Public Mutual, a unit of Public Bank, is Malaysia
KUALA LUMPUR: Public Bank Bhd
reported higher earnings of RM5.20bil in the financial year ended Dec 31, 2016 (FY16), underpinned by continued growth in the net interest income and fee and commission income.
The banking group, which celebrates its 50th anniversary, had on Thursday declared a dividend of 32 sen a share similar to a year ago.
Public Bank founder and chairman Tan Sri Dr Teh Hong Piow said for the full year, the total dividend paid and payable amounted to RM2.24bil or 43% of the group's net profit for FY16.
The FY16 earnings were up 2.8% from the RM5.06bil in FY15 while revenue rose to RM20.10bil from RM19.18bil in FY15.
For the fourth quarter ended Dec 31, 2016, its earnings dipped slightly to RM1.48bil from RM1.49bil a year ago. However, its revenue increased to RM5.08bil from RM4.93bil. Earnings per share were 38.4 sen compared with 38.65 sen.
He said the group has demonstrated the ability to generate stable profitability amid the increasing challenging operating environment.
“This was attributed to the group’s proactive organic growth strategy with prudent banking practices, which has remained an edge in the current competitive banking landscape,” he added.
Public Bank group’s gross loans as at the end of 2016 were RM294bil, up 7.5% from a year ago. Customer deposits grew by 2.9% to reach RM310bil at end-2016.
“With the favourable financial performance, not only did the Public Bank Group continue to preserve its superior track record of 50 years of unbroken profitability since its inception in 1966, it also continued to be at the forefront amongst its domestic banking peers in Malaysia by delivering high net return on equity of 16.5% as well as maintaining low gross impaired loan ratio of 0.5% and efficient cost-to-income ratio of 32.3% in 2016,” he said.
Teh pointed out that despite the intense competition amongst banks for market share, the group continued to achieve above industry loan performance.
Public Bank group recorded total loan growth of 7.5%, with its domestic loan growth standing at 7.2% compared to the domestic banking industry’s loan growth of 5.3%, leading to an increased market share of 17.7% in the domestic lending market.
He said lending to the retail banking segment remained the key strategic focus of the Public Bank group, with consumer financing for the purchase of residential properties and passenger vehicles, and extension of credit to small and medium enterprises (SME).
“As at the end of 2016, the group’s retail and SME loan portfolio collectively accounted for 85% of its total loans,” he said.
Public Bank group also continued to achieve above industry deposit growth amid challenges in the deposit market. In FY16, the group’s total customer deposits grew by 2.9% compared to the domestic banking industry’s deposit growth of 1.5%.
Ddespite challenges in the operating environment, total net income grew by 4.3% to RM9.96bil, supported by continued growth in the net interest income and fee and commission income.
The group was the most cost-efficient bank in Malaysia as its cost-to-income ratio increased from 30.5% in 2015, but still remained efficient at 32.3% in 2016.
This was well below the banking industry’s average cost-to-income ratio of 48.8%.
Teh said amid the prevailing economic uncertainties and challenges, the group continued to demonstrate resilience in its asset quality.”
As at the end of 2016, the Public Bank group’s gross impaired loan ratio stood at 0.5%, which was significantly lower than the banking industry’s ratio of 1.6%.
Its impaired loans were well covered, with loan loss coverage ratio of 102.7% as at the end of 2016, as compared to the banking industry’s coverage ratio of 90.2%.
As for its overseas operations, pre-tax profit grew by 8.5% from RM572mil in 2015 to RM621mil in 2016, contributing 9.5% to the group’s overall pre-tax profit for 2016.
Public Financial Holdings Limited Group in Hong Kong and Cambodian Public Bank Plc, both subsidiaries of Public Bank, continued to be the main contributors to the group’s overseas business growth.
The group's capital position remained stable, with its common equity Tier 1 capital ratio, Tier 1 capital ratio and total capital ratio standing at 11.4%, 12.2% and 15.5% respectively as at the end of 2016.
“The group will continue to be proactive in maintaining a healthy level of capital at all times to support the Group’s business growth strategies whilst maximising its shareholders’ return,” Teh said.
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