1111

ALLIANCE FINANCIAL GROUP

TELE-CONFERENCING WITH ANALYST

- 1QFY10 Results ended 30 June 2009 -

STAYING ON COURSE

2

• 1QFY10 Performance & Business Review

AGENDA

3

Charting through turbulent times

Key Messages

Well positioned to respond to market shifts

• FOMC – economic activity is leveling out and accommodative policy is here to stay

• Increasingly liberalized regulatory and operating environment

• Focusing on core strengths in Consumer and Commercial Banking

• Continuing to build long-term deposit funding base

• Harnessing the energy of 3-year business transformation program

Driving and leveraging our competitive position

• Drive asset quality via an integrated risk management, resulting in minimal credit losses

• Strengthen balance sheet with strong capital position and high liquidity

• Drive cost efficiency through operational excellence

• Emphasize superior service levels

4

Charting Through Turbulent Times

Sub-prime & Crisis

Oct’ 07 to Dec’ 08

Green Shoots

Jan’ 09 - nowCalm before Storm

Jan’ 05 to Oct’ 07

700

800

900

1,000

1,100

1,200

1,300

1,400

1,500

1,600

Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09

-30

-20

-10

0

10

20

30

KLCI S&P500 3-MA Exports - rhs

Sub-prime & Related Crisis

Stimulus Programme

①

②

② Bankcorp – loan defaults, to raise capital

① Fannie Mae – write down, to raise capital③

③ Merrill Lynch – write off, sells shares

④

④ Citigroup – loss on credit costs, cut jobs

⑤

⑤ Bear Stearns boss Cayne resigns

⑥

⑥ Citigroup – increases stock offering

⑦

⑦ Lehman cuts 130bn of assets

⑧

⑧ Blackstone posts $251mn loss

⑨

⑨ Freddie Mac dips below $10 since 1992

⑩

⑩ JP Morgan takes $1.5bn hit in Jul08

⑪

⑪ Morgan Stanley plans add layoffs

⑫

⑫ GE - FDIC backing for $139bn in debt

Ⓐ

Ⓑ

Ⓒ

Ⓐ Malaysia - RM7bn ($1.93bn) stimulus

Ⓑ US - $787.2bn economic stimulus

package by President Barack Obama

Ⓒ Malaysia - RM60bn “mini budget”

Charting Through Turbulent Times

5

Results Achieved

Business Fundamentals Remain Intact

FRS 139 Initiative

& Restructuring

April’ 06 to Mac’ 07 April’ 07 to December’08

151

255

502

Mar 06 Sept 06 Mar 07 Sept 07 Mar 08

14

230

Sept 08

Maximizing

Revenue

298

Dec 08

303.3

Mar 09

31% 49% 33% 51% 33%68%

32%

72%35%

80%35%

91%

35%

93%

33%

100%

5.5%

8.0%

9.5%

4.4%3.3%

2.3%2.2%

1.8%

Loan Loss Coverage (%)

CASA Ratio (%)

Net NPL Ratio (%)

YTD Profit Before Tax (RM’m)

Included RM51.8m

Overhead

provision written

back

Prudently, made

additional

RM56.5m SP

Charting Through

Turbulence Time

Dec 08 onwards

98%

35%

June 09

62.4

1.9%(283)

(1QFY10 only)

6

• Group PBT decreased 62.6%

compared to corresponding period last

year on the back of higher impairment

on securities by RM25.9mil made on

potential losses against a declining

economic conditions.

• Higher allowance for loans primarily

due to lower recoveries this quarter.

• Lower operating profit mainly due to

lower gain on revaluation of forex

derivatives instruments and at the

same time there was a lumpy gain of

RM13.3mil on redemption of debt-

converted securities last year.

• The Group’s net interest income

declined by 21.7% mainly due to OPR

drop.

30 Jun 09 30 Jun 08 Variance

RM'mn RM'mn %

OPERATING REVENUE 387.9 421.5 -8.0

Net Interest Income 141.8 181.1 -21.7

Income From Islamic Banking 58.8 39.1 50.4

Net Interest Income + Income from

Islamic Banking200.6 220.2 -8.9

Other Operating Income 53.0 69.2 -23.4

NET INCOME 253.6 289.4 -12.4

OPERATING EXPENSES (137.0) (139.4) -1.7

OPERATING PROFIT 116.6 150.0 -22.3

(ALLOWANCE)/WRITE BACK FOR

LOAN LOSS PROVISION(54.2) 16.9 -420.7

PROFIT BEFORE TAX 62.4 166.9 -62.6

TAXATION (16.2) (42.6) -62.0

NET PROFIT 46.2 124.3 -62.8

3 Months Ended 30/6/09 Results Highlight

7

• Group PBT increased RM56.8mil

compared to preceding quarter due

to:-

Lower loan loss provisions

Income from Islamic Banking

increased 49.6% due to Profit

Equalization Reserve write back

as a result of two lumpy Islamic

loans provisions

Current quarter overheads was

lower as last quarter the Group

made additional cost for

continuous manpower

rationalization exercise to improve

productivity and efficiency

Net Interest Income decreased by

7.5% due to full impact of OPR

drop of 150 bps

1Q 4Q

30 Jun 09 31 Mar 09 Variance

RM'mn RM'mn %

OPERATING REVENUE 387.9 398.4 -2.6

Net Interest Income 141.8 153.3 -7.5

Income From Islamic Banking 58.8 39.3 49.6

Net Interest Income + Income from

Islamic Banking200.6 192.6 4.2

Other Operating Income 53.0 60.1 -11.8

NET INCOME 253.6 252.7 0.4

OPERATING EXPENSES (137.0) (156.0) -12.2

OPERATING PROFIT 116.6 96.7 20.6

(ALLOWANCE)/WRITE BACK FOR

LOAN LOSS PROVISION(54.2) (91.1) -40.5

PROFIT BEFORE TAX 62.4 5.6 1,014.3

TAXATION (16.2) (4.8) 237.5

NET PROFIT 46.2 0.8 5,675.0

3 Months Ended 30/6/09 Results Highlight

8

*Computed based on “normalized” cost/income

^Includes PDS

Nd - High due to PER write back from two lumpy loans provisions

% FYE FYE 1Q 2Q 3Q 4Q 1Q

31/03/08 31/03/09 30/06/08 30/09/08 31/12/08 31/03/09 31/06/09

Net interest margin 3.0 2.8 3.1* 3.1 2.9 2.6 2.3

Cost of Fund 2.7 2.5 2.6* 2.7 2.6 2.3 2.1

NFI / Total income 26.5 22.4 24.3 21.3 21.8 22.4 27.8Nd

Cost Income Ratio 49.6* 53.3 50.0* 49.5 54.2 61.7 54.0

^ LD Ratio 82.5 79.9 82.6 85.4 87.5 79.9 86.9

RWCR 16.2 14.8 15.1 14.9 14.7 14.7 14.9

ROAA 1.4 0.8 1.8 1.3 1.1 0.8 0.6

ROAE 16.8 8.6 18.8 13.5 11.3 8.6 6.6

Gross NPL 7.0 4.5 6.0 5.4 5.2 4.5 4.5

Net NPL 3.3 1.8 2.7 2.3 2.2 1.8 1.9

Loan Loss Coverage 79.9 99.7 85.5 91.2 92.6 99.7 97.7

Quarterly Ratios

Key Financial Ratios

3 Months Ended 30/6/09 Results Highlight

9

Group Strategic Priorities

Our primary focus is to further strengthen the Group’s business

fundamentals and to put the Group in an advantageous position to

take market share when the economy recovers

Strategic priorities Key initiatives

Pro-active Capital

Management

● Alliance Financial Group has made available additional RM600 million standby funds

for any opportunistic investment

● To protect earnings

Liquidity

Management

● To maintain a strong liquidity position with sustainable loans to deposit (LDR) ratio

● Investment securities are biased for liquid assets

Robust Risk

Management &

Credit Portfolio

Quality

● Proactive review of credit underwriting policies and standards

● Pre-emptive provisioning due to deteriorating economic conditions

● Continue to build and strengthen risk management infrastructure

Operational

Efficiency & Cost

Management

● Manpower management like staff redeployment, hiring freeze, natural attrition etc

● Leverage synergy among with further rationalization among key businesses.

● Cost containment exercise

10

Employees ShareholdersCustomers Community

MissionWe will deliver excellent customer experience through strategic alliances

and enhanced group synergy, employing best in class technology and human capital.

Values

Caring Conviction Integrity Resilience Creativity

Risk & Compliance

Sales &

Service

Performance

Culture

Service

Quality

Branches &

Hubs3rd PartiesDirect Marketing

Mass MarketSME / Mass

Market

SME

/CommercialLarge

Corporate

Regional Hubs &

HO

Consumer IslamicCommercialWholesale &

Investment Bank

VisionA leading integrated financial solutions provider with regional reach,

delivering the best customer experience and creating long term shareholder value.

CARING CONVICTION CREATIVITY RESILIENCE INTEGRITY

Group Strategy

11

Loans Growth Segmentation

Past 3-year Transformation Puts AFG on Right Target Mix

Loan Portfolio – As at FYE 30/6/09

55%32%

10%

3%

59%26%

13%

2%

Loan Portfolio – As at FYE 30/6/08 Loans Breakdown by Businesses

• AFG loans growth (15.5%YoY) outpaced industry

(8.3% as of June 09)

• AFG loans growth +2.0%QoQ in 1QFY10 compared

to 0.8%QoQ in 4QFY09

• Although Corporate Banking loans grew by

46.7%YoY, it is on the back of much reduced loan

base, and the loan portfolio mix is within the target mix

(within 15%)

Loans Size

- RM17.3bn

Loans Size

–RM20.0bn

Note: - n.c. – not comparable due to retagging with mass market

FYE FYE FYE

RM Mil 31/3/08 31/3/09 30/06/09 •YoY •QoQ

Consumer 8,828 10,837* 11,869* n.c. 3.2

Commercial

/SME 5,253 5,192* 5,232* n.c. 0.8

Corporate 1,839 2,567 2,577 46.7 0.4

Exit Books 625 333 306 -47.1 -7.9

•Total 16,545 18,929 19,984 15.5 2.0

% change

12

Monetary Easing Edging Closer to End Cycle

Stresses on Net Interest Margin Lessen With Stable OPR

Sep07 Mar08 Jun08 Sep08 Dec08 Mar09

3.5% 3.5% 3.5% 3.5%

3.25%

2.0%

5.32%

5.42%

5.45%(n)

5.43%

5.22%

4.69%

OPR

Earning Assets Yield Net Interest Margin

2.95%3.02% 3.12%(n) 3.05%

2.89%

2.56%

• NIM fell further to 2.34% on the back of 150bps cut in

OPR rate to 2% since Nov 08

June 2008 June 2009

Variable Rate Loans (AFG) Fixed Rate Loans (AFG)

83.2% 85.3%

16.8% 14.7%

• AFG has higher than industry average variable

rate loans

• Industry average variable rate loans rose to

67.8% in June 09 compared to 66.5% a year agoNote: (n) –Normalized

Net Interest Margin

(Industry)

2.55% 2.62%2.65% 2.63%

2.73%2.58%

66.5%

Variable Rate Loans (Industry) Fixed Rate Loans (Industry)

66.3%

33.7%33.5%

Jun09

2.0%

4.18%

2.34%

2.65%

13

CASA Ratio at Top Industry Quartile

Higher CASA Keeps Cost of Funds Heading South

Sep07 Mar08 Jun08 Sep08 Dec08 Mar09

32%

(25%)

35%

(25%)

36%

(25%)35%

(25%)35%

(25%) 33%

(24%)

CASA Ratio Cost of Funds (AFG)

2.71% 2.67% 2.61%(n)2.71%

2.62%

2.29%

21.2 21.4

21.7

22.723.1

25.6

RM bn

Deposit Portfolio – As at FYE June2009

60%

Deposit Portfolio – As at FYE June2008

36%

3.6%

56%

35%

6.4%2.9%

Fixed deposit

CASA

Money Mkt

NID

3.29%2.94%

2.88%2.93%

2.92%

2.54%

Cost of Funds (Industry)Note: ( ) – CASA Industry

(n) – Normalized

Fixed deposit

CASA

Money Mkt

NID

Structured Deposit

24.3

2.18%

2.08%(n)

35%

(25%)

35%

(25%)

Jun09

14

Costs Have Been Carefully Managed for Greater Efficiency

Gearing Up for Greater Efficiency

Dec08 Mar09

58.6%

58.1%

Jun09

58.5%

Personnel Cost

58.1% 58.5%

11.0%9.2%

-11.6%

% share of total operating expenses % QoQ growth

Dec08 Mar09

24.3%

58.1%

Jun09

58.5%

Establishment Costs

24.2% 28.3%

-3.9%

9.8%

2.6%

Dec08 Mar09

3.7%

58.1%

Jun09

Marketing Expenses

5.0%

2.6%

50.1%

-54.1%

122.9%

Dec08 Mar09

13.4%58.1%

Jun09

58.5%

Admin & General Expenses

12.6%10.5%

3.6%

-26.7%

54.4%

15

0.0

1.0

2.0

3.0

4.0

5.0

Sep-07 Dec-07 M ar-08 Jun-08 Sep-08 Dec-08 M ar-09 Jun-09

0.0

2.0

4.0

6.0

8.0

10.0

12.0

Sep-07 Dec-07 M ar-08 Jun-08 Sep-08 Dec-08 M ar-09 Jun-09

0

300

600

900

1200

1500

Sep-07 Dec-07 M ar-08 Jun-08 Sep-08 Dec-08 M ar-09 Jun-09

0

20

40

60

80

100

Sep-07 Dec-07 M ar-08 Jun-08 Sep-08 Dec-08 M ar-09 Jun-09

Loan Asset Quality

Loan Loss Provision at Top Quartile of Industry

Loan Loss Coverage – Higher than industry

AFG’s gross NPL ratio – flat

Non Performing Loans remains manageable

AFG Industry

87%

100%

93%

83%

91%

83%85%

78%80%

77%77%

73%72%

71%

AFG Industry

Gross NPL Net NPL

AFG’s net NPL ratio lower than industry

AFG Industry

Net NPL ratio lower

than industry since

Jun08

4.4%

3.5%3.7%

3.2% 3.3%

3.0%2.7%

2.8%

2.3%2.5%

2.2%2.4%

1.8%

2.2%

8.8%

7.9%

7.0%

6.0%5.4% 5.2%

4.5%

5.9% 5.6%5.3%

4.8%4.5% 4.3%

4.1%

1,3541,252

1,158

1,032 1,009 1,016

875

643567

522452 413 411

343

98%

88%

366

890

4.5%

3.9%

1.9%

2.2%

164 6 8 10 12 14

Mar-08

Jun-08

Sep-08

Dec-08

Mar-09

Jun-09

10 11 12 13 14 15 16

Mar-08

Jun-08

Sep-08

Dec-08

Mar-09

Jun-09

10 11 12 13 14 15 16 17

Mar-08

Jun-08

Sep-08

Dec-08

Mar-09

Jun-09

Capital Adequacy Management

RWCR – Higher Than Industry Average

AFG’s RWCR @ 14.9% vs Industry’s 14.0%

AFG and ABMB Core Capital

ABMB’s RWCR @ 13.2% vs Industry’s 13.6%

AFG Industry

Core Capital (AFG) Core Capital (ABMB)

ABMB Industry

13.0%14.9%

13.6%15.1%

13.3% 16.2%

12.9%13.1%

12.2%12.7%

12.5%13.1%

13.0%12.9%

12.7%14.7%

10.2%12.2%

10.4%

12.5%

10.4%12.5%

11.2%

12.7%

12.6%

14.7%

14.7%

14.9%

12.7%

13.4%

14.0% 13.6%13.2%

12.7%

10.3%

10.5% • AFG’s core capital and RWCR continued to

improve to 10.5% and 14.9% in 1QFY09

compared to 10.3% and 14.7% in 4QFY09.

• In turn, this has strengthened AFG’s balance

sheet to take stresses, as reflected in higher

equity-to-asset ratio (9.0% in 1QFY10 from

8.7% in 4QFY09).

17

Consumer Banking

Strategic Priorities

Better

Manage

Portfolio

Health

Deliver

Productivity &

Efficiency

Enhancements

Scale Up &

Defend

Profitable

Customer

Franchise

Protect

Earnings

Deliver Better

Distribution

Leverage

Navigate to Win

Cost

Optimisation

• reshape revenue streams & rebalance mix

• revamp channel mix, baseline annuity income

• revamp channel mix,

baseline annuity income

• de-prioritize LT investments

• cross biz synergies• exploit outsourcing

• optimize asset utilization rate

• intensify collection efforts

• recalibrate performance incentives

• differentiated service platform

18

Commercial/SME Banking

Strategic Priorities

Mass Market

NIM

Enhancement

Cost

ManagementNavigate to Win

Risk

Management

• drive cross-selling to existing customers

• CASA drive; loan re-pricing

• cost reduction – marketing,

premises & staff hiring &

redeployment

• defer non-essential projects

• new credit scorecard

• greater emphasis on early

warning & remedial units to

contain credit losses

• new credit program &

commission scheme

19

Corporate Banking

Other Units

Strategic Priorities

Alliance Islamic Bank

Investment Banking

• Aggressive re-pricing

• Zero credit loss

• Cost containment

• Cash management

• Cross-selling CF & DCM

• FX – New mindset

• Personnel financing – cashvantage & Koperasi

• Hire purchase

• Syariah compliance

• Stock-broking transformation

• Cross-selling between various business units

• Restructuring advisory / independent advisory – bread & butter

Financial Market

• Increase client distribution

• Increase system capabilities thru MUREX

20

Information Technology as a Successful Enabler

• Culminating to the efforts in providing the best of class technology to serve business

needs, the Group was honored with two awards:

Technology Business Review Asean –

Corporate Award for Excellence &

CEO Award for LeadershipIDC Financial Insights –

Enterprise Transformation Award

(Unprecedented category)

• During the IDC Financial Insights award presentation, the following citation

was made:

“”Alliance Bank's strategy of applying technology excellence to

create sustainable business value has led the bank to deploy an

impressive enterprise-wide transformation ranging from enterprise

architecture to risk management. This comprehensive initiative saw

an effective collaboration between Alliance Bank and its technology

partners in successfully positioning the bank's IT organization to

support its strategic goals …. (FIIA)“”

Long Term Value

Creation

21

Key Take Away

- Business Fundamentals Remain Intact.

- Costs Have Been Carefully Managed for Greater Efficiency.

- Asset Quality Continues to Improve.

- Well Capitalized. Ahead of Industry Average.

In Summary

- Cautiously Optimistic. We Are Here For The Long Haul.

22222222

THANK YOU

Investor Relations

Alliance Financial Group7th Floor, Menara Multi-Purpose, Capital Square

8 Jalan Munshi Abdullah

50100 Kuala Lumpur, Malaysia

www.alliancebank.com.my/investorrelations.html