PETALING JAYA: Public Bank Bhd
reported its strongest quarterly operating revenue, yet its second-quarter net profit dipped due to the effect of lower non-taxable income.
The second-largest listed bank in Malaysia recorded a 1.2% year-on-year (y-o-y) decline in net profit to RM1.76bil for the second quarter ended June 30, 2025 (2Q25).
This was despite a near-10% y-o-y increase in revenue to RM7.35bil.
Coupled with the first-quarter top line, which also grew by about 10% y-o-y, Public Bank’s revenue for the first half of financial year 2025 (1H25) expanded by 10% to RM14.67bil.
Net profit growth, however, was modest by 2.1% y-o-y to RM3.51bil in 1H25.
In 2Q25, Public Bank’s net interest and Islamic banking income increased by 5.1% y-o-y on healthy loans/financing growth.
Non-interest income increased by 15.3%, which was supported by the income contribution from the recently acquired general insurance business and higher investment income.
The improvement in revenue performance was partially offset by higher other operating expenses of RM100.1mil, on higher personnel and administrative costs.
Segment-wise, retail operations’ pre-tax profit in 2Q25 decreased by 8.2%, mainly due to loan/financing impairment allowance made in the current quarter arising from normalisation of credit cost to pre-Covid-19 level and lower fee income.
These were partially mitigated by higher net interest/financing income on healthy loans/financing growth.
Hire purchase’s pre-tax profit increased by 3.2% on the back of lower loan/financing impairment allowance and higher net interest/financing income, but was partially offset by higher other operating expenses.
Corporate lending’s pre-tax profit in 2Q25 rose 33.3% y-o-y. The improved performance was mainly due to higher net writeback of loan/financing impairment allowance and higher fee income, partially offset by lower net interest/financing income and higher other operating expenses.
Investment banking’s pre-tax profit fell by 51.7% y-o-y due to lower stock-broking income, in tandem with the weaker market sentiment.
As for fund management, its pre-tax profit in 2Q25 decreased by 8.6%, because of reduced management fee from lower average net asset value of funds and lower fee on sale of trust units arising from unfavourable market conditions, and higher other operating expenses.
Meanwhile, Public Bank’s overseas operations delivered a 35.6% y-o-y higher pre-tax profit.
The improved performance was mainly due to lower loan impairment allowance and higher fee and other income.
These were partially offset by lower net interest income on lower net interest margin.
Commenting on the first-half results, Public Bank said its net interest and financing income grew by 4.1% to RM5.65bil.
Non-interest and non-financing income achieved double-digit growth of 17.5%.
Total loans in 1H25 grew at an annualised rate of 5.1%, while total deposits increased at an annualised rate of 3.5%.
As at end-June 2025, Public Bank’s asset quality remained stable with the gross impaired loans ratio standing at 0.5% and credit costs at three basis points, well below the banking industry’s average.
Loan loss coverage stood at a prudent level of 153.9%, exceeding the 90.5% industry average.
The group is also well capitalised with Common Equity Tier 1, Tier 1 and total capital ratios standing at 14%, 14%, and 16.8%, respectively.
Managing director and chief executive officer Tan Sri Tay Ah Lek said in a statement that Public Bank’s “resilient business model and prudent management” enabled the group to ride through the significant industry headwinds.
“The group’s core businesses continued to deliver commendable performance, with return on equity standing at 12.6%, whilst cost management remained prudent with an efficient cost-to-income ratio of 35.3%.
“With the good performance for 1H25, the board of directors of Public Bank has declared an interim dividend of 10.5 sen per share, amounting to RM2.04bil, which represents a payout ratio of 58.1% of the Public Bank group’s net profit for the six months ended June 30, 2025.”
Looking ahead, Public Bank cautioned that the global landscape has become more challenging mainly stemming from the ongoing trade tensions and geopolitical conflicts.
On the domestic front, while downside risks have increased mainly due to external factors, the Malaysian economy will continue to be anchored by its diversified domestic economy, resilient domestic demand and stable labour market conditions.
“Against this backdrop, the Public Bank group will remain highly vigilant in navigating these evolving risks,” said Tay.
