Public Bank Q1 profit up 6.4pc

Public Bank Bhd, Malaysia's third-biggest lender, said first-quarter profit grew 6.4 per cent on increased lending to home and car buyers as well as small business owners.

Net income rose to RM940.8 million, or 26.86 sen a share, in the three months ended March 31, from RM884.1 million, or 25.24 sen a share, a year earlier, the Kuala Lumpur-based lender said in an exchange filing today.

"Public Bank continues to strive in a healthy domestic operating environment," Chairman Teh Hong Piow said in a separate statement. "The group is expected to maintain its earnings momentum and continue to record satisfactory performance for the rest of 2012."

Domestic demand may help Malaysia's economy expand 4.2 per cent this year amid lingering sovereign debt woes in Europe, the Malaysian Institute of Economic Research said yesterday, raising its estimate from 3.7 per cent. That is in line with the central bank's forecast of 4 per cent to 5 per cent growth.

Public Bank shares were unchanged at RM13.80 at 2:55 p.m. in Kuala Lumpur after the earnings were released during the midday trading break. The stock has risen 3.1 per cent this year, trailing a 4.5 per cent gain in the benchmark FTSE Bursa Malaysia KLCI Index.

Gross loans expanded 12.6 per cent to RM181.9 billion at the end of March from a year ago, Public Bank said. The lender made 94 per cent of operating income last year from Malaysia, according to data compiled by Bloomberg. It also earned from operations in Hong Kong, China and Cambodia.

Net interest income, or revenue from borrowers after deducting interest paid to depositors, advanced 5 per cent to RM1.27 billion in the three months ended March. Earnings from Islamic banking expanded 6 per cent to RM211.7 million, according to the filing. Allowances for impairment on loans fell 54 per cent to RM30 million. -- Bloomberg