Highlight Public Bank 1Q net profit up 5% on loans and deposits growth

by **Cals** Mon 21 Apr 2014, 20:02

Highlight Public Bank 1Q net profit up 5% on loans and deposits growth

Business & Markets 2014

Written by Ho Wah Foon of theedgemalaysia.com

Monday, 21 April 2014 13:33

KUALA LUMPUR (April 21): Public Bank Bhd posted a net profit of RM1.02 billion for the first quarter of 2014, up 5% from RM968.3 million in similar quarter in 2013, on growth of loans and customer deposits.

Revenue posted for the quarter was RM3.95 billion, up from RM3.67 billion in the first quarter of 2013.

No dividend was declared.

The bank said in a filing with Bursa Malaysia that the improved earnings was mainly due to higher net interest income by RM53.2 million (3.9%), higher net fee and commission income by RM19.4 million (6.4%) and higher investment income by RM10.8 million (25.0%).

“The growth in the group’s net interest income was driven by continued healthy loans and customer deposits growth coupled with sustained strong asset quality,” the company told the stock exchange.

In a separate press statement, founder and chairman of Public Bank, Tan Sri Teh Hong Piow, said: “The Public Bank group continued to demonstrate resilience in performance, particularly for its domestic operations which recorded a healthy annualised loan growth of 10.7% and an annualised deposit growth of 14.2%.”

He said the group achieved 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 the first quarter of 2014.

Reviewing the bank’s first quarter results, the banker said the bank sustained a “healthy loan growth momentum at an annualised rate of 9.8% in the first quarter of 2014. Domestic loans grew at a stronger annualised rate of 10.7% over the same period.

Lending to the retail banking segment remained the key focus. As at the end of March 2014, 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 25.2% in the first quarter of 2014.

Teh said the group’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%.

He said non-interest income of the Public Bank group grew by 7.5% in the first quarter of 2014 as compared with the corresponding quarter in 2013, mainly driven by income from unit trust business and transactional banking services.

Teh remarked that the Public Bank group “remained the most cost-efficient bank in Malaysia” with its cost-to-income ratio of 31.8% in the first quarter of 2014 as compared with the industry’s average ratio of 45.6%.

“Public Bank Group remained resilient with a low gross impaired loan ratio of 0.7% as at the end of March 2014, significantly lower than the Malaysian banking industry’s gross impaired loan ratio of 1.8%,” said Teh.

Teh added: “The group's loan loss coverage ratio stood at 119.1%, which was higher and more prudent than the banking industry's coverage ratio of 104.5%.”

On overseas operations, the banker said for the first quarter of 2014, the group’s overseas operations contributed 6.9% of the group’s overall pre-tax profit.

Cambodian Public Bank Plc, a wholly-owned subsidiary of Public Bank, reported a growth in pre-tax profit of 32.2% to US$9.6 million as compared to the corresponding quarter in 2013.

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 the end of March 2014, said the statement.

“With the expectation that the Malaysian economy will remain on a steady growth path of 4.5% to 5.5% in 2014, backed by domestic demand, albeit at a more moderate pace, the Public Bank Group is expected to maintain its earnings momentum for the rest of 2014,” remarked Tan Sri Teh.