Public Bank Q4 net profit down 5%

PETALING JAYA: PUBLIC BANK BHD started the results season rolling for banks, reporting a 5% decline in net profit to RM1.405bil for the fourth quarter ended Dec 31, 2018.

The bank said this came as income from its key retail and hire purchase businesses declined.

The group said pre-tax profit contributions from its retail business fell 13.4% on lower fees and higher impairment allowance, while its hire purchase business suffered a 5% drop on reduced margins.

“The competition for loans and deposits in the banking sector was highly intense in 2018,” its founder and chairman emeritus Tan Sri Teh Hong Piow said in a statement.

“However, the Public Bank group continued to uphold prudent credit assessment, so as to preserve its asset quality and protect its returns, while sustaining its market position,” he said.

While net profit for the October-December quarter fell by 5.4%, it was enough to lift the bank’s full-year earnings to a new high of RM5.59bil from the RM5.47bil achieved in financial year 2017 (FY17).

Pre-tax profit for FY18 stood at RM7.10bil on the back of a revenue of RM22.04bil.

Teh said the group continued to sustain its leading position among domestic banks with the lowest gross impaired loan ratio of 0.5% and the most efficient cost-to-income ratio of 33.0%, leading to a net return-on-equity ratio of 14.8% for 2018.

For 2018, the bank achieved a healthy loan growth of 4.2%.

The veteran banker said the group’s lending strategy remained focused on consumer financing for the purchase of residential properties and passenger vehicles, as well as extension of credit to small and medium enterprises for the purchase of commercial properties and working capital.

The bank continued to retain the leading market share of 19.8% for residential property financing and 35.2% for commercial property financing.

Total customer deposits achieved a growth of 6.2% to RM339.2bil in 2018. According to the bank, this deposit growth contributed to the group’s strong funding position, as reflected in its gross loan to fund and equity ratio of 79.0% as at the end of last year.

As for overseas operations, they contributed 9.7% to the group’s overall pre-tax profit.

The bank has declared a second interim payout of 37 sen a share to be paid on March 14.

Coupled with the first payout, total dividend declared amounted to 69 sen. This represented a total dividend payout of RM2.7bil or 47.9% of the group’s net profit in FY18.

Teh said with the mass market being its key targeted segment, the group expected growth arising from the growing private sector economy. He added that the bank would continue to focus on its organic growth strategy.

Outside the country, it is actively expanding its business in Vietnam and now has 18 branches there with the opening of five new branches last year. It plans to open more branches in Vietnam this year.

Shares in Public Bank closed six sen higher to RM25.06 yesterday, giving it a market cap of RM97.28bil.



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