Public Bank: HP Act impact temporary

Kuala Lumpur: Public Bank Bhd, the country's
third largest lender, expects a resolution on the amended Hire Purchase
Act 1967 to be reached soon between the government and car dealers.

[You must be registered and logged in to see this image.]

"MAA has indicated that May and June car sales have slowed down a
little. We see the slower approval rates for car loans as temporary. We
believe it will revert to previous levels as issues between the car
dealers and the government are being sorted out," said managing director
Tan Sri Tay Ah Lek.

"This slowdown is manageable because our
portfolio is diversified. Our overall loan growth is consistent," he
told reporters at a results briefing held here yesterday.

It
is learnt that the Domestic Trade, Cooperatives and Consumerism Ministry
will decide on the issues arising from amendments to the Act by late
next week.

In its filings to the stock exchange, Public Bank
said its second-quarter net profit rose 20 per cent to RM880.4 million
from RM734.1 million posted a year ago. Revenue also improved 18 per
cent to RM3.1 billion from RM2.7 billion.





Chief operating officer Leong Kwok Nyem, during the results briefing
yesterday, acknowledged that Public Bank's lending margins could narrow
by as much as 15 basis point from the current 3.3 per cent as banks
compete for loans and deposits.

Last year, net interest margin was 3.2 per cent.

Tay said the bank is optimistic of "satisfactory performance" for the
rest of 2011 as it rides on strong loan and deposit growth, stable asset
quality and continued expansion of fee-based income.

On its
overseas expansion, he said the group will remain focused on its Hong
Kong and Cambodian operations, with plans to open three new branches in
Hong Kong and six new branches in Cambodia by the end of this year.

When asked on prospects of dividend payout for the year, Tay replied
that Public Bank will maintain its 50 per cent profit payout ratio.
Yesterday, the bank announced an interim single tier dividend of 20 sen a
share to be paid on August 17 2011.

He then said the bank's
capital position remains healthy, with its tier-1 capital ratio and
risk-weighted capital ratio standing at 9.7 per cent and 13.2 per cent
respectively, as at the end of June 2011, after payment of the first
interim dividend of 2011.