PETALING JAYA: Public Bank Bhd’s net profit for the third quarter ended Sept 30, 2019 fell 1.5% to RM1.36 billion from RM1.38 billion a year ago, due to the negative effect of the 0.25% Overnight Policy Rate (OPR) reduction in May 2019.
Revenue was also marginally lower by 0.2% to RM5.61 billion from RM5.62 billion.
For the nine-month period, the group’s net profit was down 1.9% to RM4.11 billion versus RM4.19 billion a year ago, but its revenue expanded 2.3% to RM16.78 billion from RM16.41 billion.
Public Bank founder, chairman emeritus, director and adviser Tan Sri Dr Teh Hong Piow (pix) said recent developments in the operating environment posed further challenges to the banking industry. While macro headwinds remain, the reduction in OPR in May 2019 resulted in the decline in net interest margins for the banking sector.
“Despite these concerns, the group was able to sustain stable profit performance, mainly on account of the stable interest income from its growing financing and deposit business. The group’s profitability was also complemented by its non-interest income which grew 5.8% in the first nine months of the year.
“During the financial period, the group also retained its competitive strength, as reflected in its efficient cost-to-income ratio of 34.3% and low gross impaired loans ratio of 0.5%. As a result, the group sustained a resilient net return on equity of 13.3%,” Teh said in a statement.
In the first nine months of 2019, Public Bank’s total loans rose by an annualised rate of 4.2% to RM327.2 billion. On the domestic front, the group’s total loans grew by an annualised rate of 4.4%, higher than the banking system’s annualised loan growth of 3.3%.
On deposit-taking, the group achieved an annualised growth rate of 3.2% to RM347.2 billion in total deposits.
“The group has adopted a strategy to optimise its funding position and balance between deposit growth and cost of funding, whilst ensuring sufficient liquidity buffer. As at the end of September 2019, the group’s funding position remained healthy with its gross loan to fund and equity ratio standing at 79.8%.”
For the first nine months of 2019, overseas operations contributed 11.0% to the group’s pre-tax profit, mainly attributed to the business of Public Financial Holdings Limited Group in Hong Kong and Cambodia Public Bank Plc.
As at the end of September 2019, the group’s common equity Tier 1 capital ratio, Tier 1 capital ratio and total capital ratio stood at 13.1%, 13.5% and 16.5%, respectively.
Amid the persistence of adverse developments in the macro environment largely stemming from the external front, Public Bank said the domestic banking sector is likely to continue facing headwinds weighing on revenue growth.
“Public Bank will maintain a cautious stance amid the growing downside risks. However, this does not hinder the group from pursuing continued business expansion. Pockets of opportunities remain for banks to explore in the growing Malaysian and regional economies. These include sustained demand for affordable housing and new growth opportunities arising from the advancement of digital banking.
At the noon break, Public Bank’s share price was unchanged at RM19.80 on 1.11 million shares done.
