Public Bank Q4 net profit down slightly

PETALING JAYA: Public Bank Bhd saw its net profit fall marginally by 0.6% to RM1.48 billion for the fourth quarter ended Dec 31, 2016, against RM1.49 billion in the previous corresponding period, due to lower other operating income, lower net writeback of loan impairment allowance and higher other operating expenses.

Revenue was up 3.1% from RM4.93 billion to RM5.08 billion.

The group has proposed an interim dividend of 32 sen per share, taking full-year dividend for 2016 to 58 sen.

In a filing with the stock exchange, Public Bank said its gross loans as at the end of 2016 stood at RM294 billion, representing a 7.5% growth compared with a year ago.

Its gross impaired loan ratio stood at 0.5%, which continued to be significantly lower than the banking industry’s ratio of 1.6%, with loan loss coverage ratio of 102.7% versus the industry’s coverage ratio of 90.2%.

Public Bank noted that lending to the retail banking segment remained the key strategic focus of the group, with consumer financing for the purchase of residential properties and passenger vehicles, and extension of credit to small and medium enterprises (SMEs).

As at the end of 2016, the group’s retail and SME loan portfolio collectively accounted for 85% of its total loans.

Despite the challenges in the deposit market, Public Bank registered a 2.9% growth in total customer deposits, higher than the 1.5% achieved in the domestic banking industry.

However, the group’s cost-to-income ratio rose to 32.3% in 2016 from 30.5% in 2015 as a result of rising costs of doing business as well as the increasingly complexity of the banking business.

This compares with the banking industry’s average cost-to-income ratio of 48.8%, hence sustaining Public Bank’s position as the most cost-efficient bank in Malaysia.

The bank’s capital position also remained stable, with its common equity Tier 1 capital ratio, Tier 1 capital ratio and total capital ratio standing at 11.4%, 12.2% and 15.5% respectively as at the end of 2016.

With continued growth in economy, albeit at a moderate pace, coupled with sound banking fundamentals, Public Bank founder and chairman Tan Sri Teh Hong Piow is positive on the sustainability of the group’s earnings in 2017 and said the group will strategise around its key focus on the organic growth in retail banking business.

For the whole of 2016, Public Bank’s net profit rose 2.9% from RM5.06 billion to RM5.21 billion on the back of a 4.8% rise in revenue from RM19.18 billion to RM20.1 billion.