by uK-based Global Banking & Finance review, for outstanding efforts in serving the Malaysian business community.

In addition, for the fourth consecutive year the Bank has been recognised as a “Sahabat SMe” by the SMI association of Malaysia, the largest national SMe association. these multi-year awards affirm our robust business model and clear market leadership, particularly in the SMe segment.

BizSmart Academy – Investing in Our Customers’ Future

The Group’s commitment to supporting the business community and investing in our customers’ future is best reflected by the

Bank’s first-of-its-kind Alliance Bank BizSmart academy and the inaugural SMe Innovation Challenge in august 2013.

The Alliance Bank BizSmart Academy is a holistic proposition, combining business education, coaching and seed funding for young SMes. the academy caters to existing SMe customers, as well as the wider business community. existing business customers now have access to a structured, year-long business curriculum. they can also sign up for seminars and conferences offered by the Group through the Academy’s website at www.BizSmart.com.my.

A novel feature of the BizSmart Academy is the annual SMe Innovation Challenge aimed at nurturing the next generation of young entrepreneurs. We selected young SMes with less than three years of business operations, and gave them access to cutting-edge Blue ocean Strategy coaching, and mentoring from top business leaders. through a competitive process, an “american Idol” of sorts for SMes, the winning contestant, Christy ng Shoes, with the most-promising business plan was awarded rM250,000 grant money, whilst the runner-up, tBa resources Sdn Bhd (textbookasia), received rM100,000 in funding to help implement their new business ideas.

the SMe Innovation Challenge generated strong viral following on social media, as the Group leveraged innovative approaches to profile the journey of the top 13 of these young entrepreneurs throughout the programme. the Group will be rolling out the SMe Innovation Challenge for a second year, on a larger scale.

our Business Banking clients recognise us as their long-term “trusted partner in Growth”. our customer proposition is anchored in the philosophy of “Helping our Customers Succeed”, offering holistic solutions to businesses at every life-stage. We aim to be the ‘bank of choice’ for small businesses, providing support from their initial years until they become large corporations. We continue to maintain strong ties with the various trade associations and business partners, to better understand the challenges, needs and aspirations of their members.

34


Deepening Customer Engagement

the Group also focused on deepening customer relationships through various “Banking MadePersonal” events such as appreciation dinners and premier movie screenings, as well as the ever-popular Durian Fiesta evening.

We also continued to establish ourselves as a thought leader in the business community; sharing key business insights through various seminars, business publications and radio interviews. among the initiatives held last year were the Young Entrepreneur’s Conference 2013, the national Budget Seminar, as well as trade and Foreign exchange seminars conducted nationwide.

our customer loyalty index recorded the largest improvement amongst our Commercial and Corporate customers last year, as a result of enhanced relationship management. In the SMe segment, we continue to record customer satisfaction scores at the top range of the industry; while having “main bank” status with the majority of our customers.

Lean Processes for Superior Customer Experience

to deliver superior customer experience, the Group launched a major initiative called Project APEX to re-engineer the sales and credit processes with the aim of improving the application turnaround time for customers. the loan process simplification has reduced the turnaround time, enabling “same day approval” for some SMe loan products.

During the year, GtaB launched the following new products and services:

• Alliance XChange – an online, interest bearing foreign currency account for Fixed Deposits and Current account with zero annual and maintenance fees with competitive foreign exchange rates. Alliance XChange addresses the needs of consumer customers by offering convenience and the opportunity to save in foreign currency at minimal cost and minimal amount

• Online telegraphic fund transfer• Customised payroll system for specific

government bodies• World-class security features for online

payments

Highly Skilled Business Bankers

to enhance the strengths of existing teams while raising a new generation of leaders, the Group invested in a structured sales and service training programme for our entire pool of relationship managers and front-line staff. In addition, senior managers in the division underwent Gallup’s Competency and Strengths Finder training to assist them in building high performing teams.

Group Transaction & Alternate Banking

Group transaction & alternate Banking (GtaB) stayed focused on its goal to provide a range of competitive transactional and advisory services and solutions that are efficient, fast and secure for our customers. the products and services include payments and remittances, trade Finance, Cash Management, Group Deposits and Direct Banking such as self-service terminals and online banking.

GTAB is leading the Group’s push for the conversion from over-the-counter transactions towards e-payments in support of Bank negara Malaysia (BNM)’s aspirations to reduce the usage of cheques. The Group’s strategy to actively encourage Internet banking has resulted in significant growth in the Internet banking user base and transaction volumes.

there was also encouraging response from customers to our BizSmart Online Banking and the allianceonline personal services. Sign-ups for both these services have been on the rise.


35


In addition, the following key customer fulfillment programmes were implemented:

• On-demand training for BizSmart customers• Learning sessions for our customers on

e-payments• Digital banking talks, including “Coffee on

us” sessions with customers• Trade Finance related courses for Trade

Finance customers

Islamic Banking

our Islamic Banking business, conducted through our subsidiary alliance Islamic Bank Berhad (aIS), continued to grow at a steady pace, with the support and collaboration from alliance Bank. AIS contributed 13.3% to the Group’s revenue in FY2014.

aIS continued to enhance the visibility of its brand and value propositions within its targeted customer segments. During the year, aIS established new strategic relationships with key government sector clients in deposits and transaction banking.

a significant development in the Islamic finance industry during the year was the introduction of the Islamic Financial Services act 2013 (“IFSa”). the IFSa, together with the issuance of several new Shariah guidelines by BnM, had resulted in the need for Islamic financial institutions, including aIS, to further enhance Shariah governance and to strengthen the Shariah processes and controls.

In line with these new guidelines, aIS has been re-evaluating its existing suite of products and services, developing replacement products based on Commodity Murabahah, Musharakah Mutanaqisah and Wadiah contracts and, where necessary, migrating customers to the new products.

the products rolled out during the year included the profit rate Swap, oil palm plantation Financing, CashVantage personal Financing and pension Financing. aIS remains committed in driving growth, premised on strong governance of Shariah principles and practices under the guidance of its Shariah Committee.

Investment Banking

alliance Investment Bank Berhad (aIBB) provides a wide range of services which include stockbroking, corporate advisory, corporate finance, underwriting and placement of equity securities, private debt securities, loan syndication, corporate banking and treasury services.

In FY2014, we strengthened our research capabilities, expanded the institutional dealing teams and further streamlined the stockbroking operations. these initiatives have begun to show positive results in terms of market share of turnover on Bursa Malaysia.

aIBB will continue to focus on strengthening its franchise, enhancing capabilities within the stockbroking and research teams, especially in retail broking business. It would further expand its mobile and online share trading channels, and share margin business to facilitate better client relationship management and complement its traditional remisier channel.

Financial Markets

the Financial Markets team manages the funding and liquidity requirements of the Group, and functions as a solution provider in marketing treasury products to various customer segments.

the Financial Markets team adopts a client-led approach and offers hedging solutions for SMe and corporate clients, and new structured investment products for Consumer Banking customers.

the business is beginning to benefit from its focus on growth areas of fixed income trading and foreign exchange sales. revenue from foreign exchange sales increased year-on-year, despite pressure on margins, and has provided the Group with a viable source of non-interest income.

In view of the increasing volatility in the currency markets, we will continue to refine our market risk policies and monitoring to ensure that Financial Markets remain a sustainable value generator for our customers.

36


Equity Market

AIBB’s market share in the equity market improved in FY2014, led by higher order flows from institutional business. Strategies implemented to streamline operating costs, to have a more balanced market mix of retail and institutional business, and increased cross-selling initiatives are also showing positive results. the improvement in relationships with our major institutional clients has been further reinforced by our research team.

In addition to the upgraded new front-end trading engine, retail dealers and remisiers are now equipped with remisier mobility facility, to enable them to serve their clients more efficiently.

Capital Market

overall, Capital Market activities in FY2014 were slower compared to the previous year, especially for initial public offerings (Ipos). the aggregate Ipo market capitalisation in FY2014 was rM28.2 billion, approximately 57.6% lower compared to the previous year total of rM66.5 billion.

notable assignments completed by aIBB during the year were the Ipo of leon Fuat Berhad, Solid automotive Berhad, titijaya land Berhad and a loan syndicated for tropicana Ivory Sdn Bhd.

Capital Market will continue to focus on providing a wide range of Investment Banking advisory services to small and medium corporations, by leveraging on the Group’s Business Banking segment.

Service Quality

During the year, we implemented a number of initiatives to further enhance customer experience and to make it easier for our staff to handle their tasks more efficiently. these initiatives were:

• Transforming our frontline service standard via G.r.e.a.t, a training programme designed to equip all front liners with the skills to provide quality service and make every customer engagement a memorable one;

• Enhancing the quality of customer engagement with staff at branches through the use of technology, simplifying processes and empowering branch personnel; and

• Obtaining the ISO 9001:2008 certification for our service and processes at the branch counters. Initiated in october 2013, this exercise was carried out to ensure that we consistently serve our customers in line with the standards set by the international body. the certification process began at four pilot branches namely Capital Square, Jalan Sultan Ismail, Bandar puteri puchong and Kota Damansara.

We passed the stringent dual level certification audit in March 2014 conducted by SIrIM QaS International Sdn Bhd, and received our accreditation from Standards Malaysia and united Kingdom accreditation Service. We aim to complete the certification process for another 30 branches nationwide in the coming year, in keeping with our commitment to deliver consistent high quality customer experience.

Social media has become an important channel for us to engage our customers. Social media plays a crucial role in keeping our customers updated on the latest products and services, as well as to obtain their feedback. In addition to Facebook, we are expanding our engagement with our customers via twitter, linkedIn, Youtube and Instagram.

In a recent banking industry customer satisfaction benchmarking survey driven by the association of Banks in Malaysia under the aegis of BnM, alliance Bank was ranked first amongst the nine member banks that had participated in the survey for customer service. the key objective of the survey was to derive a Customer Satisfaction Index for the banking industry, and focused on the consumer’s assessment of the quality of their banking experience.


37


Group Technology We continue to improve on our technology capabilities to promote operational efficiency and to provide a differentiated customer experience in a cost-effective manner. In FY2014, we upgraded and deployed the appropriate and relevant technologies and applications to support the delivery of innovative products and services to our customers.

the projects that were completed included:• Implementation of the Enterprise Financial

solutions, which integrates enterprise General ledge

2014 annual report - Alliance Bank Malaysia Berhad · 2016. 6. 9. · in Malaya with its first...

Documents

Transcript of 2014 annual report - Alliance Bank Malaysia Berhad · 2016. 6. 9. · in Malaya with its first...