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ALLIANCE FINANCIAL GROUP

ANALYST BRIEFING- 3QFY10 Results ended 31 December 2009 -

Sustaining The Trajectory

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• 3QFY10 Financial Performance

AGENDA

• 3QFY10 Business Review

• Business Initiatives Update

• Q & A

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Cautiously optimistic remains

Strong balance sheet and robust asset quality

• 2010 expected to show economic recovery with GDP uplift and job growth. National growth may be impacted by global trends, where the possibility of a weak recovery or a double-dip remains.

• Banking key challenges - tight spreads, product innovation, new entrants, expectations of

sector consolidation.

• Pre-requisite to grow asset size with improved margins as well as to underwrite various financial instruments serving our clients’ business aspirations.

• Vigilant about asset quality via an integrated risk management framework, hence minimal credit losses.

Underlying business momentum intact• Consumer and Commercial/SME banking – core earnings drivers for the Group.

• Operations remain robust and professionally managed under the Board’s supervision.

Key Messages

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9 months 9 months

31 Dec 09 31 Dec 08 Variance

RM'mn RM'mn %

Net Interest Income 451.8 499.0 -9.5

Income From Islamic Banking 174.5 124.9 39.7

Net Interest Income + Income from

Islamic Banking626.3 623.9 0.4

Other Operating Income 157.5 168.2 -6.4

NET INCOME 783.8 792.1 -1.0

OPERATING EXPENSES (415.9) (397.5) 4.6

OPERATING PROFIT 367.9 394.6 -6.8

NET ALLOWANCE FOR LOAN

LOSS PROVISION(66.4) (97.0) -31.5

PROFIT BEFORE TAX 301.5 297.6 1.3

TAXATION (77.3) (69.6) 11.1

NET PROFIT 224.2 228.0 -1.7

• The Group’s PBT increased by

1.3% compared to corresponding

period last year is primarily due to

recovery of a corporate loan as

well as reduction of general

allowance rate to 1.5%.

• The Group’s other operating

income decreased by 6.4%

compared to corresponding period

last year is largely attributed to a

lower gain from the realisation of

investment securities despite

higher brokerage fees income.

9 Months Ended 31/12/09 Results Highlight

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• The Group’s PBT increased 21.2%

or RM22.9mil compared to

preceding quarter due to lower

allowance for losses on loans and

financing and impairment on

investment securities.

3Q 2Q

31 Dec 09 30 Sep 09 Variance

RM'mn RM'mn %

Net Interest Income 153.8 152.9 0.6

Income From Islamic Banking 65.6 49.5 32.5

Net Interest Income + Income from

Islamic Banking219.4 202.4 8.4

Other Operating Income 57.7 46.7 23.6

NET INCOME 277.1 249.1 11.2

OPERATING EXPENSES (146.8) (126.8) 15.8

OPERATING PROFIT 130.3 122.3 6.5

NET ALLOWANCE FOR LOAN LOSS

PROVISION0.7 (14.2) -104.9

PROFIT BEFORE TAX 131.0 108.1 21.2

TAXATION (31.0) (30.0) 3.3

NET PROFIT 100.0 78.1 28.0

3Q Ended 31/12/09 Results Highlight

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*Computed based on “normalized” cost/income

^Includes PDS

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

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

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

Net interest margin 3.0 2.8 2.9 2.6 2.3 2.6 2.7

Cost of Fund 2.7 2.7 2.6 2.3 2.1 2.0 1.9

NFI / Total income 26.5 22.4 21.8 22.4 27.8Nd 24.0 24.5

Cost Income Ratio 49.6* 53.3 54.2 61.7 54.0 50.9 53.0

^ LD Ratio 82.5 79.9 87.5 79.9 86.9 96.0 94.5

RWCR 16.2 14.7 14.7 14.7 14.9 15.4 15.2

ROAA 1.4 0.8 1.1 0.8 0.6 0.8 0.9

ROAE 16.8 8.6 11.3 8.6 6.6 8.8 10.5

Gross NPL 7.0 4.5 5.2 4.5 4.5 4.1 3.9

Net NPL 3.3 1.8 2.2 1.8 1.9 2.0 1.9

Loan Loss Coverage 79.9 99.7 92.6 99.7 97.7 89.0 91.0

Quarterly Ratios

Key Financial Ratios

9 Months Ended 31/12/09 Results Highlight

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RM'm

Total

Issuance

AFG's

Exposure

Total

Issuance

AFG's

Exposure

Total

Issuance

AFG's

Exposure

● Total Issuance 1,000m 175m (17.5%) 800m 240m (30%) 1,000m 10m (1%)

● Maturity Date

Kerisma Idaman Capital CapOne

Jun-09 Oct-11 Sep-10

Collaterized Loan Obligations (CLOs) are a matter of the past

• As at December 2009, the Group has made 96% provisions in Idaman Capital

• This compared to a portion of 55% as of June 2009

Key points: • Impairment provision – none

• Small exposure of AFG on it

• AFG has 100% exposure at super senior level

• Matured already

• Total exposure covered although expected write-backs will be used to cover provision for Idaman Capital in particular

Update on CLOs

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• 3QFY10 Financial Performance

• 3QFY10 Business Review

• Business Initiatives Update

• Q & A

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-10

-5

0

5

10

15

20

25

Jun-06 Dec-06 Jun-07 Dec-07 Jun-08 Dec-08 Jun-09 Dec-09

Industry AFGCommercial/SME (AFG)

Consumer (AFG)

Corporate (AFG)

Consumer (Industry)

Corporate (Industry)

Commercial/SME (Industry)

Business transformation puts AFG on right target mix

Loans growth (%YoY) – AFG in-line with industry

Loans Segmentation

Dec 06 Dec 09 Dec 06 Dec 09

33.4%

51.3%48.7%

15.3%30.6%

20.7%32.0%

49.7%60.2%

18.3%

25.6%

12.9%

1.3%

Core strengths in Consumer & Commercial Banking

• Loans portfolio, previously heavily skewed towards Corporate Banking has been reshaped towards our desired mix – Consumer and Commercial Banking along with market growth and opportunities

• Supported by strong local execution capabilities and competitive product suite

Industry Alliance Bank

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1,500

1,800

2,100

2,400

2,700

3,000

Dec-06 Sep-07 Jun-08 M ar-09 Dec-09

-40

-25

-10

5

20

35

50

RM mil - lhs

% QoQ - rhs

3,500

4,000

4,500

5,000

5,500

6,000

Dec-06 Sep-07 Jun-08 M ar-09 Dec-09

-12

-7

-2

3

8

13RM mil - lhs

% QoQ - rhs

6,000

7,500

9,000

10,500

12,000

13,500

Dec-06 Sep-07 Jun-08 M ar-09 Dec-09

2

4

6

8

10

RM mil - lhs

% QoQ - rhs

Loans growth primarily driven by Consumer Banking

Note: - * – not comparable due to retagging with mass market

FYE FYE FYE

RM Mil 31/3/07 31/3/08 31/3/09 1Q 2Q 3Q •YoY •QoQ

Consumer 7,206 8,828 10,832 11,869 12,172 12,621 n. c. 3.7%

Commercial

/SME 4,238 5,253 5,859 5,232 5,362 5,377 n. c. 0.3%

Corporate 1,910 1,839 2,567 2,577 2,731 2,698 3.2% -1.2%

Exit Books 1,139 625 333 306 288 276 -40.0% -4.2%

Total 14,493 16,545 19,591 19,984 20,553 20,972 8.0% 2.0%

% changeFYE 2010

*

*

*

*

*

*

Loans Breakdown by Businesses Consumer

Commercial / SME

Corporate

Loans Growth Segmentation

• AFG loans growth of 8.0% in-line with industry of 7.8% as of Dec 09

• AFG loans growth momentum holding steadily at +2.0%QoQ in 3QFY10, albeit slower compared to +2.8%QoQ in 2QFY10

• Exit book loans has gone down to RM276 million in 3QFY10 from RM306 million in 1QFY10

*

*

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25%

35%

45%

55%

65%

Jun-06 Dec-06 Jun-07 Dec-07 Jun-08 Dec-08 Jun-09 Dec-09

Industry AFG

23%

27%

31%

35%

39%

43%

Jun-06 Dec-06 Jun-07 Dec-07 Jun-08 Dec-08 Jun-09 Dec-09

Industry AFG

1.8%

2.2%

2.6%

3.0%

3.4%

3.8%

Jun-06 Dec-06 Jun-07 Dec-07 Jun-08 Dec-08 Jun-09 Dec-09

Industry AFG

2.2%

2.4%

2.6%

2.8%

3.0%

3.2%

Jun-06 Dec-06 Jun-07 Dec-07 Jun-08 Dec-08 Jun-09 Dec-09

Industry AFG

Improving CASA driving down cost of funds

Earnings Check Points

3.1%

2.8%

3.1% 3.1%

2.9%

2.3%

2.6%2.7%

2.7%

2.7%

2.7% 31.6%

33.8%

32.5%

35.1% 35.6% 35.5%

34.6%

40.9%

25.5%

25.5%

24.8%

25.3% 25.3% 25.3%

25.4%

3.0% 3.0%2.9%

2.7%2.6% 2.6%

2.1%

1.9%

3.1%

3.4% 3.4%3.2%

2.9% 3.0%

2.2%

55.4%

53.7%

54.5%

49.6%

28.7%

48.2%

54.3% 54.0%53.0%

61.7%

45.3%42.9%

43.6%46.1%

48.1%

46.0%

Visible improvement in net interest margin CASA ratio at top quartile of the industry

Lower than industry’s cost of funds AFG’s cost-income ratio decelerating fast

2.6%

2.8%

2.6% 2.6%

2.7%

2.0%

26.7%

48.6%

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Cost management – one of the key drivers of improved bottom-line

% share of total operating expenses % YoY growth

Gearing Up for Greater Efficiency

Mar09

58.8%

Jun09

62.1%

Personnel Cost

58.1% 58.5%

4.0%

22.9%

-8.7%

5.3%

Sep09 Dec09 Mar09 Jun09

Establishment Costs

24.2% 28.3%

11.0%

6.7%

25.8%

-8.7%

Sep09

27.4%

17.0%

Dec09 Dec09Mar09

58.1%

Jun09

Marketing Expenses

5.0%

2.6%

-27.2%

23.7%

2.3%

Sep09

22.3%

3.3%

-6.2%

Mar09

58.1%

Jun09

Admin & General Expenses

12.6% 10.5%

22.9%

15.0%

9.9%

Sep09

1.8%

10.4%

-19.5%

Dec09

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0.0

1.0

2.0

3.0

4.0

5.0

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

0

300

600

900

1200

1500

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

0.0

2.0

4.0

6.0

8.0

10.0

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

0

20

40

60

80

100

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

Improving asset quality, resulting in minimal credit losses

Loan Loss Coverage – In line with industry

AFG’s gross NPL ratio – declining further

AFG Industry

87%

100%

93%

83%

91%

83%85%

78%80%

77%

AFG Industry

AFG’s net NPL ratio in line with industry

AFG Industry

Net NPL ratio lower

than industry since

Jun083.3%

3.0%2.7%

2.8%

2.3%2.5%

2.2%2.4%

1.8%

2.2%

7.0%

6.0%5.4% 5.2%

4.5%

5.3%4.8%

4.5% 4.3%4.1%

98%

88%

4.5%3.9% 1.9%

2.2%

89%

88%

4.1%

3.8% 2.0%

2.1%

Loan Asset Quality

Non Performing Loans remains manageable

Gross NPL Net NPL

1,158

1,032 1,009 1,016

875

522452

413 411343 366

890

403

845

91%94%

3.9%

3.2%

827

391

1.9%1.8%

14

10 11 12 13 14 15 16

Sep-08

Dec-08

Mar-09

Jun-09

Sep-09

Dec-09

4 6 8 10 12 14

Sep-08

Dec-08

Mar-09

Jun-09

Sep-09

Dec-09

10 11 12 13 14 15 16 17

Sep-08

Dec-08

Mar-09

Jun-09

Sep-09

Dec-09

Strengthened balance sheet with strong capital position

AFG’s RWCR @ 15.2% vs Industry’s 14.7%

AFG and ABMB Core Capital

ABMB’s RWCR @ 13.6% vs Industry’s 14.2%

AFG Industry

Core Capital (AFG) Core Capital (ABMB)

ABMB Industry

13.0%14.9%

13.1%

12.2%12.7%

12.5%13.1%

10.2%12.2%

10.4%12.7%

12.6%

14.7%

14.7%

14.9%

12.6%

13.6%

14.8% 14.3%13.2%

12.7%

10.3%

10.5%

• AFG’s core capital and RWCR continued to improve to 11.1% and 15.2% in 3QFY10 compared to 10.5% and 14.9% in 1QFY10

• In turn, this has strengthened AFG’s balance sheet ability to take stresses, as reflected in higher equity-to-asset ratio (9.3% in 3QFY10 from 9.0% in 1QFY10)

15.4%14.6%

13.2%11.1%

13.1%

14.1%13.5%

Capital Adequacy Management

14.7%15.2%

11.0%13.3%

14.2%13.6%

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• 3QFY10 Financial Performance

• 3QFY10 Business Review

• Business Initiatives Update

• Q & A

16

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

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Alliance Bank Strategic Priorities

3rd Vertical

Commercial Non

Programme

Active

Financial

Market

Integrated

Wealth

Management

Consumer

Banking

Segment Based

Drive

High Yield

‘Koop’ Loans

Navigate to Win

Stock-broking

Transformation

Primary focus to strengthen business fundamentals

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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