Public Bank Group posts pre-tax profit of RM1.73 billion in first quarter
KUCHING: The Public Bank Group recorded a pre-tax profit of RM 1.73 billion in the first quarter of 2020 (1Q20), representing a 5.1 per cent decline as compared to RM1.82 billion achieved in the corresponding period last year.
Net profit attributable to shareholders was 5.7 per cent lower at RM 1.33 billion. As a result, the group posted a lower net return-on-equity of 12.5 per cent.
“The global economy started 2020 with major challenges stemming from the Covid-19 pandemic,” Public Bank founder, chairman emeritus, director and adviser Tan Sri Dr Teh Hong Piow said .
“Downside pressure on the economy was further compounded with the steep fall in global oil prices.
“Coupled with the reductions in Overnight Policy Rate (OPR) which have weighed on net interest margins, domestic banks faced heightened earnings pressure in the first quarter of 2020.”
“However, the Public Bank Group maintained its resilient fundamentals, as reflected in the group’s 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 of 2020.”
Although economic activities were affected by the outbreak and its containment measures, the Public Bank Group was able to achieve continued loan and deposit growth in the first quarter of 2020, albeit at more moderate growth rates.
The group has always been proactively supporting the financing needs of consumers and businesses. In the first quarter of 2020, the group recorded an annualised rate of 2.9 per cent growth in total loans, supported by residential properties financing, commercial property financing, and passenger vehicle financing.
On deposit-taking, the Public Bank Group’s total customer deposits posted an annualised growth rate of two per cent.
In the first quarter of 2020, the Public Bank Group’s noninterest income continued to be supported by its unit trust related income, banking fee income, investment income and brokerage income.
“The Public Bank Group’s unit trust business, managed by its wholly-owned subsidiary, Public Mutual, remained the major contributor of the group’s noninterest income.
“As at March 31, 2020, 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.”
Despite that the net interest margins were under pressure, the Public Bank Group continued to record an efficient cost-toincome ratio.
In 1Q20, the group’s cost-toincome ratio stood at 35.7 per cent, which 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, the Public Bank Group continues to stand out amongst its 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.”
The Public Bank Group’s gross impaired loan ratio stood at 0.5 per cent as at the end of March 2020, reflecting its stable asset quality despite the significant challenges in the operating environment.
“The Public Bank Group’s stable asset quality was underpinned by its prudent risk management as well as lending policies and practices, along with its proactive efforts to engage with borrowers on loan recoveries.”