Alliance Bank

by GLORIA HARRY BEATTY

ALLIANCE Bank Malaysia Bhd (ABMB) is cautiously optimistic about its outlook for the financial year ending March 31, 2026 (FY26), citing a combination of resilient domestic indicators and evolving headwinds from policy changes and external conditions.

“Earlier this year we were a bit more optimistic but now…we are being a little bit more cautiously optimistic, because a lot of the events are still developing, it remains uncertain,” ABMB group CEO Kellee Kam told reporters after the bank’s AGM in Kuala Lumpur  today.

He pointed to pending decisions on tariffs, the recent hike in the sales and service tax (SST) to 8% and the broader cost of doing business as developments that will require “a few quarters to pass to see what the impact is.”

Still, Kam said Bank Negara Malaysia’s (BNM) preemptive policy easing has provided a buffer: “They have reduced the OPR (overnight policy rate)… they also reduced (the) SRR (statutory reserve requirement). In May, they reduced the SRR, which provided more liquidity into the market.”

Kam said the central bank’s revised growth forecast of 4% to 4.8% indicated that “the economy will still be growing quite well…is still a really decent growth number.”

Kam said the bank is monitoring indicators such as industrial production, domestic consumption, tourism inflows and employment.

“Tourist numbers are stronger than even pre-pandemic… (Low) unemployment rate for the economy is very important, because if people are in the jobs, they have the ability to spend.

“The other measure that we take a look at is industry liquidity, whether or not the economy as a whole has sufficient liquidity to fuel growth. In that regard, the Malaysian liquidity position is actually pretty good. From those aspects, that’s where we are optimistic,” he said, adding that its cautiousness was derived from uncertain headwinds.

For FY26, Alliance Bank has projected a loan growth of between 8% and 10%.

“I know the previous two years we were growing at the 12 and 14% mark, so we were a little bit more cautious this year,” Kam said, adding that loan growth would likely “end up towards the lower half of that.”

On credit cost, the bank was maintaining its guidance of 30 to 35 basis points.

“Thereotically, we came up with our guidance in May. We were expecting potentially some deterioration … we closed last year at 31.9 (basis points), it was trending the right way but because of the uncertainties and discussion on US tariffs, we still maintain that range 30 to 35 (basis points) so that should provide sufficient range to cater for any potentially uncertain issues,” he said.

On OPR, he said: “The OPR cut will impact our net interest margins on a theoretical basis by about three basis points. We closed the year (FY25) at about 2.45% net interest margin, so it will likely compress by about three (basis points) from the OPR cuts. It is still within our current guidance of between 2.4 to 2.45%.”

He noted the bank reported a record net profit of RM751 million in FY25, alongside 12% loan growth and steady market share recovery across key segments.

ABMB postred a net profit of RM750.7 million over a turnover of RM2.270 billion for FY25, up 8.7% and 12.4% respectively from FY24.

The ABMB shares closed 2 sen up at RM4.52 (52-week high/low: RM5.26/RM3.77), valuing the company at RM7.8 billion.

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