Alliance Financial says it can hold its own against bigger banks

KUALA LUMPUR: Alliance Financial Group Bhd (AFG), the smallest financial institution in terms of asset size, has dismissed speculation that it is the subject of a merger.
The bank, which has seen some changes in shareholding, said it was financially sound and looking to lift its returns to shareholders.
“I would just like to say that small is beautiful. We are absolutely certain that we are a very sound and sustainable financial group. We believe that with the investments we are making, we would actually be able to lift our return on equity (RoE),” group chief executive officer Joel Kornreich said at a press conference after its AGM and EGM.
“Three years back, our goal was 15% (RoE). I think maybe that was not quite realistic, but we are definitely aiming for 11%-12% as a very sustainable level for us,” Kornreich added.
Banking merger fever has picked up again in the Malaysian financial industry following the proposed exercises between RHB Bank Bhd and AMMB Holdings Bhd; and Malaysia Building Society Bhd and Asian Finance Bank Bhd.
AFG chairman Datuk Oh Chong Peng said that as far as it knew, nobody was courting it and nobody has said anything about wanting to take over or anything like that.
“Nothing is in the pipeline as far as we (the board of directors) know. But we don’t know what the shareholders are planning, as they could have something at their level which we have no clue to,” Oh said.
Pertaining to possible mergers down the road, Kornreich said nobody could predict or control the future, while also highlighting that the bank’s fundamentals remained sound.
“We see that the bank is sustainable the way it is now, and we will invest to make it more efficient and profitable. In other words, we can definitely live a single (life), and well if somebody wants to marry us, then that happens when it happens. However, we don’t want to speculate on that. We just know now that we can live very well as a single person and then we’ll see,” Kornreich said.
It was reported in StarBizWeek in early June that AFG could be ripe for a merger and could be a good fit for Affin Bank Bhd, which is small but has a strong institutional shareholder in the Armed Forces Fund Board or LTAT.
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