Public Bank net profit rises 5% to RM1.02b

by **Cals** Tue 22 Apr 2014, 19:48

Business & Markets 2014

Written by Levina Lim of theedgemalaysia.com

Tuesday, 22 April 2014 10:32

KUALA LUMPUR: Public Bank Bhd reported a 5% rise in net profit for the first quarter ended Dec 31, 2014 (1QFY14) to RM1.02 billion from RM968.30 million previously on a 7.49% improvement in revenue to RM3.95 billion.

The bank’s improved earnings was mainly due to higher net interest income, net fee and commission income, and higher investment income. These were partially offset by higher operating expenses mostly due to an increase in personnel costs to support higher business volumes.

Retail operations brought in a pre-tax profit of RM779.6 million, followed by hire purchase (RM137.4 million), fund management (RM112.8 million), treasury and capital market operations (RM99.3 million), corporate lending (RM95.6 million), overseas operations (RM91.3 million), and investment banking (RM12.2 million).

“Despite the protracted external uncertainties and challenging operating environment with expected moderation in the overall domestic demand, the Public Bank group continued to demonstrate resilience in performance, particularly its domestic operations which recorded a healthy annualised loan growth of 10.7% and an annualised deposit growth of 14.2%,” said chairman Tan Sri Teh Hong Piow in a statement yesterday.

Lending to the retail banking segment remained the key focus of the bank, with the extension of credit mainly to small and medium enterprises as well as for purchasing residential properties and passenger vehicles.

“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,” he said.

The group maintained its market leadership position in its domestic lending for residential mortgages, commercial property financing and passenger vehicles financing, with market shares of 19.6%, 33.7% and 26.9% respectively.

According to Teh, the group’s funding and liquidity position remained supportive of its lending activities, backed by its strong retail deposit franchise with a large domestic depositor base of over five million customers.

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%.

The strong domestic deposit growth was mainly backed by the steady inflows of fixed deposits, low-cost savings and current accounts, which grew by an annualised rate of 20.5%, 17.1% and 5% respectively.

Non-interest income also grew by 7.5% in the 1QFY14 compared with the corresponding quarter in 2013, mainly driven by income from higher unit trust business and transactional banking services.

Teh said that the group’s unit trust management business through Public Mutual Bhd registered a strong double-digit performance during the quarter under review, with a pre-tax profit growth of 17.1% compared with the corresponding quarter in 2013.

As at March 31, 2014, Public Mutual had 105 funds with a total net asset value of RM62.6 billion under its management.

According to Teh, the group continued to be at the forefront amongst its banking peers in Malaysia, achieving a net return on equity of 20.5% whilst maintaining the lowest gross impaired loan ratio of 0.7% and cost-to-income ratio (CIR) of 31.8% in 1QFY14.

The bank’s CIR is low compared to the banking industry’s average of 45.6%. Its asset quality remained resilient with a gross impaired loan ratio of 0.7% as at the end of March 2014, lower than the Malaysian banking industry’s gross impaired loan ratio of 1.8%.

This article first appeared in The Edge Financial Daily, on April 22, 2014.