PETALING JAYA: Public Bank Bhd’s net profit for the third quarter ended Sept 30, 2020 grew 2.2% to RM1.39 billion as compared to the corresponding quarter in 2019 mainly due to higher investment income, higher net fee and commission income on higher income from stock-broking and fund management, higher Islamic banking income, higher net interest income and higher other operating income.
However revenue fell 8.6% to RM5.13 billion.
As for the first nine months of 2020, the group posted net profit stood at RM3.72 billion, 9.3%
lower than the first nine months in 2019 mainly due to the moderating revenue growth arising from the Covid-19 pandemic, the effect of the Overnight Policy Rate (OPR) reduction during the year, as well as the one-off net modification loss of RM498 million incurred in the second quarter due to the Covid-19 relief measures offered to individuals and businesses.
Revenue fell 8.3% to RM15.39 billion.
Public Bank founder, chairman emeritus, director and adviser Tan Sri Dr Teh Hong Piow (pix) said the pandemic continued to pose significant uncertainties to the economic landscape and the business environment on all fronts. Further, a total of 125 basis points cut in the OPR this year and the higher provisions set aside in anticipation of the pandemic effect had continued to weigh on profitability.
“However, as the economy gradually reopened and supported by the various government relief and stimulus measures, the economic environment in the third quarter of 2020 had shown an improvement. Public Bank recorded higher loan growth in the third quarter as compared to the earlier quarters. Total loans grew by an annualised rate of 4.8% in the first nine months of 2020. Domestic loans grew by an annualised rate of 5.6%, which was higher than the domestic banking industry’s annualised loan growth of 4.0%. On funding side, the group posted annualised growth rate of 3.9% in both total deposits and domestic deposits.”
Non-interest income continued to support the group’s financial performance, with 17.8% growth in the first nine months of 2020, mainly driven by higher investment income, as well as higher income from unit trust and stockbroking businesses.
The group’s wholly-owned subsidiary Public Mutual remained the main contributor to the group’s non-interest income. As at end-September 2020, Public Mutual managed a total of 162 unit trust funds, with its total net asset value increasing from RM86.6 billion as at end-2019 to RM94.1 billion as at Sept 30, 2020.
“Despite the various challenges faced in 2020, the group recorded a resilient net return on equity of 11.3% in the first nine months of 2020. Cost-to-income ratio stood at 35.2%, as compared to the domestic banking industry’s cost-to-income ratio of 44.7%.
“Meanwhile, impaired loan ratio remained low at 0.3%, which was significantly better than the domestic banking industry’s impaired loan ratio of 1.4%. In addition, the group maintained a high loan loss reserves of 209.1%. Including the RM1.7 billion regulatory reserves that the group had set aside, total reserves for loan losses were even higher at 362.0%.
“During this challenging period, Public Bank’s active participation in all the various financial relief measures, including loan moratorium, loan restructuring and rescheduling and special financing schemes, has benefitted more than 1.8 million customers.”
As at the end of September 2020, the group’s capital position was standing strong, with its common
cquity tier 1 capital ratio, tier 1 capital ratio and total capital ratio at 13.6%, 13.7% and 16.8% respectively. The group’s liquidity coverage ratio also remained healthy at 159.0%.
Public Bank will continue to take a proactive and accommodative stance in the provision of assistance to its customers.
“As the outlook remains highly uncertain, the group will continue to focus and be extra vigilant to ensure prudent credit policies, robust risk management, cost efficiency and good corporate governance. As the group embraces challenges with these strong core competencies, the group will also remain agile and leverage on the opportunities arising from the shift in customer demand and needs during this challenging time.”
