PETALING JAYA: Despite a revenue-drop of nearly RM500mil, Public Bank Bhd saw a 15% jump in net profit to a record RM1.53bil on a year-on-year (y-o-y) basis in the first quarter ended March 31.
The stronger bottom line was due to higher net interest income in the quarter, improved net income from its Islamic banking business and a higher fee and commission income.
In a filing with Bursa Malaysia yesterday, the banking group said its net profit rose to RM1.53bil in the January-March 2021 period compared with RM1.33bil a year earlier.
Revenue fell by 8.8% y-o-y to RM5.03bil from RM5.52bil in the previous corresponding quarter.
“For the quarter under review, net interest income and net income from Islamic banking business increased by RM237.1mil (up 12.9% y-o-y) and RM91.5mil (up 26.8% y-o-y) respectively mainly due to positive loans growth achieved in the current period as well as the negative impact of overnight policy rate reductions to the previous year corresponding period.
“Net fee and commission income increased by RM154.5mil (up 35.4% y-o-y) on higher income from fund management and stock-broking businesses.
“These were partially offset by higher loan impairment allowance of RM137.1mil, lower investment income of RM44.4mil and higher other operating expenses RM28.2mil, ” it said.
In a separate statement, Public Bank founder and chairman emeritus Tan Sri Teh Hong Piow highlighted that the banking group’s first-quarter performance was driven by the continued expansion in loans and deposits businesses, and further boosted by fee-based revenue growth.
As at end-March, Public Bank’s total loans recorded an annualised growth of 4.8%. This was mainly supported by residential property financing, passenger vehicle financing as well as small and medium enterprises (SME) financing.
On deposit-taking, the group’s total customer deposits achieved an annualised growth of 2.9% and domestic customer deposits registered an annualised growth of 3%.
The lower-cost current and savings deposits continued to grow at a strong pace during the quarter with an annualised growth of 18.4%.
“The Public Bank group remained as the most cost-efficient bank in Malaysia, with a cost-to-income ratio of 31.8%, significantly better than the domestic banking industry’s cost-to-income ratio of 42.8%.
“In light of the ongoing challenging operating condition, the group will continue to manage cost prudently in order to sustain profitability, ” according to Teh.
Public Bank said that its asset quality had remained stable in the first quarter ended March 31.
Its gross impaired loan ratio was recorded at 0.4%, while the loan loss coverage ratio was maintained at 247.0% compared to the banking industry’s loan loss coverage of 111.8%
On capital and liquidity position, the banking group said its common equity Tier-1 capital ratio, Tier-1 capital ratio and total capital ratio stood at 13.8%, 13.8% and 16.9% respectively, as at end-March 2021.
Public Bank did not declare a dividend for the quarter.
Looking ahead, Teh said the banking industry is expected to achieve an improved performance in 2021.
“While the Public Bank group remains cautiously optimistic about the economic outlook, it will continue to strive hard for business growth in its core business segments in order to continue generating value for its stakeholders, ” he said.