PETALING JAYA: PUBLIC BANK BHD’s net profit slipped marginally by 1.5% in the third quarter ended Sept 30 to RM1.36bil, compared with RM1.38bil a year ago.
For the quarter, the lender posted a pre-tax profit of RM1.76bil, a marginal increase of RM2.1mil or 0.1% as compared to a pre-tax profit of RM1.75bil in the previous year’s corresponding quarter.
The increase was mainly due to higher net income from the Islamic banking business and higher net interest income arising from loan growth, despite the negative effect of the 0.25% overnight policy rate (OPR) reduction in May 2019.
On a quarter-on-quarter comparison, the group’s net profit of RM1.36bil in the third quarter represented an increase of 2.2% as compared to the net profit of RM1.33bil achieved in the preceding quarter.
Revenue for the period stood at RM5.61bil against RM5.62bil a year ago, while earnings per share stood at 35.10 sen versus 35.64 sen previously.
For the first nine months of 2019, Public Bank’s profit performance remained stable, on the back of a 2.3% growth in total revenue to RM16.78bil.
For the period, the group recorded a pre-tax profit of RM5.31bil and a net profit attributable to shareholders of RM4.11bil, compared to RM5.31bil and RM4.19bil respectively in the corresponding period of 2018.
“Recent developments in the operating environment posed further challenges to the banking industry. While macro headwinds remain, the reduction in the OPR in May 2019 had also resulted in the decline in net interest margins for the banking sector, which affected the profit for the first nine months ended September 2019, ” founder and chairman Tan Sri Teh Hong Piow said in a statement yesterday.
“Despite these concerns, the Public Bank group was able to sustain stable profit performance, mainly on account of the stable interest income from its growing financing and deposit business. The group’s profitability was also complemented by its non-interest income, which grew 5.8% in the first nine months of the year.
“During the financial period, the group also retained its competitive strength, as reflected in its efficient cost-to-income ratio of 34.3% and low gross impaired loan ratio of 0.5%. As a result, the group sustained a resilient net return on equity of 13.3%, ” Teh said.
In the first nine months of 2019, the bank’s total loans rose by an annualised rate of 4.2% to RM327.2bil. On the domestic front, the group’s total loans grew by an annualised rate of 4.4%, higher than the banking system’s annualised loan growth of 3.3%.
On deposit-taking, Public Bank achieved an annualised growth rate of 3.2% to RM347.2bil in total deposits. Domestic deposits rose by an annualised rate of 3.4%, which was also higher as compared to the domestic banking system’s annualised deposit growth of 2.0%.
“The group has adopted a strategy to optimise its funding position and balance between deposit growth and cost of funding, whilst ensuring sufficient liquidity buffer. As at the end of September 2019, the group’s funding position remained healthy with its gross loan to fund and equity ratio standing at 79.8%, ” Teh said.
In the first nine months of 2019, Public Bank posted a 5.8% growth in non-interest income, led by higher investment income and banking fee income.
In the first nine months of 2019, Public Mutual managed a total of 152 unit trust funds, representing a net asset value of RM84.2bil. Public Mutual also sustained its market leader position in the domestic private unit trust industry, with a retail market share of 35.3%.
Public Bank’s cost-to-income ratio stood at 34.3%, significantly more efficient than the domestic banking industry’s average cost-to-income ratio of 44.6% in the first nine months.
As at end-September 2019, the bank’s gross impaired loan ratio remained stable at 0.5%, well below the domestic banking industry’s 1.6%.The banking group maintained a high impairment provision, as reflected in its loan loss coverage of 117.6%, which was well above the banking industry’s 88.8%. Including additional regulatory reserves set aside of RM1.9bil, the group’s loan loss coverage would be higher at 230.5%.
For the first nine months of 2019, overseas operations contributed 11.0% to the group’s pre-tax profit, mainly attributed to the business of Public Financial Holdings Limited Group in Hong Kong and Cambodia Public Bank Plc (Campu Bank).
“The Public Bank Group’s overseas operations have remained an important revenue source. For the first nine months of 2019, the group’s total profits from its overseas business recorded a growth of 14.4%, mainly contributed by the growing profits from its Indo-China business, particularly Campu Bank and Public Bank Vietnam Limited, ” Teh said.
As at the end of September 2019, the bank’s common equity tier 1 capital ratio, tier 1 capital ratio and total capital ratio stood at a healthy level of 13.1%, 13.5% and 16.5%, respectively.
Commenting on its prospects, Teh said the group would maintain a “cautious stance amid the growing downside risks”.
“However, this does not hinder the group from pursuing continued business expansion. Pockets of opportunities remain for banks to explore in the growing Malaysian and regional economies. These include sustained demand for affordable housing and new growth opportunities arising from the advancement of digital banking, ” he said.
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