KUALA LUMPUR: Alliance Bank Malaysia Bhd is targeting to grow its gross loans book by seven per cent for the financial year ending 31 March 2020.
Group chief executive officer Joel Kornreich said the bank is confident of hitting the target despite the lowering of the overnight policy rate (OPR) to three per cent, from the initial 3.25 per cent.
"We had such a good momentum within the consumer and commercial space in the financial year (FY) 2019 and it will carry us over in the FY20, and we expect to gain more borrowers with the lowering of the OPR," he said.
"The impact of the lowered OPR would be in our margins however that is manageable."
For FY19 ended 31 March 2019, the bank has set a gross loans growth target of 10 per cent but managed to only hit six per cent.
"Yes, the target was 10 per cent but we only managed at six per cent. Though we are good in our small and medium-sized enterprises (SME) and consumer space, we were hit by headwinds in the commercial and corporate space," he Kornreich.
"As you know, there were some major infrastructure projects that were either scrapped or delayed in 2018 and that had significant impact on us. However, I think we have seen the worst of the slowdowns, and barring external events, we expect things to rebound."
Alliance Bank's SME loans portfolio currently stood at some RM9 billion while its residential mortgage book is at RM18 billion and its commercial and corporate book is at RM10.5 billion.
The bank saw its total net profit growing nine per cent to RM537.6 million in FY19, on the back of revenue growth of 3.2 per cent to RM1.6 billion.
Net interest income increases by 8.9 per cent to RM1.3 billion due to stronger loans growth and improved loan mix from better risk adjusted return loans.
When asked, Kornreich is optimistic of delivering a double digit growth in FY20 because of all the initiative the banks are undertaking.
"We expect to grow in the double digits for FY20 as we have put in all efforts in improving customer experience, focusing on innovation, speed, simplicity and responsiveness," he said.
"We have successfully improved our service turnaround time and standard levels across all touch point and we believe that this would be the one to accelerate the momentum of our transformation initiative."
For FY20, the group is targeting to maintain its cost to income ratio at 48 per cent, with a return on equity of over 10 per cent.
It has proposed a second interim dividend of 8.2 sen thus bringing the total FY19 dividend to 16.7 sen per share.
This translates to a dividend payment ratio of 48 per cent.