PETALING JAYA: Despite the downside risk arising from the reintroduction of a six-month blanket moratorium for loans, Alliance Bank Malaysia Bhd appears confident that its targets will not be derailed.

       The smallest lender in the country said its current measures are sufficient to capitalise on the eventual economy re-opening.

       It expected its headline targets for the financial year (FY) ending March 30, 2022, to remain intact, with gross loans growth expected to be 3%-4%, net interest margin at 2.35%, cost-income ratio at 45%-46%, net credit cost less than 90 basis points, and return on equity at more than 7.5%.

       According to Kenanga Research, although Alliance Bank is keeping its guidance for now, the brokerage said challenges could arise from prolonged movement controls, affecting demand for loans, and its asset quality.

       “There are some headwinds in the first quarter of FY22, owing to the implementation of tighter movement controls and the lockdown, which affected loan applications and repayments,” it said.

       Kenanga Research upgraded its call on Alliance Bank to market perform, from underperform previously, on recent share price weakness, with an unchanged target price of RM2.20 for the counter.

       “Management opined that with lessons learnt from the previous moratorium and ongoing assistance programmes, it is positioned to better manage the enrolment process of any further applications,” the brokerage wrote in its report.

       following a recent meeting with Alliance Bank. “Further, given the new opt-in basis, management does not anticipate take-up to be as aggressive as last year. Also, the flexibility to amend financing terms would allow banks to land at fairer terms, hence reducing exposure to modification losses,” it added.

       Under the recent PEMULIH package, the Government reintroduced another six-month blanket moratorium for loans, but with an opt-in basis as opposed to an automatic one which led to a FY21 modification loss of RM68mil for Alliance Bank.