PUBLIC BANK PROFIT DIPS TO RM1.33B
OPR cuts, falling oil prices have weighed on net interest margins, says Teh
PUBLIC Bank Bhd’s net profit declined 5.67 per cent to RM1.33 billion in the first quarter ended March 31 from RM1.41 billion a year ago.
Public Bank said in a Bursa Malaysia filing yesterday this was due to a loss on re-measurement of defined benefit plans, loss on revaluation of financial investments and higher loss on cash flow hedges.
Its revenue decreased 0.9 per cent to RM5.52 billion from RM5.57 billion previously, owing to lower net interest income resulting from the negative effect of the Overnight Policy Rate (OPR) reductions during the period.
Public Bank chairman Tan Sri Dr Teh Hong Piow said the downside pressure on the economy was compounded by the steep fall in oil prices.
“Coupled with the reductions in OPR, which have weighed on net interest margins, domestic banks faced heightened earnings pressure in the first quarter of this year,” said Teh in a separate statement yesterday.
However, he said the group maintained its resilient fundamentals, as reflected in its stable gross impaired loan ratio of 0.5 per cent and efficient cost-to-income ratio of 35.7 per cent in the first quarter.
“The group was able to achieve continued loan and deposit growth in the first quarter, albeit at more moderate growth rates.
“During the period, we recorded an annualised rate of 2.9 per cent growth in total loans, supported by residential property financing, commercial property financing and passenger vehicle financing.”
Teh said total customer deposits posted an annualised growth rate of two per cent.
The bank’s non-interest income in the first quarter continued to be supported by its unit trust-related income, banking fee income, investment income and brokerage income.
Teh said its unit trust business, managed by subsidiary Public Mutual, remained the major contributor of its non-interest income.
“As at March 31, Public Mutual maintained its market leadership in the retail private unit trust industry with a market share of 34.3 per cent.
“It managed a total of 158 unit trust funds with a net asset value of RM78.4 billion.”
Public Bank also continued to record an efficient cost-toincome ratio of 35.7 per cent in the first quarter.
This was significantly better than the domestic banking industry’s cost-to-income ratio of 44.7 per cent.
“Rising costs are increasingly putting pressure on profitability. However, we continue to stand out among our peers in cost efficiency.
“With the current economic challenges and the moderating revenue growth, the group has placed greater focus on broadbased cost efficiency to protect its profitability.”
He cautioned that this would be an exceptionally challenging year and banks’ earnings would be under pressure.
“Nonetheless, the group’s resilient capital position, as well as its strong asset quality and large loan loss reserves, continue to provide a strong buffer to the group in navigating any challenges.”
As at the end of March, Public Bank’s liquidity coverage ratio stood at 135.1 per cent.