first quarter fy2016 analyst briefing

ANALYST BRIEFING1QFY2016

18 August 2015

in Asia Pacific, Gulf Region & Africa

Executive Summary

Contents

1

Financial Results for 1QFY2016 2

Appendices 3

3

Executive Summary

Strong SME Franchise, Deposit Base and Healthy Balance Sheet

Strengths

Strong Deposit growth: +10.8% y-o-y (Industry: +7.3%), with stable CASA ratio at 34.5%

Strong franchise in SME segment: +21.4% y-o-y loans growth Excellent asset quality: Gross Impaired Loans ratio at 1.0% (Industry:

1.6%). Loan loss coverage at 105.4% Improvement in Net Interest Margin q-o-q despite intense competition Improvement in wealth management income: +17.9% q-o-q

Rising cost of funds Slower economic growth, impacting client activities and revenues

(trade finance, brokerage etc.)

Further optimize loans and deposit mix Build on SME strength Accelerate Wealth Management business

Key Opportunities

Note: Financial Year end is 31 March 2015; Industry data

Key Challenges

4

Improvement in Risk Adjusted

Returns

1

Deposit Growth > Loans Growth

2

Client Based Fee Income

3

Improve Risk Adjusted Returns* by focusing on higher return loans:• SME and Commercial Banking• Personal loans, credit cards and share margin financing for our

business partners and their clients and staff

Improve balance sheet efficiency by growing:• Deposits economically (improve CASA ratio)• Deposits faster than loans

Grow fee income as % of total revenue• Trade finance, FX and brokerage in Business Banking• Wealth management, bancassurance and brokerage in Consumer

Banking

FY2016: Key Priorities

FY2016: Key Priorities to Deliver Sustainable and Profitable Growth

Note: Risk Adjusted Return: Net Interest Margin less (Direct Variable Cost + Business as Usual Credit Cost) ÷ Average Loan Balance

1QFY2016:Income Statement

Net Profit After Taxation Up 30.7% Q-o-Q Despite Challenging Market Environment

5

Income Statement 1QFY16RM mil

1QFY15RM mil

Y-o-Y Change Better /(Worse)

4QFY15RM mil

Q-o-Q ChangeBetter/(Worse)

RM mil % RM mil %

Net Interest Income 207.8 199.8 8.0 4.0% 186.1 21.7 11.6%

Islamic Banking Income 58.6 53.7 4.9 9.1% 58.2 0.4 0.7%

Non-Interest Income 78.0 83.2 (5.2) (6.3%) 61.7 16.3 26.4%

Net Income 344.3 336.7 7.6 2.3% 306.0 38.3 12.5%

Operating Expenses 167.4 161.7 (5.7) (3.5%) 165.5 (1.9) (1.1%)

Pre-Provision Operating Profit 177.0 175.1 1.9 1.1% 140.6 36.4 25.9%

Allowance/ (Write back) for losses on loans & financing and other losses

16.4 1.8 (14.6) >100% 16.0 (0.4) 2.5%

Pre-tax profit 160.7 173.3 (12.6) (7.3%) 124.6 36.1 28.9%

Net Profit After Tax (“NPAT”) 121.9 130.8 (8.9) (6.8%) 93.3 28.6 30.7%

Q-o-Q: Normalised NPAT growth

of 13.8% after one-off adjustment

NIM: + 1bps (+9 bps GIM and 8 bps increase in cost of funds)

Y-o-Y: Pre-provision profit up

1.1%

Lower NPAT of 6.8% due to normalisation of credit cost.

Annualized credit cost, including recoveries, at ~ 18.4 bps in 1QFY2016 vs 2.1 bps in 1Q FY2015.

Note: 4Q FY2015 RM18.4 million one off adjustment for income recognition for balance transfer for credit cards from upfront to amortiization

Strategy Execution 1Q FY16 Results

Improve Risk Adjusted

Returns (RAR)

1. Shifted production volume to focus on higher risk adjusted return assets

6

Executive Summary – Strategy & Execution

A

Strategy & Execution (Q1 FY16) – Key Updates

Annualized GrowthQ-o-Q Growth

Q1 FY16(Annualized)

Y-o-Y GrowthQ1 FY16

Mortgage, Hire Purchase, Shophouse Financing, Corporate 3.8% 13.8%

SME, Commercial, Personal Loans, Credit Cards, Share Margin Financing 7.1% 11.8 %

Gross Interest Margin Mortgage, Hire Purchase, Shophouse Financing, Corporate: 4.4% SME, Commercial, Personal Loans, Credit Cards, Share Margin

Financing: 5.6%

Risk Adjusted Return (RAR) Mortgage, Hire Purchase, Shophouse Financing, Corporate: 0.4% SME, Commercial, Personal Loans, Credit Cards, Share Margin

Financing: 1.9%


Improve Risk Adjusted

Returns (RAR)

2. Implemented better discipline for loans portfolio returns

7


A


As a result of focus on RAR: Gross Interest Margin (“GIM”) is up 9 bps Q-o-Q and

managed to neutralize the 8 bps higher cost of funds Net Interest Margin (“NIM”) improved 1 bps Q-o-Q and 3

bps Y-o-Y

Note: *Normalised for one-off accounting adjustment on interest income recognition for balance transfer for Credit Cards from upfront to amortisation*Gross Interest Margin including treasury assets

1QFY15 2QFY15 3QFY15 4QFY15* 1QFY161.5%

2.5%

3.5%

4.5%

2.13% 2.26% 2.20% 2.15% 2.16%

4.35% 4.53% 4.59% 4.58% 4.67%

Net Interest Margin Gross Interest Margin

Gross & Net Interest Margin Trend


(A)

Grow Deposits Economically

and Faster than Loans

Growing Deposits:1. Corporate CASA with

transaction banking services 2. Consumer CASA with

marketing campaigns3. Progressively optimizing the

funding cost

CASA growth of RM152.5 million despite shrinking market liquidity

CASA growth y-o-y of RM1.4 billion or 10.1% (industry: 6.5%)

8


B

Strategy & Execution (Q1 FY16)

1QFY15 4QFY15 1QFY1612

13

14

15

16

17

18

13.7

15.0 15.1

83.8% 82.8% 85.1%

34.7% 33.6% 34.5%

CASA Deposits LD ratio CASA ratio

RM bil

CASA Growth Trend


(A)

Grow Customer-

based Fee Income

Focus on:1. Wealth Management in Consumer

Banking2. Client-based fee income in Business

Banking

Wealth management income increased by 17.9% quarter-on-quarter.

Client based fee income marginally down despite pressures in trade, treasury sales and brokerage.

9


C


Non-Interest Income 1QFY16 4QFY15 Q-o-Q Growth

RM mil %

Consumer Banking 13.3 12.1 1.2 9.9%

Business Banking 29.7 31.3 -1.6 -5.1%

Fee & Commission 17.7 17.7 - -

Total Client-Based 60.7 61.1 -0.4 -0.7%

Non Client-Based 19.9 7.8 12.1 >100%

Total Non Interest Income 80.6 68.9 11.7 17.0%

Non-Interest Income Ratio 23.4% 21.9% - +1.5%

Note: Non-Interest Income in this Table is inclusive of Islamic Banking fee income

10

Way Forward

Leverage on franchise strengths to deliver sustainable profitability despite economic challenges

Franchise Growth Focus

Focus Consumer Banking and Wealth Management business on fulfilling the financial needs of the Business Owners, their employees and their clients

Improve Financial Efficiency

Focus on asset efficiency, i.e. Risk Adjusted Returns, to protect margins Grow deposits faster than loans Improve share of customer non-interest income revenues Effective management of asset quality and credit costs Continue to streamline to contain costs

Focus on Client Excellence

Enhance client value propositions and client service standards Build differentiated and relevant brand positioning in target segments

Executive Summary

Contents

1

Financial Results for 1QFY2016 2

Appendices 3

Key Financial Ratios

Financial Ratios 1QFY16 1QFY15 Y-o-Y Change 4QFY15 Q-o-Q Change

Shareholder Value

Return on Equity 10.9% 13.2% -2.3% 9.4% 1.5%

Earnings per Share 8.0 sen 8.6 sen -7.0% 6.1 sen 31.1%

Net Assets per Share RM2.92 RM2.68 9.0% RM2.90 0.7%

Efficiency

Net Interest Margin 2.16% 2.13% +0.3 bps 2.15 % +1 bps

Non-Interest Income Ratio 23.4% 25.7% -2.3% 21.9% 1.5%

Cost to Income Ratio 48.6% 48.0% 0.6% 54.1% -5.5%

Balance Sheet Growth

Net Loans (RM bil) 37.0 32.8 12.7% 36.6 1.1%

Customer Deposits (RM bil) 43.9 39.6 10.8% 44.6 -1.6%

Asset Quality

Gross Impaired Loans Ratio 1.0% 1.4% -0.4% 1.0% -

Net Impaired Loans Ratio 0.6% 0.8% -0.2% 0.6% -

Loan Loss Coverage Ratio 105.4% 90.2% 15.2% 102.7% 2.7%

LiquidityLoan to Deposit Ratio 85.1% 83.8% 1.3% 82.8% 2.3%

CASA Ratio 34.5% 34.7% -0.2% 33.6% 0.9%

Capital

Common Equity Tier 1 Capital Ratio 11.1% 10.0% 1.1% 11.1% -

Tier 1 Capital Ratio 11.1% 11.1% - 11.1% -

Total Capital Ratio 13.0% 13.2% -0.2% 13.0% -

12

Summarised Balance Sheet

Balance Sheet 1QFY16 RM bil

1QFY15RM bil

Change Y-o-Y4QFY15RM bil

Change Q-o-Q

RM bil % RM bil %

Total Assets 52.3 50.1 2.2 4.3% 53.1 -0.8 -1.6%

Treasury Assets(1) 11.2 12.8 -1.6 -12.3% 11.5 -0.3 -2.7

Net Loans 37.0 32.8 4.2 12.7% 36.6 0.4 1.1%

Customer Deposits 43.9 39.6 4.3 10.8% 44.6 -0.7 -1.6%

CASA Deposits 15.1 13.7 1.4 10.1% 15.0 0.1 1.0%

Shareholders’ Funds 4.5 4.1 0.4 9.0% 4.5 - -

Net Loan Growth (y-o-y) 12.7% 15.7% - -3.0% 14.9% - -2.2%

Customer Deposit Growth (y-o-y) 10.8% 10.9% - -0.1% 13.7% - -2.9%

-12.3% y-o-y reduction in Treasury Assets for effective management of market risk

+12.7% y-o-y Net Loan growth moderated (industry*: 9.1% y-o-y) driven by strong loan growth in Consumer and Business segments by:

Group Consumer Banking (+10.7% y-o-y)

Group Business Banking (+15.0% y-o-y)

+10.8% y-o-y Customer Deposit growth, is above industry growth rate of 7.3%.

+10.1% y-o-y growth in CASA deposits despite intensified competition in industry for CASA deposits.

Net Loan Growth at 12.7% Y-o-Y, Driven by Consumer and SME Segments

Note: * Industry data sourced from BNM Monthly Statistical Bulletin as of June 2015(1) Treasury assets comprise financial assets (HFT, AFS & HTM), derivative financial assets & placements with Financial Institutions

13

5.1% Y-o-Y and 9.0% Q-o-Q Net Interest Income & Islamic Banking Growth

Interest & Islamic Banking Income

Net Interest Income & Islamic Banking Income Deposit rates increase:

Competition for retail deposits ahead of implementation of Basel III Liquidity Coverage Ratio, effective June 2015

25 bps increase in OPR to 3.25% in July 2014

Rising industry loans to deposits ratio

Net Interest Margin expanded by 1 bps Q-o-Q, due to changes in loan composition.

focus on higher risk adjusted return loans;

slower growth in residential and non-residential loans.

1QFY15 2QFY15 3QFY15 4QFY15 1QFY160

200000

400000

199,821.0 221,139.0 213,519.0 186,110.0 207,766.0

53,674.0 53,919.0 58,279.0 58,211.0 58,552.0

253,495.0 275,058.0 271,798.0 244,321.0

266,318.0

Net Interest Income Islamic Banking IncomeRM mil

141QFY15 2QFY15 3QFY15 4QFY15* 1QFY16

1.5%

2.5%

3.5%

4.5%

2.35% 2.41% 2.53% 2.58% 2.66%

2.13% 2.26% 2.20% 2.15% 2.16%

4.35% 4.53% 4.59% 4.58% 4.67%

Cost of Fund Net Interest Margin Gross Interest Margin

Cost of Funds & Net Interest Margin Trend


100

200

18.3 21.1 18.6 18.0 17.6

28.4 40.1

27.0 24.1 25.0

33.1 25.3

15.9 15.1 24.3

3.4

28.6

16.5 4.5

11.1

83.2

115.1

78.0 61.7

78.0

25.7%

30.1%

23.0% 21.9% 23.4%

Commission Fee Income Investment Income

Other Income Non-Interest Income Ratio

15

Non-Interest Income

Mix

14.2%

31.1%

32.1%

22.6%

RM mil

Non-Interest Income Trend

Non-Interest Income Ratio at 23.4%

Non-interest income ratio improved to 23.4% from, 21.9% at 4 Q FY2015.

Operating Expenses

16

Administration Expenses up by RM4.8 million, mainly due to higher deposit insurance cost.

The Group continues to enhance productivity and efficiency through effective cost management and also investment in branch channels, IT infrastructure and marketing.

Expenses under Control, rising by +3.5% Y-o-Y and 1.1% Q-o-Q

OPEX Contribution 1QFY16RM mil

1QFY15RM mil

Change

RM %

Personnel 104.6 105.0 -0.4 -0.4%

Establishment 37.1 34.0 3.1 9.0%

Marketing 4.8 6.6 -1.8 -27.3%

Administration 20.9 16.1 4.8 30.2%

Total OPEX 167.4 161.7 5.7 3.5%1QFY15 2QFY15 3QFY15 4QFY15 1QFY160

100

200

300

161.7 160.5 159.3 165.5 167.4

48.0%

41.1%

45.5%

54.1%

48.6%

OPEX CIRRM mil

Operating Expenses Trend

Personnel62.5%

Establishment22.1%

Marketing2.9%

Admin12.5%

Composition of Operating Expenses

Personnel65.0%

Establishment21.0%

Marketing4.1%

Admin9.9%

1QFY151QFY16

17

FY2012 FY2013 FY2014 FY2015 1QFY160

10

20

30

40

24.527.8

31.8

36.6 37.0

Net Loans, Advances and Financing Trend

Loan Portfolio

12.7% Y-o-Y Loans Growth

RM bil

1QFY16 vs 1QFY15+ RM4.2 bil

+ 12.7%

FY2012 FY2013 FY2014 FY2015 1QFY160%

20%

40%

60%

80%

100%

53.9% 55.7% 57.2% 56.5% 56.7%

21.9% 17.9% 18.3% 20.3% 20.5%

24.2% 26.4% 24.5% 23.2% 22.8%

Consumer SME Wholesale

Loan Composition by Business Segments

Y-o-Y Net Loan Growth of 12.7%, higher than industry loan growth of 9.1% (1)

Balanced loan composition with 56.7% Consumer, and 43.3% in Business Banking, of which 47.3% is SME Lending

Effective management of interest rate risk: 89.6% of loan book is floating rate (1QFY15: 89.6%)

Note: (1) Industry data sourced from BNM Monthly Statistical Bulletin as of June 2015

Loans Growth for Residential and Non-Residential Continues to Moderate

Loan Growth:By Economic Purposes

Going forward, loans for residential and non-residential properties to grow in tandem with industry due to: Focus on risk adjusted returns instead of market

share Overall slow down in transactions in property

markets Above industry loans growth for SME remains a core

area of focus

FY2012 FY2013 FY2014 FY2015 1QFY160

4

8

12

16

20

24

9.811.6

13.315.1 15.4

12.4%18.9%

14.9% 13.5% 11.3%

RM bil

Residential Loans Growth (Y-o-Y)

18

FY2012 FY2013 FY2014 FY2015 1QFY160

5

10

15

5.5 5.05.9

7.5 7.7

14.4%

-7.9%

17.0%

26.8% 21.4%

RM bil

SME Loan Growth (Y-o-Y)

RM mil 1QFY16 1QFY15 Y-o-Y Growth

SME 7,660 6,312 21.4%

Corporate & Commercial 8,509 7,754 9.7%

Business Banking 16,169 14,066 15.0%

Note: * BNM’s revised SME definition effective from 1 January 2014. FY2013 SME loans and onwards have been restated based on BNM’s revised SME definition.

FY2012 FY2013 FY2014 FY2015 1QFY160

4

8

12

3.4 3.74.8

6.5 6.6

17.9%11.0%

27.8%35.5%

29.3%

RM bil

Non-Residential Loans Growth ((Y-o-Y)

Note: Y-o-Y Loans Growth

FY2012 FY2013 FY2014 FY2015 1QFY160

500

1000

1500

2000

2500

451.3

1,022.0

1,561.6 1,566.7 1,498.4

29.9%126.5%

52.8% 0.3% -6.1%

RM mil

Share Margin Financing Growth (Y-o-Y)

Stronger Growth Trajectory for Personal Loans. Share Margin and Transport Vehicles Moderated

Loan Growth: By Economic Purposes

19

FY2012 FY2013 FY2014 FY2015 1QFY160

1000

2000

3000

4000

2,147.2 1,952.9 2,047.3 2,276.1 2,371.2

2.5%-9.1%

4.8% 11.2% 13.9%RM mil

Personal Loans Growth (Y-o-Y)

FY2012 FY2013 FY2014 FY2015 1QFY160

250

500

750

1000

623.6 581.3 601.3 653.1 655.0

-6.0% -6.8%3.4% 8.6% 4.8%

RM mil

Credit Card Receivables Growth (Y-o-Y)

FY2012 FY2013 FY2014 FY2015 1QFY160

500

1000

1500

2000

2500

561.8737.9

1117.81427.0 1369.7

-20.2%31.3% 51.5% 27.7% 13.2%

RM mil

Transport Vehicles Growth (Y-o-Y)

Note: Y-o-Y Loans Growth

20

Shift in Loan Composition Will Occur Over Time

Gradual change of loan mix over time as loan production now focused on SME and Commercial Lending (term loans, share margin financing, personal loans and credit cards).

Residential and non-residential properties accounted for 58.9% of gross loan portfolio: 41.3% of loan portfolio is for residential

properties, slight decline from 41.7% as at 1QFY2015

17.6% for non-residential properties, mainly lending to SMEs for operating business premises

Risk management - Well diversified and collateralised loan book

Robust credit scoring and credit underwriting standards

Composition of Loan Portfolio

Purchase of residential property

41.3%

Working capital17.5%

Purchase of non-residential property

17.6%Personal use6.3%

Credit card1.8%

Purchase of

securities4.1%

Purchase of

transport vehicles

3.7%

Others7.7%

1QFY16

Loan Composition by Economic Purposes

21

Further Reduction in Impaired Loans. Net Impaired Loans Ratio Stable at 0.6%

Asset Quality

Gross and Net Impaired Loans Ratio remained stable

Gross Impaired Loan ratio at 1.0%, and Net Impaired Loans at 0.6%, better than industry average

Continuing efforts to refine credit underwriting and origination as well as monitoring and collections initiatives.

1QFY16 vs 1QFY15GIL: - RM76.4 mil

- 16.9%

FY2012 FY2013 FY2014 FY2015 1QFY160

200

400

600

800

1000

1200

1400

629.2 579.2442.8

380.7 376.104

2.5% 2.1%1.4% 1.0% 1.0%

1.4% 1.1% 0.7% 0.6% 0.6%

Gross impaired loans Gross Impaired Loan RatioNet Impaired Loan Ratio (%)

RM mil

Gross Impaired Loans Balance Sheet: Movements in impaired loans, advances and financing

RM’000 1QFY16 1QFY15

At beginning of year 380,712 442,781

Impaired during the quarter 136,524 167,573

Reclassified as unimpaired during the quarter (84,841) (92,235)

Recoveries (40,188) (53,620)

Amount written off (16,103) (12,004)

Gross Impaired Loans at 30 June 376,104 452,495

Individual allowance for impairment (62,370) (92,344)

Collective allowance for impairment (impaired portion) (99,797) (111,934)

Net impaired Loans at 30 June 213,937 248,217

1QFY16 vs 1QFY15NIL: - RM34.3 mil

- 13.8%

22

Further Reduction in Impaired Loans for Residential and Non-Residential Properties

Asset Quality: Mortgages, Hire Purchase, SME

Consumer Lending: Gross Impaired Loans ratio for the purchase of residential & non-residential property improved to 1.1%.

SME Lending: Gross Impaired Loans ratio stable at 0.9%.

FY2012 FY2013 FY2014 FY2015 1QFY160

100

200

300

400

500

266.7282.4

254.2 255.939 244

2.0%1.8%

1.4%1.2% 1.1%

Gross impaired loans GIL Ratio

RM mil

FY2012 FY2013 FY2014 FY2015 1QFY160

5

10

15

5.7 5.6

9.8

8.3 8.6

1.0% 0.8% 0.9%0.6% 0.6%


RM mil

FY2012 FY2013 FY2014 FY2015 1QFY160

100

200

146.2

101.4

79.4 65.5 65.3

2.7%1.7%

1.4%0.9% 0.9%


RM mil

Purchase of Residential andNon-Residential Properties Purchase of Transport Vehicles SME

Impairment Provisions

23

Normalization of Credit Cost and Lower Recoveries

FY2012 FY2013 FY2014 FY2015 1QFY16

87.7%82.5%

92.7%

102.7%105.4%

RM’000 1QFY16 1QFY15

Individual assessment 4,224 (5,972)

Collective assessment 17,406 15,563

Bad debts recovered (8,777) (12,688)

Bad debts written off 3,342 4,171

Allowance for other assets 919 678

Allowance/ (write-back) for losses on loans, financing and other losses 17,114 1,752

Write-back of impairment (CLO) (676) -

Total allowance 16,438 1,752

1Q FY16: Higher provision charge y-o-y with normalisation of credit cost.

1Q FY15: Benefited from recoveries

Cha

rge

Writ

e-ba

ck

1QFY15 2QFY15 3QFY15 4QFY15 1QFY16-15

0

15

30

45

1.8 (6.6)

27.0 17.5 17.1

(0.8) (4.4) (1.5) (0.7)

Write-back of Impairment

Allowance for/ (write -back of) Losses on Loans & Other Losses

1.8

22.6

(7.4)

16.0 16.4

Net (Write-back) / Allowance of losses on Loans/ Financing and Impairment

RM mil Loan Loss Coverage

Credit Cost (bps) AnnualizedFY16

1QFY16 FY2015

Including recoveries 18.4 bps 4.6 bps 11.5 bps

Excluding recoveries 28.0 bps 7.0 bps 29.4 bpsNote: Credit cost annualized based on 1Q FY2016 actual charge

Deposits from customers

83.9%

Deposits of banks and other FIs

4.0%

Shareholders' Funds8.6%

Other Liabilities3.5%

1QFY16

Net Loans70.7%

Investment securities

21.1%

Cash, ST funds, Deposits with FI

3.5%

Other Assets4.7%

1QFY16

24

Balance Sheet Management

83.9% of Funding from Customer Deposits

4.3% y-o-y growth in total assets Loans account for 70.7% of total assets, up from

65.5% a year ago

1QFY16 vs 1QFY15+ RM2.2 bil

+ 4.3%

FY2012 FY2013 FY2014 FY2015 1QFY160

10

20

30

40

50

60

24.5 27.8 31.836.6 37.0

11.512.7

11.911.5 11.2

3.73.2

4.45.0 4.1

39.743.7

48.153.1 52.3

Net Loans Treasury Assets Other AssetsRM bil

Note: Investment securities comprise financial assets (HFT, AFS & HTM) & derivative financial assets

Net Loans65.5%

Investment securities

23.6%

Cash, ST funds, Deposits with FI

6.1%

Other Assets4.8%

1QFY15

Deposits from customers

79.0%

Deposits of banks and other FIs

9.0%

Shareholders' Funds8.3%

Other Liabilities3.7%

1QFY15

Total Assets Trend Composition of Total Assets

Composition of Total Liabilities/ Equity

25

Customer Deposits

Customer Deposits grew +10.8% y-o-y, higher than industry growth +7.3%(1) y-o-y.

CASA deposits expanded by RM1.4 billion or 10.1% y-o-y to RM15.1 billion in 1QFY2016

34.5% CASA deposits ratio, driven mainly by SME segment.

Reduced high cost fixed deposits, in view of slower loans growth

Robust Y-o-Y Deposit Growth of 10.8%, with CASA Deposits Up 10.1% to RM15.1 billion

FY2012(EOP) FY2013(EOP) FY2014 (EOP) FY2015(EOP) 1QFY16(EOP)0

20

40

60

9.1 10.4 11.5 13.2 13.31.7 1.7 1.8 1.8 1.815.6

17.1 18.621.0 20.4

5.86.8

7.38.6 8.4

33.7% 33.6% 34.0% 33.6% 34.5%

DD SA FD NID,MMD,SD CASA ratioRM bil

43.9

32.236.0

39.244.6

12.1 13.3 15.0 15.110.8

(1) Industry data sourced from BNM Monthly Statistical Bulletin as of June 2015. EOP – refers to end of period.

Customer Deposits Trend

26

Liquidity Management

Liquidity: Healthy Loan to Deposit Ratio at 85.1%

Stable funding with 40.9% from Individuals and 30.6% from Business Enterprises

Liquidity Coverage Ratio at 144%, above 60% regulatory requirement

FY2012 FY2013 FY2014 FY2015 1QFY160%

20%

40%

60%

80%

100%

77.7% 78.4%82.1% 82.8% 85.1%

Individuals40.9%

Business enterprises30.6%

Govt. & statutory bodies6.8%

Domestic financial

institutions11.1%

Domestic non-bank financial

institutions7.9%

Foreign entity1.4% Others

1.3%

Demand deposits, 30.4% Saving de-

posits, 4.1%

Fixed/ investment deposits, 46.6%

Money market deposits, 7.1%

Negotiable instruments of

deposits, 10.9%

Structured deposits,

0.9%

Deposit Composition by Customer Types

Deposit Composition by Product Types

Loan to Deposit Ratio Trend

Legal Entity CET 1 Capital Ratio

Tier 1 Capital Ratio

Total Capital Ratio

Alliance Financial Group 11.1% 11.1% 13.0%

Alliance Bank 11.1% 11.1% 11.6%

Alliance Islamic Bank 10.9% 10.9% 11.6%

Alliance Investment Bank 101.6% 101.6% 101.6%

Basel III Minimum regulatory capital adequacy ratio (1)

4.5% 6.0% 8.0%

Effective Capital Management

27

Core Equity Tier I Ratio at 11.1% above industry average.

Strong profit generation capacity to fund balance sheet expansion

Going forward, asset growth in line with revenue growth resulting in stable capital ratios.

Core Equity Tier 1 Capital Ratio at 11.1%

(1) Based on the Basel III minimum capital ratios for calendar year 2015

AFG Ratio (%) FY12 FY13 FY14 FY15 1QFY16

Double Leverage Ratio 98.7% 98.5% 99.0% 96.0% 97.4%

RWA/ Total Assets 66.2% 63.8% 63.2% 65.7% 66.7%

RWA (RM bil) 26.3 27.9 30.4 34.9 34.9

Y-o-Y RWA Growth 17.2% 5.9% 9.0% 15.0% 10.7%

FY2012 FY2013 FY2014 FY2015 1QFY16

15.1% 14.6% 13.7% 13.0% 13.0%

Total Capital Ratio (%)


100

200

130.8

180.3

126.493.3

121.9

RM mil


5

10

15

8.611.8

8.36.1

8

NPAT: 30.7% Improvement in Q-o-Q Profitability

28

Enhanced Shareholder Value

sen

Net Profit After Tax

Earnings Per Share Return On Equity


100

200

300

173.3237.0

168.2124.6

160.7

RM mil

Profit Before Tax

1QFY15 2QFY15 3QFY15 4QFY15 1QFY160%

10%

20%

13.2%15.1%

11.6%9.4% 10.9%

RM mil

29

FY2012 FY2013 FY2014 FY2015 1QFY16 14 Aug'150

2

4

6

8

10

6.0226.811 6.827

7.4156.796

5.697

RM bil

Enhanced Shareholder Value

FY2012 FY2013 FY2014 FY2015 1QFY16 14 Aug'150

1

2

3

4

5

6

3.894.40 4.41

4.794.39

3.68

RM

Market Capitalization at RM6.8 billion

FY12 FY13 FY14FY15

1QFY16 14 Aug’15

1.6 1.7 1.6 1.6 1.5 1.3

FY12 FY13

FY14 FY15 1QFY16 July’15

30.7% 37.2% 32.5% 31.0% 29.3% 29.4%

Price-to-Book Multiple (times) Foreign Shareholding

Market Capitalisation Share Price Performance

Executive Summary

Contents

1

Financial Results for 1QFY20162

Appendices3

31

INCOME STATEMENT 1QFY16 4QFY15 3QFY15 2QFY15 1QFY15 30.6.2015 31.3.2015 31.12.2014 30.9.2014 30.6.2014

Interest income 463,765 432,025 459,142 457,755 423,485

Interest expense (255,999) (245,915) (245,623) (236,616) (223,664)Net interest income 207,766 186,110 213,519 221,139 199,821 Net income from Islamic banking business 58,552 58,211 58,279 53,919 53,674 266,318 244,321 271,798 275,058 253,495 Other operating income 78,029 61,726 78,032 115,064 83,244 Net income 344,347 306,047 349,830 390,122 336,739 Other operating expenses (167,350) (165,466) (156,401) (160,523) (161,668)

Operating profit before allowance 176,997 140,581 193,429 229,599 175,071

Allowance for losses on and other losses loans, advances and financing (17,114) (17,490) (26,950) 6,588 (1,752)

Write-back of impairment 676 1,539 1,743 833 -Operating profit after allowance 160,559 124,630 168,222 237,020 173,319 Share of results of joint venture 103 2 8 6 -Profit before taxation and zakat 160,662 124,632 168,230 237,026 173,319 Taxation and zakat (38,732) (31,363) (41,857) (56,698) (42,509)Net profit after taxation and zakat 121,930 93,269 126,373 180,328 130,810

Quarterly Income Statement

Islamic Banking: Y-o-Y Net Financing Growth of 27.4% and Deposit Growth of 22.8%

32

Net Financing & Advances (AIS)

Customer Deposits (AIS)

Islamic Banking Income

Net Profit After Tax & Zakat (AIS)

FY2012 FY2013 FY2014 FY2015 1QFY160

5

10

15

5.2 5.9 6.38.0 8.5

36.8% 33.1% 32.9% 31.7% 32.8%

Customer Deposits CASA RatioRM bil

Islamic Banking


50

100

53.7 53.9 58.3 58.2 58.6

15.9% 13.8% 16.7% 19.0% 17.0%

Islamic Banking Income % of Group's Net IncomeRM mil


5

10

15

20

15.6 12.9

14.9 17.1

11.0

RM mil

FY2012 FY2013 FY2014 FY2015 1QFY160

2

4

6

8

4.4 4.6 5.0

6.6 6.7

RM bil

Non-Interest Income

33Note: Including Islamic Banking Income

QTD QTD Y-O-Y QTD Q-O-QNon Interest Income (RM'm) 1Q FY16 1Q FY15 RM mil % 4Q FY15 RM mil % Consumer Banking Fee IncomeWealth Management 9.2 9.2 - - 7.8 1.4 17.9%Brokerage - retail 2.5 3.1 (0.6) -19.4% 2.7 (0.2) -7.4%Cards 1.6 2.4 (0.8) -33.3% 1.6 - - TOTAL 13.3 14.7 (1.4) -9.5% 12.1 1.2 9.9%Business Banking Fee IncomeTrade Finance & Guarantees 12.6 14.9 (2.3) -15.4% 15.4 (2.8) -18.2%FX - Treasury Sales 12.4 12.4 - - 12.8 (0.4) -3.1%Brokerage - institutional 4.7 2.9 1.8 64.0% 3.1 1.6 51.3%TOTAL 29.7 30.2 (0.5) -1.5% 31.3 (1.6) -5.1%Fee & Commission (Incl. fees from Treasury sales) 17.7 19.7 (2.0) -10.2% 17.7 - - Customer Based 60.7 64.6 (3.9) -6.0% 61.1 (0.4) -0.7%

Gain from sale/redemption of Financial Investments 0.9 6.9 (6.0) -87.0% (0.7) 1.6 >-100%Revaluation & Realised Gain from Derivatives (including DCI/SI) 5.8 6.1 (0.3) -4.9% (11.7) 17.5 >-100%Foreign Exchange Gain (Translation & Trading) 4.2 1.1 3.1 >100% 10.6 (6.4) -60.4%Dividend Income 2.7 1.6 1.1 68.8% - 2.7 - Others 6.3 6.2 0.1 1.6% 9.6 (3.3) -34.4%Non Customer Based 19.9 21.9 (2.0) -9.1% 7.8 12.1 >100%

Total Non Interest Income 80.6 86.5 (5.9) -6.8% 68.9 11.7 17.0%

Requirements Banks to maintain, in aggregate, Collective

Assessment Allowance (“CA”) and Regulatory Reserve ratio of 1.2%.

The CA + Regulatory Reserve is stated as a percentage of gross loans (excluding guaranteed loans from the Government of Malaysia), net of individual allowance (“IA”).

CA includes both provision for impaired and non-impaired loans, amount as per disclosed in our financial statements.

The Bank shall comply with this requirement by 31 December 2015.

Guideline on Classification and Impairment Provision for Loans/Financing

Treatments In the event the Bank is required to top up the provision to

1.2% (via the creation of Regulatory Reserve), the top up portion is created by way of transferring the provision from retained profits i.e. merely movement within the statement of equity without additional charge to profit & loss accounts.

It would be a transfer from Retained Earnings to Regulatory Reserve (within Shareholders Funds).

Effectively the Regulatory Reserve will be similar to the Statutory Reserve – cannot be used to declare dividends. But no impact on the Net Tangible Assets (“NTA”).

As per Para 16.1, CA and Regulatory Reserve, attributable to impaired loans shall be excluded from Tier-2 Capital’s computation.

AFG June 2015 March 2015

CA % 1.0% 1.0%

Impact As at end-June 2015, AFG’s CA ratio was at 1.0%. To top up to 1.2%, this translates to transfer of RM113.25 million from

retained earnings to Regulatory Reserve. Estimated impact to CET1 ratio is a drop of 0.32% to 10.8%. Total Capital Ratio maintained at 13.0%.

Regulatory Reserve

34

Alliance Financial Group7th Floor, Menara Multi-PurposeCapital SquareNo. 8, Jalan Munshi Abdullah50100 Kuala Lumpur, MalaysiaTel: (6)03-2604 3333www.alliancefg.com/quarterlyresults

THANK YOU

Maple Chan Yun FengCorporate Strategy & Investor RelationsContact: (6)03-2604 3385Email: [email protected]

Disclaimer: This presentation has been prepared by Alliance Financial Group (the “Company”) for information purposes only and does not purport to contain all the information that may be required to evaluate the Company or its financial position. No representation or warranty, expressed or implied, is given by or on behalf of the Company as to the accuracy or completeness of the information or opinions contained in this presentation.

This presentation does not constitute or form part of an offer, solicitation or invitation of any offer, to buy or subscribe for any securities, nor should it or any part of it form the basis of, or be relied in any connection with, any contract, investment decision or commitment whatsoever.

The Company does not accept any liability whatsoever for any loss howsoever arising from any use of this presentation or its contents or otherwise arising in connection therewith.

For further information, please contact: Amarjeet KaurGroup Corporate Strategy & DevelopmentContact: (6)03-2604 3386Email: [email protected]