Public Bank posts marginal earnings growth, bucks industry trend

PETALING JAYA: Public Bank Bhd delivered yet another strong set of results despite a challenging operating environment with net profit up 0.8% to RM1.2 billion for the third quarter ended Sept 30, 2015 from RM1.19 billion achieved a year ago while revenue rose to RM4.91 billion from RM4.32 billion previously.
The banking group’s earnings per share for the third quarter fell to 31.11 sen from 31.88 sen in the corresponding period a year earlier.
“The improved earnings was mainly due to higher net interest income, higher foreign exchange income and higher net fee and commission income partially offset by higher other operating expenses and higher loan impairment allowances,” the bank told the stock exchange yesterday.
The group reported increased profit in four out of seven business segments, with only the retail, hire purchase and investment banking seeing lower profit.
For the first nine months, Public Bank posted a 9.3% increase in net profit of RM3.57 billion against RM3.26 billion a year ago. Revenue for the period stood at RM14.25 billion, up 15.5% from RM12.33 billion previously.
The improved earnings was mainly due to higher net interest income of RM346.9 million (7.9%) and higher non-interest income of RM292.5 million (20.7%).
However, this was partially offset by higher other operating expenses of RM195.7 million (9.9%) mainly due to higher personnel costs, which were in tandem with the increased headcount to support business expansion, and higher loan impairment allowances of RM54.4 million on a larger loan base.
Chairman Tan Sri Teh Hong Piow said the banks’ results were driven by sustained growth performance in the group’s loan and deposit, as well as it’s non-interest income, which posted a 20.7% growth in the first nine months of 2015.
“Gains arising from favourable foreign exchange movement with respect to the group’s foreign operations have also partially contributed to the profit growth for the period,” he said in a separate press release yesterday.
Teh said although the operating environment is getting more challenging, with subdued sentiment and confidence, the group continued to demonstrate resilience in performance by achieving a commendable annualised loan growth of 12.5% and an annualised deposit growth of 9.5%.
Public Bank group also stood out among its Malaysian banking peers by achieving a high net return on equity of 16.9%.
Domestic lending business grew at an annualised rate of 10.5% over the same period, outpacing the domestic banking industry’s annualised loan growth rate of 8.2%.
“As at the end of September 2015, the group’s retail loan portfolio collectively accounted for 86% of its total loans. The group’s lending to small and medium enterprises recorded an annualised growth of 16.3% in the first nine months of 2015,” he said.
Teh said Public Bank remained the most cost-efficient bank in Malaysia with its cost-to-income ratio of 30.7% in the first nine months of 2015 as compared with the banking industry’s average ratio of 45.5%.
Public Bank asset quality remained resilient with a low gross impaired loan ratio of 0.53% as at the end of September 2015, significantly lower than the Malaysian banking industry’s gross impaired loan ratio of 1.6%.
“The Public Bank group’s loan loss coverage ratio stood at 130.8%, which was higher and more prudent than the banking industry’s coverage ratio of 97.6%,” he added.
The bank’s capital position remained stable with its common equity Tier 1 capital ratio, Tier 1 capital ratio and total capital ratio standing at 10.2%, 11.4% and 14.8% respectively as at the end of September 2015.
“We will continue to ensure that the group’s capital position remains healthy in support of the group’s business growth strategies by balancing the need for higher capital retention in view of the requirements under the Basel III capital regime whilst maximising our shareholders’ returns,” Teh said.