Public Bank posts net profit of RM1.4 billion in first quarter

PETALING JAYA: Public Bank Bhd reported net profit of RM1.40 billion for the first quarter ended March 31, 2022 (Q1), down 8.6% from the RM1.53 billion for the corresponding quarter in 2021, mainly due to the imposition of a welfare tax introduced by the government for 2022.

Revenue was also lower at RM4.89 billion compared to RM5.03 billion a year ago.

Founder of the Public Bank, Chairman Emeritus, Director and Advisor Tan Sri Teh Hong Piow (image) said the overall operating environment remains very challenging. However, the solid fundamentals of the Banque Publique group, combined with its vigilance and agility, continued to enable it to sustain its financial resilience.

In the first quarter, the group continued to maintain a resilient net return on equity of 11.8% and an effective cost/income ratio of 33.2%.

At the end of March 2022, the group’s total loans recorded an annualized growth of 5.3% to RM362.7 billion. Domestic lending strengthened at an annualized rate of 5.9% to RM339.6 billion. This comes mainly from its commercial sector, notably residential real estate financing and hire purchase financing.

Total loans granted increased by 14% in the first quarter of 2022, compared to the corresponding period of 2021. The group maintained its leading position in residential real estate, commercial real estate and hire-purchase financing with market shares of 20.5%, 34.0% and 30.4%% respectively.

In terms of funding, the group’s total customer deposits recorded an annualized growth of 4.6% to RM384.8 billion. Domestic deposits grew at the same annualized rate of 4.6% to RM356.7 billion.

“The group’s funding growth remained well supported by its sound funding structure, as evidenced by its gross loan to funds and equity ratio of 80.7% at the end of March 2022.”

For the first quarter, the group’s non-interest income decreased by 10.9% compared to the previous corresponding quarter, mainly due to the decline in the group’s income from its investment trust and brokerage activities. as well as lower investment income resulting from unfavorable market conditions. during the quarter. On the other hand, other income from bank commissions remained stable.

The group’s mutual fund business, carried out by its wholly-owned subsidiary, Public Mutual, remained the largest contributor to the group’s non-interest income and contributed 10.1% to the group’s profit . At the end of March 2022, Public Mutual continued to capture a significant retail market share of 35.4%, with a total of 177 unitary trust funds and total assets under management of RM99.8 billion.

“For the first quarter, the group recorded a 1.5% increase in its overheads. In pursuit of its cost optimization strategy, the group continues to adopt a prudent approach in the management of its general operating expenses. In the first quarter, the group’s cost/income ratio remained at an efficient level of 33.2%, against an average of 48.1% for the national banking sector.

At the end of March 2022, the group’s gross impaired loan ratio remained low at 0.3%, well below the industry’s gross impaired loan ratio of 1.5%. Despite its resilient credit profile, the group remained vigilant and continued to take a cautious approach in building up loan loss reserves. With the prudent precautionary provision set aside since the start of the pandemic, the group’s loan loss coverage is the most conservative of its peers.

At the end of the quarter under review, the group’s loan loss coverage ratio stood at 382.5%, up sharply from the banking sector’s loan loss coverage ratio of 115.7%. The group’s loan loss coverage ratio, including regulatory provisions, increased to 402.7%.

During this time, the group has assisted around 24% of its borrowers with total loans amounting to over RM80.0 billion under various repayment assistance schemes. With the expiry of some loans under the Pemulih repayment assistance program, the group continues to proactively provide additional assistance to customers who continue to face financial constraints. At the end of April 2022, approximately RM20.1 billion of domestic loans were still covered by the repayment assistance schemes, representing 6% of the group’s total domestic loans.

Overseas operations contributed 7.5% to group profit, with Public Financial Holdings Limited Group and Cambodian Public Bank remaining the largest contributors.

At the end of March 2022, the group’s Common Equity Tier 1 capital ratio, Tier 1 capital ratio and total capital ratio stood at a healthy level of 14.3%, 14.4% and 17, 4% respectively, while the liquidity coverage ratio remained healthy at 126.2%.

“After two years of the pandemic, the group’s resilience to challenges has been strengthened. Coupled with its strong fundamentals built over the years, the group will remain well positioned to capitalize on growth opportunities in the post-pandemic economy going forward.

“The group will remain committed to pursuing its organic business strategy, improving profitability and maintaining superior asset quality to support sustainable growth,” Teh said.

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