Public Bank Q3 earnings at RM1.38bil

Third-largest lender by assets records higher revenue for the quarter

PETALING JAYA: Despite higher revenue, Public Bank Bhd saw its earnings slip 1.5% in the third quarter ended Sept 30, 2018 (3Q18) in the absence of a one-off capital gain recorded a year ago.

During the quarter in review, the third-largest lender by assets in Malaysia posted a net profit of RM1.38bil, down from RM1.4bil in the previous corresponding quarter, resulting in a lower earnings per share (EPS) of 35.64 sen, compared with 36.38 sen previously.

Public Bank said its 3Q18 earnings would have grown 1.6% to RM1.38bil from the RM1.36bil operational net profit, if the one-off gain on investment of RM43mil recorded in the previous corresponding period was excluded.

Its pre-tax operational profit, on the other hand, would have grown 0.6% year-on-year to RM1.76bil for the quarter in review.

“The growth in the operational pre-tax profit was mainly due to a lower loan impairment allowance, higher income from the Islamic banking business and a higher net interest income. These were partially offset by higher other operating expenses and lower foreign exchange income,” Public Bank said.

During the quarter in review, the group saw its revenue growing 5.9% to RM5.62bil from RM5.31bil in 3Q17.

Public Bank’s shares rose two sen, or 0.08%, to close at RM24.90 yesterday.

For the nine-month period (9M18) ended Sept 30, its net profit rose by 5% to RM4.19bil from RM3.98bil in the previous corresponding period, with EPS rising to RM1.08 from RM1.03 previously.

Public Bank’s 9M18 revenue was higher by 5.8% to RM16.41bil from RM15.51bil a year ago.

In a statement, Public Bank founder and chairman Tan Sri Teh Hong Piow said: “In the environment marked by rising uncertainties and persistent volatility, the Public Bank group continued to uphold profitability growth, driven largely by its organic growth strategy in its loans and deposits businesses, coupled with its strong and stable asset quality and cost efficiency.

“These enabled the group to continue delivering a leading set of financial performance indicators amongst its peers, with its net return on equity standing at 14.7%, cost-toincome ratio at 33.0% and gross impaired loans ratio at 0.5%,” he added.

From January to September, Public Bank’s total gross loans rose by an annualised rate of 4.4% to RM314.5bil, while domestic loans grew at an annualised rate of 4.4% to RM291.6bil.

On the funding side, the group saw its total customer deposits growing at an annualised rate of 6.5% to RM334.9bil, while domestic deposits rose by an annualised rate of 6.3% to RM307bil.

“As a result of this performance, coupled with the Public Bank group’s prudent liquidity management, the group sustained a healthy gross loan to fund and equity ratio of 79.4% as at the end of September 2018,” Teh said.

As for its non-interest income, it was largely driven by the group’s unit trust business, banking transactional income and foreign exchange-related business.

Its cost-to-income ratio at 33.0% was lower than the industry’s cost-to-income ratio of 44.8%.

“Amid rising cost pressure, the Public Bank group has been able to sustain the lowest costto-income ratio as compared to its peers. This testifies to the group’s ongoing effective measures in driving cost efficiency.

“This has also enabled greater capacity for the group to pursue its growth strategy,” Teh said.

As at end-September, its gross impaired loans ratio was low at 0.5%. Despite its strong asset quality, the group maintained a high loan loss coverage of 110.2%.

Including the regulatory reserves of RM2bil, the loan loss coverage was at 235.8%.

For the nine-month period, overseas operations contributed 9.5% to the group’s overall pre-tax profit, with Public Financial Holdings Ltd Group in Hong Kong and Cambodian Public Bank Plc being the largest contributors to overseas operations profit.

Recent updates by analysts saw JP Morgan and AmBank Research maintaining their “overweight” and “buy” calls, respectively, on Public Bank, with a similar target price of RM26, while RHB Research maintained its “neutral” outlook on Public Bank with a target price of RM26.30.