Public Bank Bhd managing director and chief executive officer Tan Sri Dr Tay Ah Lek.
KUALA LUMPUR: Public Bank Bhd
(PBB), which saw its net profit dip 3.5% in the first quarter ended March 31 (1Q24), will remain vigilant in its business approach and maintain its prudent risk profile to weather ongoing risks.
“Tapping on the improved economic outlook, the group will continue to take a proactive approach to embracing growth opportunities. The group will also continue to pursue digital transformation and further step up its ESG efforts to remain relevant in today’s dynamic business environment,” managing director and chief executive officer Tan Sri Tay Ah Lek said in a statement.
The bank posted a net profit of RM1.65bil in 1Q24 down from RM1.7bil in the corresponding quarter last year mainly due to the non-recurrence of the positive impact of OPR hikes in the previous corresponding period.
Revenue for the quarter rose almost 10% to RM6.8bil versus RM6.1bil a year prior. Earnings per share stood at 8.52 sen against 8.83 sen posted in the same quarter last year.
“Net income improved by 3.7% to RM3.38bil as compared with the preceding quarter ended Dec 31, 2023. With a stable net interest margin/financing margin of 2.21%, net interest and financing income rose by 2.7% to RM2.71bil. Meanwhile, non-interest income posted 7.9% growth to RM649.6mil.
“For the first quarter of 2024, the group continued to sustain a commendable net return on equity of 12.3%, an efficient cost-to-income ratio of 35.4% and a stable asset quality with gross impaired loans ratio of 0.62%,” Tay said.
The bank maintained a commendable loan growth at an annualised rate of 6.3%. Its domestic loans grew by an annualised rate of 5.9% to RM378.2bil, outpacing the Malaysian banking industry’s annualised loan growth rate of 5.3%.
Its domestic residential properties financing, hire purchase financing and commercial properties financing grew by an annualised rate of 5.6%, 17.3% and 4.0% respectively.
During the quarter, total newly approved domestic loans increased by 10.2% as compared with the corresponding period last year. Loans approved for hire purchase and SMEs rose 27.2% and 11.8% respectively, which will contribute to loan growth for 2024.
In the first quarter of 2024, the group's total customer deposits and domestic total customer deposits increased by an annualised rate of 7.1% and 7.3% to RM420.2bil and RM391.9bil, respectively. This growth was supported by stable inflows in core deposits.
As ar end March 2024, PBB retained stable liquidity with a gross loan-to-fund and equity ratio of 82.0%.
As of March 2024, the group's gross impaired loans ratio was 0.62%, with its domestic operations having a lower ratio of 0.41%, compared to the industry average of 1.62%.
PPB maintained a prudent level of provisioning despite stable asset quality, boasting a loan loss coverage ratio of 168.7%, nearly double the banking industry's ratio of 92.1%. Taking regulatory reserves into account, the group's coverage ratio rose to 200.0%.
The bank maintained strong capitalisation in 1Q24, with common equity Tier 1 capital ratio, Tier 1 capital ratio, and total capital ratio at 14.5%, 14.5%, and 17.4%, respectively.
The liquidity coverage ratio remained comfortably above the regulatory requirement, standing at a healthy level of 136.5%.
Meanwhile, the bank’s non-interest income increased marginally by 0.5% to RM649.6mil in 1Q24 as compared with the corresponding period last year.
Its wholly owned subsidiary managing its unit trust business, Public Mutual, remained the main contributor to the group’s non-interest income.
Public Mutual recorded robust performance in the first quarter of 2024, with 11.4% growth in pre-tax profit to RM214.6mil as compared with the corresponding period last year, contributing 10.1% to the group’s pre-tax profit.
As of March 2024, Public Mutual retained its position as a leader in the retail market with a 35.8% market share, offering a total of 183 unit trust funds and managing RM100.4bil in net asset value.
PBB’s overseas operations contributed 6.3% to the group’s pre-tax profit in 1Q24 mainly from its Indochina operations.
Cambodian Public Bank Plc was the main contributor to PBB’s overseas profits, with an increase of 5.7% in pre-tax profit during the quarter.
“Indochina will continue to be the group’s key focus area in its overseas
business expansion. With its strategic expansion of business footprint, the group has established an extensive total branch network of 76 branches in Indochina, including 40 branches in Vietnam, 32 branches in Cambodia and 4 branches in Lao PDR. Further, branch expansion plans are in the pipeline for the Group’s newly incorporated wholly-owned subsidiary, Public Bank Lao Limited,” PBB said.
The bank said the challenging operating environment and subdued property market conditions in Hong Kong continued to impact Public Financial Holdings Limited Group's business.
“The group will maintain caution and prudence in managing its risk profile while exploring potential opportunities stemming from Hong Kong's gradual economic recovery,” it added.
