Alliance Islamic Bank Berhad: Interim Financial Statements - 30 September 2019

Transcription

1. ALLIANCE ISLAMIC BANK BERHAD 200701018870 (776882-V) (Incorporated in Malaysia) Condensed Interim Financial Statements Unaudited Statement of Financial Position as at 30 September 2019 30 September 2019 RM'000 31 March 2019 RM'000 442,472 348,407 2,394,285 80,756 10,024,419 5,258 375,988 9,569 283 288 5,673 893 2,100,887 9,306,879 2,261 335,388 3,912 332 11,156 897 13,339,884 12,110,119 A16 11,171,711 9,932,901 A17 240,090 500,634 298 207,746 720 228,911 243,731 500,592 252,529 686 228,855 12,350,110 11,159,294 400,000 589,774 989,774 400,000 550,825 950,825 TOTAL LIABILITIES AND EQUITY 13,339,884 12,110,119 Restricted investment account1 Total Islamic Banking asset1 160,000 13,499,884 179,795 12,289,914 2,491,961 2,290,438 Note ASSETS Cash and short-term funds Financial investments at fair value through other comprehensive income Financial investments at amortised cost Financing and advances Other assets Statutory deposits with Bank Negara Malaysia Tax recoverable Right-of-use assets Property, plant and equipment Deferred tax assets Intangible assets A12 A13 A14 A15 TOTAL ASSETS LIABILITIES AND EQUITY Deposits from customers Deposits and placements of banks and other financial institutions Recourse obligation on financing sold to Cagamas Lease liabilities Other liabilities Provision for zakat Subordinated Sukuk A18 TOTAL LIABILITIES Share capital Reserves TOTAL EQUITY A26 COMMITMENTS AND CONTINGENCIES 1 The disclosure is in accordance with the requirements of Bank Negara Malaysia's Guidelines on Financial Reporting for Islamic Banking Institutions. The Condensed Interim Financial Statements should be read in conjunction with the audited financial statements of the Bank for the financial year ended 31 March 2019 1
2. ALLIANCE ISLAMIC BANK BERHAD 200701018870 (776882-V) (Incorporated in Malaysia) Condensed Interim Financial Statements Unaudited Statement of Income for the Financial Period Ended 30 September 2019 2nd Quarter Ended Six Months Ended 30 September 30 September 30 September 30 September 2019 2018 2019 2018 Note RM'000 RM'000 RM'000 RM'000 Income derived from investment of depositors' funds and others Income derived from investment of shareholder's funds Allowance for expected credit losses on financing and advances and other financial assets (Allowance for)/write-back of expected credit losses on financial investments Total distributable income Wakalah fees income from investment account Income attributable to the depositors and financial institutions Total net income Other operating expenses Profit before taxation Taxation Net profit for the financial period A19 158,510 148,843 314,564 287,958 A20 14,290 13,371 28,916 26,431 A21 (28,405) (11,196) (42,994) (14,495) A22 (93) 144,302 - 151,018 205 (94) 300,392 - 20 299,914 205 A23 (94,410) 49,892 (32,510) 17,382 (4,542) 12,840 (86,132) 65,091 (24,604) 40,487 (9,780) 30,707 (183,541) 116,851 (62,115) 54,736 (13,902) 40,834 (169,238) 130,881 (51,795) 79,086 (18,487) 60,599 12,840 30,707 40,834 60,599 3.7 8.9 11.8 17.6 A24 Net profit for the financial period attributable to: Equity holder of the Bank Earnings per share attributable to Equity holder of the Bank - basic/diluted (sen) A25 The Condensed Interim Financial Statements should be read in conjunction with the audited financial statements of the Bank for the financial year ended 31 March 2019 2
3. ALLIANCE ISLAMIC BANK BERHAD 200701018870 (776882-V) (Incorporated in Malaysia) Condensed Interim Financial Statements Unaudited Statement of Comprehensive Income for the Financial Period Ended 30 September 2019 2nd Quarter Ended Six Months Ended 30 September 30 September 30 September 30 September 2019 2018 2019 2018 RM'000 RM'000 RM'000 RM'000 Net profit for the financial period 12,840 30,707 40,834 60,599 17,138 10,419 35,749 6,734 (4,114) 7 13,031 (604) (2,355) 7,460 (1,901) (8,124) 8 25,732 (604) (1,471) (20) 4,639 Total comprehensive income for the financial period 25,871 38,167 66,566 65,238 Total comprehensive income for the financial period attributable to: Equity holder of the Bank 25,871 38,167 66,566 65,238 Other comprehensive income: Items that may be reclassified subsequently to profit or loss: Revaluation reserve on financial investments at fair value through other comprehensive income ("FVOCI") - Net gain from change in fair value - Realised gain transferred to statement of income on disposal and impairment - Transfer to deferred tax - Changes in expected credit losses Other comprehensive income, net of tax The Condensed Interim Financial Statements should be read in conjunction with the audited financial statements of the Bank for the financial year ended 31 March 2019 3
4. ALLIANCE ISLAMIC BANK BERHAD 200701018870 (776882-V) (Incorporated in Malaysia) Condensed Interim Financial Statements Unaudited Statement of Changes in Equity for the Financial Period Ended 30 September 2019 Non-distributable reserves At 1 April 2019 As previously stated Effects of adoption of MFRS 16 As restated Net profit for the financial period Other comprehensive income Total comprehensive income for the financial period Transfer to regulatory reserves Dividend paid At 30 September 2019 Distributable reserve Ordinary shares RM'000 Regulatory reserves RM'000 FVOCI reserves RM'000 Retained profits RM'000 Total equity RM'000 400,000 400,000 - 9,060 9,060 - 18,834 18,834 25,732 522,931 (13) 522,918 40,834 - 950,825 (13) 950,812 40,834 25,732 400,000 6,570 15,630 25,732 44,566 40,834 (6,570) (27,604) 529,578 66,566 (27,604) 989,774 The Condensed Interim Financial Statements should be read in conjunction with the audited financial statements of the Bank for the financial year ended 31 March 2019 4
5. ALLIANCE ISLAMIC BANK BERHAD 200701018870 (776882-V) (Incorporated in Malaysia) Condensed Interim Financial Statements Unaudited Statement of Changes in Equity for the Financial Period Ended 30 September 2019 (Contd.) Non-distributable reserves Ordinary shares RM'000 At 1 April 2018 As previously stated Effects of adoption of MFRS 9 As restated Net profit for the financial period Other comprehensive expense Total comprehensive income for the financial period Transfer to regulatory reserves Dividend paid At 30 September 2018 400,000 400,000 400,000 Regulatory reserves RM'000 21,430 (21,430) 866 866 FVOCI reserves RM'000 319 319 4,639 4,639 4,958 Distributable reserve Revaluation reserves RM'000 246 (246) - Retained profits RM'000 Total equity RM'000 498,216 (25,300) 472,916 60,599 - 919,892 (46,657) 873,235 60,599 4,639 60,599 (866) (26,430) 506,219 65,238 (26,430) 912,043 The Condensed Interim Financial Statements should be read in conjunction with the audited financial statements of the Bank for the financial year ended 31 March 2019 5
6. ALLIANCE ISLAMIC BANK BERHAD 200701018870 (776882-V) (Incorporated in Malaysia) Condensed Interim Financial Statements Unaudited Statement of Cash Flows for the Financial Period Ended 30 September 2019 30 September 2019 RM'000 Profit before taxation Adjustments for non-cash items Operating profit before changes in working capital Changes in working capital Net tax paid Zakat paid Net cash generated from operating activities Net cash used in investing activities Net cash used in financing activities Net change in cash and cash equivalents Cash and cash equivalents at beginning of financial period Cash and cash equivalents at end of financial period Cash and cash equivalents comprise the following: Cash and short term funds 30 September 2018 RM'000 54,736 (139) 54,597 387,477 (22,114) (5) 419,955 (280,520) (45,370) 94,065 348,407 442,472 79,086 (42,333) 36,753 176,620 (14,564) (19) 198,790 (600,067) (26,401) (427,678) 1,290,567 862,889 442,472 862,889 The Condensed Interim Financial Statements should be read in conjunction with the audited financial statements of the Bank for the financial year ended 31 March 2019 6
7. ALLIANCE ISLAMIC BANK BERHAD 200701018870 (776882-V) (Incorporated in Malaysia) Explanatory Notes PART A - Explanatory Notes Pursuant to Malaysian Financial Reporting Standard ("MFRS") 134 and Guidelines on Financial Reporting for Islamic Banking Institutions Issued by Bank Negara Malaysia ("BNM") A1 Basis of Preparation The unaudited condensed interim financial statements for the second financial quarter and financial half year ended 30 September 2019 have been prepared under the historical cost convention, except for financial assets at fair value through profit or loss and financial investments through other comprehensive income, that are measured at fair value. The unaudited condensed interim financial statements have been prepared in accordance with MFRS 134 "Interim Financial Reporting" issued by the Malaysian Accounting Standards Board ("MASB"). The unaudited condensed interim financial statements should be read in conjunction with the audited annual financial statements of Alliance Islamic Bank Berhad ("the Bank") for the financial year ended 31 March 2019. The explanatory notes attached to the interim financial statements provide an explanation of events and transactions that are significant to an understanding of the changes in the financial position and performance of the Bank since the financial year ended 31 March 2019. The significant accounting policies and methods of computation applied in the unaudited condensed interim financial statements are consistent with those adopted in the most recent audited annual financial statements for the financial year ended 31 March 2019, and modified for the adoption of the following accounting standards applicable for financial periods beginning on or after 1 April 2019: • MFRS 16 "Leases" • Amendments to MFRS 9 "Prepayment Features with Negative Compensation" • Annual Improvements to MFRSs 2015 - 2017 Cycles - Amendments to MFRS 3 "Business Combinations" - Amendments to MFRS 11 "Joint Arrangements" - Amendments to MFRS 112 "Income Taxes" - Amendments to MFRS 123 "Borrowing Costs" • IC Interpretation 23 "Uncertainty over Income Tax Treatments" The adoption of the above standards, amendments to published standards and interpretation to existing standards are not anticipated to have any significant impact on the financial statements of the Bank other than the adoption of MFRS 16 where the impact are shown in Note A30. The following MFRS have been issued by the MASB and are effective for annual periods commencing on or after 1 April 2020, and have yet to be adopted by the Bank: • Amendments to MFRS 3 “Definition of a Business” (effective from 1 January 2020) The preparation of unaudited condensed interim financial statements in conformity with the Malaysian Financial Reporting Standards requires the use of certain critical accounting estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed interim financial statements, and the reported amounts of revenues and expenses during the reported period. It also requires Directors to exercise their judgement in the process of applying the Bank's accounting policies. Although these estimates and judgement are based on the Directors' best knowledge of current events and actions, actual results may differ. 7
8. ALLIANCE ISLAMIC BANK BERHAD 200701018870 (776882-V) (Incorporated in Malaysia) A2 Auditors' Report on Preceding Annual Financial Statements The auditors' report on the audited annual financial statements for the financial year ended 31 March 2019 was not subject to any qualification. A3 Seasonality or Cyclicality of Operations The operations of the Bank was not materially affected by any seasonal or cyclical fluctuations during the second financial quarter and financial half year ended 30 September 2019. A4 Unusual Items Due to Their Nature, Size or Incidence There were no unusual items affecting the assets, liabilities, equity, net income or cash flows of the Bank during second financial quarter and financial half year ended 30 September 2019. A5 Changes in Estimates There were no material changes in estimates of amounts reported in prior financial years that have a material effect during the second financial quarter and financial half year ended 30 September 2019. A6 Issuance and Repayment of Debt and Equity Securities There were no issuance nor repayment of debt and equity securities during the second financial quarter and financial half year ended 30 September 2019. A7 Dividend Paid A second interim dividend of 8.00 sen on 345,045,045 ordinary shares amounting to RM27,604,000 in respect of financial year ending 31 March 2019, was paid on 20 June 2019. A8 Material Event During The Financial Reporting Period The Bank had on 22 April 2019 entered into an exclusive 15-year bancatakaful agreement with Zurich General Takaful Malaysia Berhad. The agreement will see the Bank strengthen its position in providing end-to-end financing solutions for both individuals and small and medium enterprise (SME) community. A9 Material Event Subsequent to the end of the Financial Reporting Period There was no material event subsequent to the end of the financial reporting period that require disclosure or adjustment to the unaudited condensed interim financial statements. A10 Related Party Transactions All related party transactions within the Bank have been entered into in the normal course of business. A11 Proposed Dividend The Directors of the Bank have proposed a single tier first interim dividend of 5.92 sen on 345,045,045 ordinary shares amounting to approximately RM20,427,000.00 in respect of financial year ending 31 March 2020. 8
9. ALLIANCE ISLAMIC BANK BERHAD 200701018870 (776882-V) (Incorporated in Malaysia) A12 Financial Investments at Fair Value through Other Comprehensive Income ("FVOCI") At fair value Money market instruments: Malaysian Government investment issues Commercial papers Unquoted securities: Sukuk Total financial investments at FVOCI 30 September 2019 RM'000 31 March 2019 RM'000 1,158,201 9,976 1,168,177 1,064,786 1,064,786 1,226,108 1,226,108 1,036,101 1,036,101 2,394,285 2,100,887 Movements in allowance for expected credit losses are as follows: 12-Month ECL (Stage 1) 30 September 31 March 2019 2019 RM'000 RM'000 At beginning of financial period/year As previously stated Effects of adoption of MFRS 9 As restated New financial assets originated or purchased Financial assets derecognised other than write-off Changes due to change in credit risk Total charge to/(write-back from) income statement At end of financial period/year 39 39 8 8 47 73 73 7 (15) (26) (34) 39 A13 Financial Investments at Amortised Cost 30 September 2019 RM'000 At amortised cost Unquoted securities: Sukuk Allowance for expected credit losses Total financial investments at amortised cost 80,842 (86) 80,756 31 March 2019 RM'000 - Movements in allowance for expected credit losses are as follows: 12-Month ECL (Stage 1) 30 September 31 March 2019 2019 RM'000 RM'000 At beginning of financial period/year New financial assets originated or purchased Changes due to change in credit risk Total charge to income statement At end of financial period/year 85 1 86 86 9 -
10. ALLIANCE ISLAMIC BANK BERHAD 200701018870 (776882-V) (Incorporated in Malaysia) A14 Financing and Advances By types and Shariah concepts: Bai` Bithaman Ajil RM'000 Al-Ijarah Thumma Al-Bai`/ Tawarruq AITABMurabahah RM'000 RM'000 RM'000 Qard RM'000 Bai` Al-Dayn RM'000 Bai` `Inah RM'000 Total Financing and Advances RM'000 30 September 2019 At amortised cost Cash line financing Term financing - Housing financing 1 - Hire purchase receivables - Other term financing Bills receivables Trust receipts Claims on customers under acceptance credits Staff financing (including financing to Directors of RM Nil) Revolving credits2 Gross financing and advances 44,408 - - 6,646 - - 1,607,295 3,255,825 1,876,651 - 1,556,241 1,580,007 - 241,234 - 50,051 50,808 - - 192,278 - 3,255,825 241,234 3,648,936 50,051 50,808 - - - 608,147 - 82,118 - 690,265 16,640 288,453 5,481,977 281,581 3,417,829 241,234 709,006 6,646 82,118 192,278 16,640 570,034 10,131,088 Add: Sales commission and handling fees 51,828 Less: Allowances for expected credit losses on financing and advances (158,497) Total net financing and advances 10,024,419 10
11. ALLIANCE ISLAMIC BANK BERHAD 200701018870 (776882-V) (Incorporated in Malaysia) A14 Financing and Advances (Contd.) By types and Shariah concepts (Contd.): Bai` Bithaman Ajil RM'000 Al-Ijarah Thumma Al-Bai`/ Tawarruq AITABMurabahah RM'000 RM'000 RM'000 Qard RM'000 Bai` Al-Dayn RM'000 Bai` `Inah RM'000 Total Financing and Advances RM'000 31 March 2019 At amortised cost Cash line financing Term financing - Housing financing 1 - Hire purchase receivables - Other term financing Bills receivables Trust receipts Claims on customers under acceptance credits Staff financing (including financing to Directors of RM Nil) Revolving credits2 Gross financing and advances 96,749 1,340,827 - - 5,124 - - 1,442,700 2,948,273 1,948,379 - 1,204,830 - 296,474 - 12,081 39,565 - - 214,502 - 2,948,273 296,474 3,367,711 12,081 39,565 - - - 683,926 - 86,195 - 770,121 16,777 287,995 5,298,173 215,115 2,760,772 296,474 735,572 5,124 86,195 214,502 16,777 503,110 9,396,812 Add: Sales commission and handling fees 48,577 Less: Allowance for expected credit losses on financing and advances (138,510) Total net financing and advances 9,306,879 1 Included hire purchase receivables under Al-Ijarah Thumma Al-Bai` ("AITAB") which is the contract of lease ending transfer of ownership from the lessor to the lessee in the form of sale transaction, which may take place at the end of the Ijarah period or at any point of time during the period, subject to the agreed terms and conditions between the contracting parties. 2 The total Financing and Advances under Bai` Bithaman Ajil ("BBA") includes Revolving Credit-I (Murabahah) which substantively adopts a BBA product structure. The Bank has entered into an arrangement on Commodity Murabahah Term Financing (“CMTF”) with Alliance Bank Malaysia Berhad (“ABMB”), the holding company of the Bank, where ABMB will provide the funds, while the assets are managed by the Bank (as the Wakeel or agent) based on the Wakalah principle. The risk and rewards of the underlying assets are recognised and borne by ABMB. Hence, the underlying assets and allowances for expected credit losses are recognised and accounted for by ABMB. The total net financing and advances for CMTF was at RM160,000,000 as at 30 September 2019 (31 March 2019: RM 179,795,000). 11
12. ALLIANCE ISLAMIC BANK BERHAD 200701018870 (776882-V) (Incorporated in Malaysia) A14 Financing and Advances (Contd.) (i) Purpose and source of fund for Qard Financing At beginning of financial period/year Sources of Qard fund: - Shareholders' fund Uses of Qard fund: - Purchase of non-residential landed property - Personal use - Working capital At end of financial period/year 30 September 2019 RM'000 31 March 2019 RM'000 5,124 982 15,173 14,454 (508) (13,143) 6,646 (192) (3,017) (7,103) 5,124 (ii) By maturity structure: Within one year One year to three years Three years to five years Over five years Gross financing and advances 30 September 2019 RM'000 31 March 2019 RM'000 2,998,459 448,771 613,081 6,070,777 10,131,088 2,806,896 432,115 682,581 5,475,220 9,396,812 30 September 2019 RM'000 31 March 2019 RM'000 56,971 57,081 2,510,895 1,673,568 5,786,022 22,876 80,756 10,131,088 2,358,476 1,728,815 5,154,376 13,330 84,734 9,396,812 30 September 2019 RM'000 31 March 2019 RM'000 25,516 241,210 2,056,046 27,105 296,447 2,044,961 3,239,848 4,568,468 10,131,088 2,931,296 4,097,003 9,396,812 (iii) By type of customers: Domestic non-bank financial institutions Domestic business enterprises - Small and medium enterprises - Others Individuals Other domestic entities Foreign entities Gross financing and advances (iv) By profit rate sensitivity: Fixed rate - House financing - Hire purchase receivables - Other fixed rate financing Variable rate - House financing - Other variable rate financing Gross financing and advances 12
13. ALLIANCE ISLAMIC BANK BERHAD 200701018870 (776882-V) (Incorporated in Malaysia) A14 Financing and Advances (Contd.) (v) By economic purposes: Purchase of transport vehicles Purchase of landed property of which: - Residential - Non-residential Purchase of fixed assets excluding land & buildings Personal use Construction Working capital Others Gross financing and advances 30 September 2019 RM'000 31 March 2019 RM'000 226,066 4,621,778 3,322,675 1,299,103 46,711 2,404,620 72,658 2,262,687 496,568 10,131,088 281,168 4,271,410 3,010,880 1,260,530 38,956 2,048,622 56,228 2,171,438 528,990 9,396,812 30 September 2019 RM'000 31 March 2019 RM'000 877,131 6,888,945 1,252,068 829,227 283,717 10,131,088 821,198 6,386,035 1,253,223 693,573 242,783 9,396,812 (vi) By geographical distribution: Northern region Central region Southern region Sabah region Sarawak region Gross financing and advances (vii) Movements in credit impaired financing and advances ("impaired financing") in Stage 3 30 September 2019 RM'000 At beginning of financial period/year As previously stated Effects of adoption of MFRS 9 As restated Impaired during the financial period/year Reclassified as unimpaired during the financial period/year Recovered during the financial period/year Financial assets derecognised during the financial period/year other than write-off Amount written-off At end of financial period/year Gross impaired financing as a % of gross financing and advances 13 31 March 2019 RM'000 106,925 106,925 147,936 (38,692) (4,338) 104,232 178 104,410 189,668 (104,932) (24,828) (18,870) (27,932) 165,029 (10,151) (47,242) 106,925 1.63% 1.14%
14. ALLIANCE ISLAMIC BANK BERHAD 200701018870 (776882-V) (Incorporated in Malaysia) A14 Financing and Advances (Contd.) (viii) Movements in allowance for expected credit losses on financing and advances are as follows: At 1 April 2019 Transfer to Stage 1 Transfer to Stage 2 Transfer to Stage 3 New financial assets originated or purchased Financial assets derecognised other than write-off Changes due to change in credit risk Unwinding of discount Total (write-back from)/charge to income statement Write-off 30 September 2019 At 1 April 2018 As previously stated under MFRS 139 Effects of adoption of MFRS 9 As restated Transfer to Stage 1 Transfer to Stage 2 Transfer to Stage 3 New financial assets originated or purchased Financial assets derecognised other than write-off Changes due to change in credit risk Unwinding of discount Total charge to income statement Write-off At 31 March 2019 12 months ECL (Stage 1) RM'000 Lifetime ECL Not-credit impaired (Stage 2) RM'000 Lifetime ECL Credit Impaired (Stage 3) RM'000 Total RM'000 23,032 3,399 (6,955) (7) 11,800 (4,975) (3,483) (221) (221) (3) 22,808 69,895 (16,628) 39,882 (26,766) 9,796 (9,944) 7,772 4,112 4,112 (51) 73,956 45,583 (364) (13,212) 51,569 1,821 (3,956) 1,916 37,774 (1,195) 36,579 (20,429) 61,733 138,510 (13,593) 19,715 24,796 23,417 (18,875) 6,205 41,665 (1,195) 40,470 (20,483) 158,497 34,959 (1,341) (31,276) 75,489 8,018 (2,918) (2,598) 45,374 (1,533) 43,841 (33,217) 45,583 86,206 37,209 123,415 (33,691) 32,267 26,634 65,721 (49,457) 8,497 49,971 (1,533) 48,438 (33,343) 138,510 22,429 9,004 (15,260) (33) 23,766 (12,600) (4,274) 603 603 23,032 14 66,027 (41,354) 78,803 (48,822) 33,937 (33,939) 15,369 3,994 3,994 (126) 69,895
15. ALLIANCE ISLAMIC BANK BERHAD 200701018870 (776882-V) (Incorporated in Malaysia) A14 Financing and Advances (Contd.) (ix) Credit impaired financing and advances by economic purposes: Purchase of transport vehicles Purchase of landed property of which: - Residential - Non-residential Purchase of fixed assets excluding land & buildings Personal use Working capital Others Gross impaired financing and advances 30 September 2019 RM'000 31 March 2019 RM'000 2,869 85,634 49,981 35,653 400 51,000 23,249 1,877 165,029 2,309 49,337 23,445 25,892 641 33,299 18,697 2,642 106,925 30 September 2019 RM'000 31 March 2019 RM'000 21,644 119,957 16,429 6,275 724 165,029 9,793 79,488 14,188 2,762 694 106,925 30 September 2019 RM'000 31 March 2019 RM'000 4,306 89 2,566 6,961 3,508 89 305 3,902 (1,703) 5,258 (1,641) 2,261 (x) Credit impaired financing and advances by geographical distribution: Northern region Central region Southern region Sabah region Sarawak region Gross impaired financing and advances A15 Other Assets Other receivables Deposits Prepayment Less: Allowance for expected credit losses on other receivables [Note (a)] Note: (a) Movements in allowances for expected credit losses on other receivables are as follows: Lifetime ECL 30 September 31 March 2019 2019 RM'000 RM'000 At beginning of financial period/year Changes due to change in credit risk At end of financial period/year 1,641 62 1,703 1,404 237 1,641 As at 30 September 2019, the Bank's gross exposure of other receivables that are under lifetime ECL was at RM1,703,000 (31 March 2019: RM1,641,000). 15
16. ALLIANCE ISLAMIC BANK BERHAD 200701018870 (776882-V) (Incorporated in Malaysia) A16 Deposits from Customers 30 September 2019 RM'000 31 March 2019 RM'000 Demand deposits - Qard 3,078,288 2,724,725 Savings deposits - Qard 325,895 320,557 6,432,010 5,452,519 - Negotiable Islamic Debt Certificate - Bai' Inah 992,769 805,845 - Money market deposits - Commodity Murabahah 159,253 261,717 80,432 35,428 67,636 11,171,711 95,537 39,744 232,257 9,932,901 30 September 2019 RM'000 31 March 2019 RM'000 4,895,792 1,629,556 886,677 355,503 7,767,528 4,020,974 1,838,605 672,770 355,270 6,887,619 30 September 2019 RM'000 31 March 2019 RM'000 981,875 2,380,491 3,707,572 3,731,967 194,068 85,522 90,216 11,171,711 795,162 2,475,387 3,646,508 2,720,243 134,874 70,963 89,764 9,932,901 Term deposits - Commodity Murabahah - Other deposits - Mudharabah - Wakalah - Qard (i) The maturity structure of term deposits are as follows: Due within six months Six months to one year One year to three years Three years to five years (ii) By type of customers: Domestic financial institutions Government and statutory bodies Business enterprises Individuals Domestic non-bank financial institutions Foreign entities Others 16
17. ALLIANCE ISLAMIC BANK BERHAD 200701018870 (776882-V) (Incorporated in Malaysia) A17 Deposits and Placements of Banks and Other Financial Institutions Non-Mudharabah Fund Licensed investment banks Bank Negara Malaysia 30 September 2019 RM'000 31 March 2019 RM'000 8,310 231,780 240,090 243,731 243,731 30 September 2019 RM'000 31 March 2019 RM'000 54,447 8,159 60,642 4,856 7,858 65,082 2,744 42,613 8,474 50,063 5,257 8,609 132,364 1,150 3,958 207,746 3,999 252,529 A18 Other Liabilities Other payables Bills payable Clearing account Sundry deposits Provision and accruals Amount due to holding company Amount due to related company Allowance for expected credit losses on commitments and contingencies [Note (a)] 17
18. ALLIANCE ISLAMIC BANK BERHAD 200701018870 (776882-V) (Incorporated in Malaysia) A18 Other Liabilities (Contd.) Note (a): Movements in allowance for expected credit losses on commitments and contingencies are as follows: At 1 April 2019 Transfer to Stage 1 Transfer to Stage 2 Transfer to Stage 3 New financial assets originated or purchased Financial assets derecognised other than write-off Changes due to change in credit risk Unwinding of discount Total (write-back from)/charge to income statement At 30 September 2019 At 1 April 2018 As previously stated under MFRS 139 Effects of adoption of MFRS 9 As restated Transfer to Stage 1 Transfer to Stage 2 Transfer to Stage 3 New financial assets originated or purchased Financial assets derecognised other than write-off Changes due to change in credit risk Other adjustments Unwinding of discount Total write-back from income statement At 31 March 2019 12 months ECL (Stage 1) RM'000 Lifetime ECL Not-credit impaired (Stage 2) RM'000 Lifetime ECL Credit Impaired (Stage 3) RM'000 Total RM'000 712 81 (100) 181 (110) (195) (143) (143) 569 3,182 (605) 1,006 988 (453) (822) 114 114 3,296 105 1 (9) (8) (4) (12) 93 3,999 (524) 906 1 1,169 (563) (1,026) (37) (4) (41) 3,958 793 793 156 (139) 560 (360) (299) 1 (81) (81) 712 5,707 5,707 (1,806) 1,306 (12) 1,549 (1,771) (1,798) 7 (2,525) (2,525) 3,182 9,960 9,960 (6) 229 (9,693) (378) (9,848) (7) (9,855) 105 16,460 16,460 (1,650) 1,161 217 2,109 (11,824) (2,475) 8 (12,454) (7) (12,461) 3,999 As at 30 September 2019, the gross exposures of financing commitments and financial guarantee contracts that are credit impaired was at RM2,326,000 (31 March 2019: RM1,979,000). 18
19. ALLIANCE ISLAMIC BANK BERHAD 200701018870 (776882-V) (Incorporated in Malaysia) A19 Income Derived from Investment of Depositors' Funds and Others 2nd Quarter Ended 30 September 30 September 2019 2018 RM'000 RM'000 Six Months Ended 30 September 30 September 2019 2018 RM'000 RM'000 Income derived from investment of: (i) Term deposits (ii) Other deposits 106,495 52,015 158,510 99,134 49,709 148,843 211,964 102,600 314,564 195,050 92,908 287,958 (i) Income derived from investment of term deposits: 2nd Quarter Ended 30 September 30 September 2019 2018 RM'000 RM'000 Finance income and hibah Financing and advances Financial investments at fair value through other comprehensive income Financial investments at amortised cost Money at call and deposit placements with financial institutions Accretion of discount less amortisation of premium Total finance income and hibah Other operating income - Fee income - Investment income - Other income Six Months Ended 30 September 30 September 2019 2018 RM'000 RM'000 82,456 72,292 163,302 142,024 14,389 520 11,826 - 27,630 520 23,238 - 897 98,262 5,012 89,130 2,230 193,682 10,581 175,843 3,611 101,873 5,898 95,028 7,676 201,358 11,513 187,356 4,541 28 53 106,495 3,499 104 503 99,134 8,893 1,683 30 211,964 6,864 222 608 195,050 Included in financing income earned on financing and advances for the current financial period is financing accrued on impaired financing of the Bank amounting to RM740,000 (30.09.2018: RM555,000). 19
20. ALLIANCE ISLAMIC BANK BERHAD 200701018870 (776882-V) (Incorporated in Malaysia) A19 Income Derived from Investment of Depositors' Funds and Others (Contd.) (ii) Income derived from investment of other deposits: 2nd Quarter Ended 30 September 30 September 2019 2018 RM'000 RM'000 Finance income and hibah Financing and advances Financial investments at fair value through other comprehensive income Financial investments at amortised cost Money at call and deposit placements with financial institutions Accretion of discount less amortisation of premium Total finance income and hibah Other operating income - Fee income - Investment income - Other income Six Months Ended 30 September 30 September 2019 2018 RM'000 RM'000 40,271 36,244 79,046 67,650 7,023 252 5,929 - 13,374 252 11,069 - 440 47,986 2,532 44,705 1,079 93,751 5,040 83,759 1,766 49,752 2,955 47,660 3,716 97,467 5,484 89,243 2,217 20 26 52,015 1,753 53 243 49,709 4,304 814 15 102,600 3,269 106 290 92,908 Included in financing income earned on financing and advances for the current financial period is financing accrued on impaired financing of the Bank amounting to RM358,000 (30.09.2018: RM264,000). A20 Income Derived from Investment of Shareholder's Funds 2nd Quarter Ended 30 September 30 September 2019 2018 RM'000 RM'000 Finance income and hibah Financing and advances Financial investments at fair value through other comprehensive income Financial investments at amortised cost Money at call and deposit placements with financial institutions Accretion of discount less amortisation of premium Total finance income and hibah Other operating income - Fee income - Investment income - Other income Six Months Ended 30 September 30 September 2019 2018 RM'000 RM'000 11,067 9,751 22,278 19,246 1,933 71 1,595 - 3,769 71 3,149 - 119 13,190 676 12,022 304 26,422 1,434 23,829 483 13,673 795 12,817 1,047 27,469 1,560 25,389 610 7 14,290 472 14 68 13,371 1,213 230 4 28,916 930 30 82 26,431 Included in financing income earned on financing and advances for the current financial period is financing accrued on impaired financing of the Bank amounting to RM101,000 (30.09.2018: RM75,000). 20
21. ALLIANCE ISLAMIC BANK BERHAD 200701018870 (776882-V) (Incorporated in Malaysia) A21 Allowance for Expected Credit Losses on Financing and Advances and Other Financial Assets 2nd Quarter Ended 30 September 30 September 2019 2018 RM'000 RM'000 Allowance for expected credit losses on: (a) Financing and advances - Net charge during the financial period (b) Credit impaired on financing and advances - Recovered - Written-off (c) Commitments and contingencies on financing and advances - (write-back)/Net charge during the financial period Allowance for expected credit losses on other receivables A22 Six Months Ended 30 September 30 September 2019 2018 RM'000 RM'000 28,679 8,910 41,665 27,694 (3,348) 3,327 (2,754) 3,462 (6,392) 7,696 (9,205) 6,679 (286) 28,372 1,500 11,118 (37) 42,932 (10,831) 14,337 33 28,405 78 11,196 62 42,994 158 14,495 Allowance for/(Write-back of) Expected Credit Losses on Financial Investments 2nd Quarter Ended Six Months Ended 30 September 30 September 30 September 30 September 2019 2018 2019 2018 RM'000 RM'000 RM'000 RM'000 Allowance for/(write-back of) expected credit losses on: Financial investments at fair value through other comprehensive income Financial investments at amortised cost A23 7 86 93 - 8 86 94 (20) (20) Income Attributable to the Depositors and Financial Institutions 2nd Quarter Ended 30 September 30 September 2019 2018 RM'000 RM'000 Deposits from customers: - Mudharabah fund - Non-Mudharabah fund Deposits and placements of banks and other financial institutions: - Non-Mudharabah fund Financing sold to Cagamas Other Borrowings Subordinated Sukuk 21 Six Months Ended 30 September 30 September 2019 2018 RM'000 RM'000 564 83,594 718 77,169 1,192 162,329 1,439 151,337 1,359 5,504 3,389 94,410 937 5,472 1,836 86,132 2,267 11,016 42 6,695 183,541 1,863 10,969 3,630 169,238
22. ALLIANCE ISLAMIC BANK BERHAD 200701018870 (776882-V) (Incorporated in Malaysia) A24 Other Operating Expenses 2nd Quarter Ended 30 September 30 September 2019 2018 RM'000 RM'000 Personnel costs - Salaries, allowances and bonuses - Contribution to EPF - Others Establishment costs - Depreciation on property, plant and equipment - Depreciation on right-of-use assets - Amortisation of computer software - Rental - Repairs and maintenance - Water and electricity - Information technology expenses - Others [Note (a)] Marketing expenses - Promotion and advertisement - Branding and publicity - Others Administration and general expenses - Communication expenses - Printing and stationeries - Insurance - Professional fees - Others Total other operating expenses Six Months Ended 30 September 30 September 2019 2018 RM'000 RM'000 17,697 2,868 1,988 22,553 13,092 2,077 1,647 16,816 32,720 5,280 4,002 42,002 26,643 4,178 3,157 33,978 33 70 72 1,308 408 299 2,041 1,980 6,211 30 104 1,244 320 278 1,602 1,645 5,223 66 141 153 2,560 980 599 4,167 4,178 12,844 57 160 2,498 947 605 3,185 3,333 10,785 100 727 227 1,054 174 85 141 400 123 1,580 412 2,115 528 695 283 1,506 441 91 369 1,149 642 2,692 32,510 425 102 264 656 718 2,165 24,604 933 189 777 2,150 1,105 5,154 62,115 1,094 217 556 1,732 1,927 5,526 51,795 Included in the other operating expenses are the Shariah Committee members' remuneration of RM164,000 (30.09.2018: RM153,000). 22
23. ALLIANCE ISLAMIC BANK BERHAD 200701018870 (776882-V) (Incorporated in Malaysia) A24 Other Operating Expenses (Contd.) The following represents a detailed breakdown of the Bank's share of the holding company's other operating expenses included within the Bank's total other operating expenses: 2nd Quarter Ended 30 September 30 September 2019 2018 RM'000 RM'000 Sharing of Other Operating Expenses Personnel costs - Salaries, allowances and bonuses - Contribution to EPF - Others Establishment costs - Rental - Repairs and maintenance - Water and electricity - Information technology expenses - Others [Note (a)] Marketing expenses - Promotion and advertisement - Branding and publicity - Others Administration and general expenses - Communication expenses - Printing and stationeries - Professional fees - Others Total sharing of other operating expenses Six Months Ended 30 September 30 September 2019 2018 RM'000 RM'000 15,770 2,575 1,951 20,296 11,826 1,878 1,404 15,108 29,410 4,770 3,728 37,908 23,962 3,762 2,692 30,416 1,308 402 291 2,018 1,973 5,992 1,167 315 274 1,591 1,640 4,987 2,560 970 585 4,126 4,162 12,403 2,344 937 590 3,144 3,247 10,262 12 58 114 184 182 72 137 391 23 685 270 978 415 682 276 1,373 349 91 860 42 1,342 27,814 223 80 547 194 1,044 21,530 607 150 1,415 243 2,415 53,704 688 159 1,169 418 2,434 44,485 Note (a): Being substantially cross-charge amount for using the fixed assets of the holding company. This includes computer software, computer equipment, furniture and fittings. 23
24. ALLIANCE ISLAMIC BANK BERHAD 200701018870 (776882-V) (Incorporated in Malaysia) A25 Earnings Per Share Basic/Diluted Basic/diluted earnings per share amounts are calculated by dividing profit for the financial period attributable to Equity holder of the Bank by the weighted average number of ordinary shares in issue during the financial period. 2nd Quarter Ended Six Months Ended 30 September 30 September 30 September 30 September 2019 2018 2019 2018 Net profit for the financial period attributable to Equity holder of the Bank (RM'000) Weighted average numbers of ordinary shares in issue ('000) Basic/diluted earnings per share (sen) 12,840 30,707 40,834 60,599 345,045 345,045 345,045 345,045 3.7 8.9 11.8 17.6 A26 Commitments and Contingencies In the normal course of business, the Bank makes various commitments and incurs certain contingent liabilities with legal recourse to their customers. No material losses are anticipated as a result of these transactions. The notional amounts of the commitments and contingencies of the Bank are as follows: 30 September 2019 RM'000 31 March 2019 RM'000 189,263 64,657 160,578 68,909 18,523 46,589 398,504 1,821,014 2,491,961 415,302 1,599,060 2,290,438 Commitments and contingencies Direct credit substitutes Transaction-related contingent items Short-term self-liquidating trade-related contingencies Irrevocable commitments to extend credit: - maturity exceeding one year - maturity not exceeding one year Total 24
25. ALLIANCE ISLAMIC BANK BERHAD 200701018870 (776882-V) (Incorporated in Malaysia) A27 Capital Adequacy The capital adequacy ratios of the Bank are computed in accordance with Bank Negara Malaysia's Capital Adequacy Framework for Islamic Banks. The Framework sets out the approach for computing regulatory capital adequacy ratios, as well as the levels of those ratios at which banking institutions are required to operate. The Framework is to strengthen capital adequacy standards, in line with the requirements set forth under Basel III. The risk-weighted assets of the Bank are computed using the Standardised Approach for credit risk and market risk, and the Basic Indicator Approach for operational risk. (a) The capital adequacy ratios of the Bank are as follows: 30 September 2019 31 March 2019 Before deducting proposed dividends CET I capital ratio Tier I capital ratio Total capital ratio 11.092% 12.258% 14.950% 11.690% 12.950% 15.762% After deducting proposed dividends CET I capital ratio Tier I capital ratio Total capital ratio 10.852% 12.018% 14.710% 11.339% 12.599% 15.411% 30 September 2019 RM'000 31 March 2019 RM'000 400,000 529,578 15,630 44,519 989,727 400,000 522,931 9,060 18,795 950,786 Less: Regulatory adjustments - Intangible assets - Deferred tax assets - 55% of FVOCI reserves - Regulatory reserves Total CET I Capital (893) (5,673) (24,485) (15,630) 943,046 (897) (11,156) (10,337) (9,060) 919,336 Additional Tier 1 Sukuk Wakalah Total Additional Tier 1 Capital 99,191 99,191 99,113 99,113 1,042,237 1,018,449 129,684 99,147 228,831 129,634 91,478 221,112 1,271,068 1,239,561 CET I Capital Paid-up share capital Retained profits Regulatory reserves FVOCI reserves Total Tier I Capital Tier II Capital Subordinated Sukuk Murabahah Expected credit losses and regulatory reserves Total Tier II Capital Total Capital (b) The breakdown of risk-weighted assets ("RWA") by exposure in each major risk category are as follows: Credit risk Market risk Operational risk Total RWA and capital requirements 25 30 September 2019 RM'000 31 March 2019 RM'000 7,931,739 570,450 8,502,189 7,318,223 546,146 7,864,369
26. ALLIANCE ISLAMIC BANK BERHAD 200701018870 (776882-V) (Incorporated in Malaysia) A28 Fair Value Measurements (a) Determination of fair value and the fair value hierarchy MFRS 13 Fair Value Measurement requires disclosure of financial instruments measured at fair value to be categorised according to a hierarchy of valuation techniques, whether the inputs used are observable or unobservable. The following levels of hierarchy are used for determining and disclosing the fair value of the financial instruments: Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 - inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and Level 3 - inputs for the asset or liability that are not based on observable market data (unobservable inputs). The Bank recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the transfer has occurred. The fair value of an asset to be transferred between levels is determined as of the date of the event or change in circumstances that caused the transfer. (i) Financial instruments in Level 1 The fair value of financial instruments traded in active markets is based on quoted market prices at the reporting date. A market is regarded as active if quoted prices are readily and regularly available from an exchange and those prices represent actual and regularly occurring market transactions on an arm’s length basis. This includes listed equities and corporate debt securities which are actively traded. (ii) Financial instruments in Level 2 Where fair value is determined using quoted prices in less active markets or quoted prices for similar assets and liabilities, such instruments are generally classified as Level 2. In cases where quoted prices are generally not available, the Bank then determines fair value based upon valuation techniques that use as inputs, market parameters including but not limited to yield curves, volatilities and foreign exchange rates. The majority of valuation techniques employ only observable market data and so reliability of the fair value measurement is high. These would include government securities, corporate private debt securities, corporate notes and repurchase agreements. (iii) Financial instruments in Level 3 The Bank classifies financial instruments as Level 3 when there is reliance on unobservable inputs to the valuation model attributing to a significant contribution to the instrument value. Valuation reserves or pricing adjustments where applicable will be used to converge to fair value. The valuation techniques and inputs used generally depend on the contractual terms and the risks inherent in the instrument as well as the availability of pricing information in the market. Principal techniques used include discounted cash flows, and other appropriate valuation models. 26
27. ALLIANCE ISLAMIC BANK BERHAD 200701018870 (776882-V) (Incorporated in Malaysia) A28 Fair Value Measurements (Contd.) (b) Financial instruments measured at fair value and the fair value hierarchy The following tables show the Bank's financial instruments which are measured at fair value at the reporting date analysed by the various levels within the fair value hierarchy: Level 1 RM'000 Level 2 RM'000 Level 3 RM'000 Total RM'000 - 1,168,177 1,226,108 - 1,168,177 1,226,108 - 1,064,786 1,036,101 - 1,064,786 1,036,101 30 September 2019 Assets Financial investments at FVOCI - Money market instruments - Unquoted securities 31 March 2019 Assets Financial investments at FVOCI - Money market instruments - Unquoted securities There were no transfers between Levels 1 and 2 of the fair value hierarchy for the Bank during the financial period/year ended 30 September 2019 and 31 March 2019. A29 Credit Transactions And Exposures With Connected Parties 30 September 2019 RM'000 Outstanding credit exposures with connected parties of which: Total credit exposure which is impaired or in default Total credit exposures 31 March 2019 RM'000 2,382 2,101 - - 14,186,104 12,894,377 Percentage of outstanding credit exposures to connected parties: - as a proportion of total credit exposures 0.02% 0.02% - which is impaired or default 0.00% 0.00% The disclosure on Credit Transactions and Exposures with Connected Parties above is presented in accordance with para 9.1 of Bank Negara Malaysia's Guidelines on Credit Transactions and Exposures with Connected Parties for Islamic Banks, which became effective on 1 January 2008. 27
28. ALLIANCE ISLAMIC BANK BERHAD 200701018870 (776882-V) (Incorporated in Malaysia) A30 Changes in Accounting Policy The Bank has adopted MFRS16 “Leases” issued by MASB with its mandatory adoption date of 1 April 2019. MFRS 16 "Leases" supersedes MFRS 117 “Leases” and the related interpretations. As permitted by MFRS 16, the Bank has adopted the simplified retrospective approach and will not restate comparative amounts for the year prior to first adoption. Under MFRS 117 “Leases”, leases of property, plant and equipment were classified as either finance or operating leases. Payments made under operating leases were charged to profit or loss on a straight-line basis over the period of the lease. The Bank recognised lease liabilities in relation to leases which had previously been classified as operating leases under MFRS 117 “Leases”. These liabilities were measured at the present value of the remaining lease payments, discounted by the Bank’s borrowing rate (5.52% - 5.53%) as at 1 April 2019. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to profit or loss over the lease period. Right-of-use assets were measured on a retrospective basis as if the new rules had always been applied. The right-of-use asset is depreciated over the shorter of the asset's useful life and the lease term on a straight-line basis. The Bank leases various office premises. In determining the lease term, all facts and circumstances that create an economic incentive to exercise an extension option, or not exercise a termination option are considered. Extension options (or periods after termination options) are only included in the lease term if the lease is reasonably certain to be extended (or not terminated). Payments associated with leases where does not have the right to control the use of an identified asset, shortterm leases and leases of low-value assets are recognised as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less. The adoption of MFRS 16 has resulted in a decrease of RM13,000 in the Bank's retained profits as at 1 April 2019. The financial impacts are as follows: Statement of Financial Position as at 1 April 2019 As previously stated RM'000 Assets Right-of-use assets Deferred tax assets Adoption of MFRS 16 RM'000 As restated RM'000 11,156 424 4 424 11,160 Liabilities Lease liabilities - 441 441 Equity Retained profits 522,931 28 (13) 522,918
29. ALLIANCE ISLAMIC BANK BERHAD 200701018870 (776882-V) (Incorporated in Malaysia) PART B - Review of Performance & Current Year Prospect B1 Review of Performance Profitability The Bank’s Net Profit After Taxation was recorded at RM40.8 million for the first half ended 30 September 2019 (“1HFY20”). The decline of RM19.8 million or 32.6% year-on-year (“YOY”) was mainly due to higher credit losses. Operating profit before allowance grew RM4.3 million, or 4.6% YOY. Net income grew by RM14.6 million or 10.0% to RM159.9 million driven by net finance income growth of RM10.1 million or 7.6% YOY from the growth in gross financing and the improved mix from better risk adjusted return financing. Net profit margin (“NPM”) improved by 3 bps YOY to 2.36%. Better Financing Growth Gross financing and advances grew 19.6% YOY to RM10.1 billion, driven by the SME and Consumer portfolios. Financing for SMEs expanded 17.7% YOY, while consumer personal financing grew by RM119.0 million or 10.8% YOY. AOA financing balances increased more than double to RM2.3 billion from RM1.0 billion in the previous year. The financing mix continued to improve with better risk adjusted return financing making up 59.5% of the total portfolio, as compared to 49.1% in the previous year. Higher Other Operating Income The Bank recorded other operating income of RM17.2 million or 36.3% YOY, contributed by higher unit trust fee income of RM1.7 million and higher treasury and investment income of RM1.3 million. Operating Expenses Cost to income ratio (“CIR”) was within expectation at 38.8%. The Bank continues to invest in human capital and IT infrastructure to support the Group Transformation initiatives. Asset Quality 1HFY20 annualised net credit cost was 88.1 bps, an increase of 53.1 bps YOY. The increase was due to the normalisation of credit costs during the period as compared to the substantial write backs in the corporate and commercial segments and bad debt recoveries experienced in the previous year. Additionally, higher credit losses from mortgage portfolios were in line with the expansion of the segment. Gross impaired financing (“GIF”) ratio increased by 39 bps YOY to 1.63%. The increase was mainly from the residential properties portfolio, as well as a few large business accounts. This was partly mitigated by repayments in the non-residential properties portfolio and several business accounts. Financing loss coverage (including Regulatory Reserve) remained stable at 105.5%. Healthy Funding and Liquidity Position The Bank’s funding position remains healthy despite the intense market competition for deposits. Customer based funding grew 9.3% YOY to RM10.2 billion, mostly from consumer segment deposits. The Bank was able to maintain high Current Account/Savings Account (“CASA”) ratio of 30.5% driven by the growth in Alliance SavePlus Account balances. Term deposits grew RM643 million or 10.8% YOY. The Bank’s liquidity coverage and financing to funds ratios remain healthy at 261.0% and 82.8% respectively. Proactive Capital Management We continue to maintain our strong capital levels, with Tier-1 Capital ratio at 12.0%, Common Equity Tier-1 ratio at 10.9% and Total Capital ratio at 14.7%. 29
30. ALLIANCE ISLAMIC BANK BERHAD 200701018870 (776882-V) (Incorporated in Malaysia) B2 Current Year Prospect The outlook for the Islamic Banking industry is expected to be marked by steady growth in the consumer financing segment, and moderated by softening in the business financing segment. The lagging effects of the OPR cut on fixed deposits as well as keen competition amidst a more challenging financing market will keep margin under pressure. The Bank will continue to grow its financing portfolio with better risk-adjusted returns, moderate funding costs by targeting lower cost deposits and expand revenue streams from wealth management. The Bank’s products, distribution, and marketing efforts will remain aligned with the Group’s strategic propositions encompassing Alliance One Account, SME financing, and Alliance@Work: and with the Group’s deposit garnering and cross selling initiatives. The Bank will also commence rolling out initiatives to enhance brand visibility in affinity market segments. The Bank is focused on building capabilities around serving the Halal SME sector better, as well as developing value-based (VBI) propositions focused on empowering social businesses that generate positive impact to the society and environment. In view of the slower expected economic growth rate and tough credit environment, we remain vigilant in managing our credit portfolios and conservative in our provisioning practices. The Bank expects that the abovementioned initiatives will position its businesses for sustainable revenue and profitability for the financial year. 30