KUALA LUMPUR: Public Bank Bhd
's 73.23%-owned subsidiary, Public Financial Holdings Ltd (PFHL), expects to incur an after-tax loss of between HK$1.9bil and HK$2bil for the financial year ending Dec 31, 2026 (FY26), following a full impairment of goodwill.
The projected loss compares with an after-tax profit of HK$80mil recorded in FY25.
“The profit warning was due to a full impairment on the carrying amount of goodwill after an impairment assessment,” Public Bank said in a filing with Bursa Malaysia.
PFHL expects to fully impair goodwill with a carrying value of HK$1.96bil as at Dec 31, 2025, resulting in a corresponding reduction in its consolidated assets and net assets.
The impairment assessment took into account a sharp rise in long-term market interest rates since the third quarter of 2026, which increased the discount rate used in valuing goodwill.
PFHL also revised its medium-term cash flow projections downwards, reflecting higher funding costs and pressure on net interest margins.
It said the majority of its lending portfolio was priced at fixed rates or benchmarked against the Hong Kong dollar prime rate, which tends to remain stable across interest rate cycles.
PFHL said the goodwill impairment was a non-cash item and would not affect its operating cash flows.
The impairment would also have no impact on the financial positions or regulatory capital ratios of its two key operating subsidiaries, Public Bank (Hong Kong) Ltd and Public Finance Ltd.
Meanwhile, Public Bank said the profit warning would have no operational impact on the bank or its other subsidiaries.
“The profit warning does not have any operational effect on Public Bank and its other subsidiaries.
“However, the profit warning may result in a potential reduction to the consolidated net assets per ordinary share in Public Bank of RM0.04 per share and the consolidated earnings per Public Bank share of four sen per share, respectively,” Public Bank said.
PFHL said its projected FY2026 loss was based on its latest unaudited management accounts for the nine months ended Sept 30, 2026, and its expected fourth-quarter performance.
The estimates remain subject to change as they have not been audited or reviewed by its auditors and audit committee.
The profit warning comes amid Public Bank's proposed privatisation of PFHL through a scheme of arrangement announced on Sept 8, 2026.
