Public Bank's Q1 net profit up 5%

PETALING JAYA: Public Bank Bhd, the country's third largest banking group, saw its net profit grow by 5% to RM1.02 billion in the first quarter ended March 31, 2014 (1Q FY14), up from RM968.3 million a year ago, mainly driven by higher net interest income, higher net fee and commission income as well as higher investment income.
The bank's revenue rose by 7.6% to RM3.95 billion, from RM3.67 billion last year.
In a press statement yesterday, Public Bank founder and chairman Tan Sri Teh Hong Piow highlighted that the group's local operations recorded an annualised loan growth of 10.7%, and deposit growth of 14.2%, despite the protracted external uncertainties and challenging operating environment with expected moderation in the overall domestic demand.
" Public Bank continued to be at the forefront amongst its banking peers in Malaysia, achieving the highest net return on equity of 20.5% whilst maintaining the lowest gross impaired loan ratio of 0.7% and cost-to-income ratio of 31.8% in 1Q FY14" he said.
Public Bank sustained a healthy loan growth momentum at an annualised rate of 9.8% in 1Q FY14, as the group maintained its market leadership position in domestic lending for residential mortgages, commercial property financing and passenger vehicles financing with market shares of 19.6%, 33.7% and 26.9% respectively.
Lending to the retail banking segment remained the key focus of the Public Bank, as its retail loan portfolio collectively accounted for 86% of its total loans as at March 31, 2014. The group's lending to small and medium enterprises also recorded an annualised growth of 25.2% in 1Q FY14.
Teh said Public Bank's total customer deposits grew at an annualised rate of 12.8%, with domestic customer deposits growing at a stronger annualised rate of 14.2%.
The strong domestic deposit growth was mainly backed by the steady inflows of fixed deposits, low cost savings and current accounts, which grew by an annualised rate of 20.5%, 17.1% and 5.0% respectively.
Non-interest income of the Public Bank grew by 7.5% in 1Q FY14, mainly driven by income from higher unit trust business and transactional banking services.
Teh said Public Bank's unit trust management business through its wholly-owned subsidiary, Public Mutual Bhd, saw its pre-tax profit grow by 17.1% in 1Q FY14.
Public Mutual, which remained as the market leader in the private unit trust business, had 105 funds with total net asset value of RM62.6 billion under its management.
For 1Q FY14, Public Bank's overseas operations contributed 6.9% of the group's overall pre-tax profit. Its wholly-owned Cambodian Public Bank Plc reported a year-on-year growth in pre-tax profit of 32.2% to US$9.6 million (RM31.2 million), and remains as one of the top three largest banks in Cambodia.
The group's capital position remained stable, with its common equity Tier 1 capital ratio, Tier 1 capital ratio and total capital ratio standing at 8.5%, 10.1% and 13.3% respectively as at March 31, 2014.
Commenting on group's prospect, Teh remarked that Public Bank is expected to maintain its earnings momentum for the rest of 2014, backed by domestic demand, albeit at a more moderate pace.
"Our strategies for Public Bank remain unchanged. The group will continue to focus on its core retail banking and financing business, whilst maintaining its prudent credit policies. We will continue to leverage on our strong brand as well as our wide and efficient branch network to support long term sustainable growth," he said.