Tan Sri Teh Hong Piow said the group was confident that its strong fundamentals will enable it to stay resilient and flexible.
KUALA LUMPUR: Public Bank Bhd
's net profit slipped slightly by 1.5% in the third quarter ended Sept 30, 2018 to RM1.383bil compared with RM1.404bil a year ago, in the absence of a one-off capital gain recorded a year ago.
It said on Thursday, if the one-off gain on investment of RM43mil was excluded, its net profit would be RM1.38bil, or 1.6% above the RM1.36bil in operational net profit a year ago.
“The growth in the operational pre-tax profit was mainly due to lower loan impairment allowance, higher income from Islamic banking business and higher net interest income. These were partially offset by higher other operating expenses and lower foreign exchange income,” it said.
Public Bank's retail operations recorded a 2.8% decline in pre-tax profit of RM26.3mil to RM919.7mil mainly due to lower net interest income on lower net interest margin and higher other operating expenses. These were partially offset by the writeback of loan impairment allowance in the current quarter.
As for hire purchase operations, pre-tax profit fell by 28.2% or RM26.7mil to RM68.2mil, mainly due to lower net interest income and higher loan impairment allowance.
Other comprehensive income (net) of the group rose by RM175.8mil to RM181.1mil, mainly due to foreign currency translation gain in respect of foreign operations and higher gain on revaluation of financial investments in the current quarter.
Corporate lending's pre-tax profit fell by RM36.5mil or 25.6% to RM106.1mil mainly due to higher loan impairment allowance and lower fee income, partially offset by higher net interest income.
Treasury and capital market operations' pre-tax profit dipped by 1% to RM163.8mil mainly due to lower net interest income partially offset by higher investment income.
As for investment banking, it recorded a 10.7% increase in pre-tax profit to RM13.4mil, mainly due to lower other operating expenses and higher brokerage income from stock-broking activities.
Its fund management business's pre-tax profit dipped by 1.3% to RM169.6mil.
Public Bank said its overseas operations's pre-tax profit rose by 26.2% to RM205mil mainly due to net writeback of loan impairment allowance in the current quarter versus the allowance made a year ago.
The banking group's revenue the third quarter increased by 5.8% to RM5.62bil from RM5.31bil. Earnings per share were 35.64 sen compared with 36.38 sen.
January-September highlights
For the nine months ended Sept 30, 2018, its net profit rose by 5% to RM4.18bil from RM3.98bil in the previous corresponding period. Its revenue was higher by 5.8% to RM16.41bil from RM15.51bil a year ago.
The founder and chairman Tan Sri Teh Hong Piow said: “In the environment marked by rising uncertainties and persistent volatility, the Public Bank Group continued to uphold profitability growth, driven largely by its organic growth
strategy in its loans and deposits businesses, coupled with its strong and stable asset quality and cost efficiency.
“These enabled the group to continue delivering a leading set of financial performance indicators amongst its peers, with its net return on equity standing at 14.7%, cost-to-income ratio at 33.0% and gross impaired loans ratio at 0.5%.”
From January-September, Public Bank's total gross loans rose by an annualised rate of 4.4% to RM314.5bil. Domestic loans grew at an annualised rate of 4.4% to RM291.6bil.
On the funding side, total customer deposits grew at an annualised rate of 6.5% to RM334.9bil while domestic deposits rose by an annualised rate of 6.3% to RM307bil.
“As a result of this performance, coupled with the Public Bank Group’s prudent liquidity management, the group sustained a healthy gross loan to fund and equity ratio of 79.4% as at the end of September 2018,” Teh said.
As for its non-interest income, it was largely driven by the Group’s unit trust business, banking transactional income and foreign exchange related business.
“Public Mutual remained the largest contributor to the group’s non-interest income.
“For the first nine months of 2018, Public Mutual recorded a pre-tax profit of RM509mil, 5.3% higher as compared to the same period last year,” he said.
Its cost-to-income ratio was at 33.0% versus the industry’s cost-to-income ratio of 44.8%.
“Amid rising cost pressure, the Public Bank group has been able to sustain the lowest cost-to-income ratio as compared to peers. This testifies to the group’s ongoing effective measures in driving cost efficiency. This has also enabled greater capacity for the group to pursue its growth strategy,” he said.
As at end September, its gross impaired loans ratio was low at 0.5%. Despite its strong asset quality, the group maintained a high loan loss coverage of 110.2%.
Including the regulatory reserves of RM2bil, the loan loss coverage was at 235.8%.
As for the overseas operations, they contributed 9.5% to the group's overall pre-tax profit during the January-September period.
Public Financial Holdings Ltd Group in Hong Kong and Cambodian Public Bank Plc remained the largest contributors to overseas operations profit.
During the nine-month period, excluding the effect of foreign exchange, overseas operations achieved a pre-tax profit growth of 8.8%.
Cambodian Public Bank achieved a commendable growth of 21.3% in pre-tax profit as compared to the same period last year.
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