Posted on August 7, 2012, Tuesday
KUCHING: Alliance Financial Group’s (AFG) business operations should remain as usual despite the resignation of chief financial officer (CFO), Eric Lee and the retirement of Yahya Ibrahim from AFG’s top executive panel.
According to the research arm of Kenanga Investment Bank Bhd (Kenanga Research), the management did not expect these to result in any major changes in AFG’s operating and business strategy.
“Firstly, we understand that Sng Seow Wah will continue to lead the bank and remain on the board of directors.
Secondly, the group is in the process of identifying a replacement for Lee, and thirdly, Yahya’s replacement has already been identified and is now waiting for Bank Negara Malaysia’s (BNM’s) approval,” said the research firm.
Besides, the management also clarified that the recent departure of a few division heads were due to retirement and expiry of employment contracts.
As such, the group appeared to have its management intact and there were no major changes expected in the overall leadership and all top management positions were filled currently.
“Hence, as against our earlier concerns, management informed that the staff morale is actually high and is fully committed to support the bank’s operational and corporate strategies.
“The group has gained market share in March 2012 and now make up 2.44 per cent of the industry with a total gross loan of RM24.98 billion,” added the Kenanga Research.
On the other note, the momentum of AFG’s loan growth was sustainable driven by its aims of growing small and medium enterprises (SME) loans by 18 per cent, mortgages loans by high teens as well as starting up its hire-purchases lending.
“Our loan growth forecast of 11 per cent year-on-year for AFG is thus highly achievable with risk actually on the upside,” said the research firm.
The immediate challenge for the bank was renewed competition especially on the household products.
Rising funding costs together with price cutting in the loans should have a negative impact on its net interest margin over the next 12 to 24 months.
The research firm also added that, “However, its strong current account and saving account contribution to total deposits should offer some cushioning impacts.” As such, the research firm maintained a fair value of RM4 per share for AFG, based on 1.4 times its FY14 book value of RM2.89
