Public Bank’s 4Q net profit up 19.2%

by **Cals** Fri 05 Feb 2016, 08:24

Public Bank’s 4Q net profit up 19.2%

By Meena Lakshana / The Edge Financial Daily | February 4, 2016 : 10:07 AM MYT

This article first appeared in The Edge Financial Daily, on February 4, 2016.

KUALA LUMPUR: Public Bank Bhd, the country’s third largest banking group by assets, saw its fourth quarter (4Q) net profit rise 19% from a year ago, mainly due to the net write-back of loan impairment allowances and higher net interest income, and other operating income. This was partially offset by other higher operating expenses.

[size=12][You must be registered and logged in to see this image.]Teh says Public Bank will continue to pursue organic growth in the core retail banking and financing business.

Net profit for the three months ended Dec 31 2015 (4QFY15) increased to RM1.49 billion, or 38.65 sen per share, compared with RM1.25 billion, or 32.47 sen per share, in 4QFY14. Revenue grew 8.8% to RM4.93 billion from RM4.53 billion.

The group also declared a higher second interim dividend of 32 sen per share for 4QFY15, payable on March 1, compared with 31 sen in 4QFY14. Total dividends paid and payable for the year amounted to RM2.16 billion, representing a payout of 42.7% of the group’s net profit for FY15. Full-year 2015 (FY15) net profit came in 12% higher at RM5.06 billion, or RM1.31 per share, from RM4.52 billion, or RM1.24 sen per share, in FY14, while revenue increased 13.8% to RM19.18 billion from RM16.86 billion in FY14.

Public Bank said the improved earnings hinged on higher net interest income of RM446.6 million (7.5%), higher non-interest income of RM428.4 million (22.4%) and lower loan impairment allowances of RM112.8 million (43.5%). This was partially offset by other higher operating expenses of RM309.3 million (11.9%), mainly due to higher personnel costs, which were in tandem with increased labour to support business expansion.

The growth in the group’s profit was driven by continued healthy loans and customer deposits growth coupled with sustained strong asset quality, the filing stated. Gross loans grew by 11.6% to RM273.4 billion in FY15 from RM245 billion in FY14, driven by growth in property financing, financing of passenger vehicles and lending to small and medium enterprises, with the group’s retail loan portfolio accounting for 86% of its total loans.

Total deposits from customers increased by 8.9% to RM301.2 billion in FY15, which partly contributed to the higher net interest income for the year. The group’s domestic customer deposit grew by 7.5%, significantly higher than the domestic banking industry’s growth rate of 1.8%.The group’s impaired loan ratio further improved to 0.5% as at Dec 31, 2015.

Its net loan-to-deposit ratio was 90.3% as at end of 2015, while the group’s non-interest income increased by 22.4%. This was mainly contributed by higher income from its unit trust business, foreign exchange related transactions and fee income from banking operations.

Public Bank founder and chairman Tan Sri Teh Hong Piow said against increasing challenges arising from low commodity prices, volatility in the financial market and the weak external environment, Public Bank Group continued to demonstrate resilience in performance by achieving healthy loan growth of 11.6% and deposit growth of 8.9%.

“The results reflected the consistent execution of the group’s organic growth strategy, which continues to deliver favourable results to our customers and our shareholders,” he said in a statement yesterday.

“Public Bank Group continued to be the most efficient banking group in Malaysia with its low cost-to-income ratio of 30.5%, compared with the banking industry’s average cost-to-income ratio of 45.5%,” he added.

Teh expects intense competition for market share and the more stringent capital and liquidity requirement will continue to put pressure on the group’s net interest margin and return on equity. He said Public Bank will continue to pursue organic growth strategy in the core retail banking and financing business.

“Public Bank will [also] continue to be proactive in its capital management in order to ensure that the group’s capital position remains healthy at all times in support of the group’s business growth strategies and maximising its shareholder value, while balancing the need for higher capital retention as required under the Basel III capital regime.

“Facing the challenges ahead, Public Bank Group’s key priorities are to accelerate business innovation and pursue operational efficiency in order to deliver the group’s commitment to excellence to all its stakeholders,” he said.

“Moving into our 50th year anniversary in 2016, we are confident that we are well-positioned for sustainable growth into the future,” he added.
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