PETALING JAYA: Public Bank Bhd’s net profit for the second quarter ended June 30, 2022 rose 2.4% to RM1.42 billion from RM1.38 billion a year ago thanks to lower loan impairment allowance of RM316.1 million and higher net interest income of RM111.1 million.
Revenue increased slightly to RM4.97 billion versus RM4.92 billion in the same quarter last year.
For the six months period (H1’22), its net profit was lower at RM2.82 billion compared with RM2.91 billion in the same period last year due to the impact of the one-off prosperity tax, while revenue fell to RM9.86 billion from RM9.95 billion.
Net interest income grew 3.4% to RM4.32 billion, underpinned by healthy loan and deposit growth, as well as improved net interest margin.
Public Bank founder, chairman emeritus, director and adviser Tan Sri Dr Teh Hong Piow (pix) said the transition to endemicity alongside the pick up in business activities and consumer sentiment have resulted in an improved business environment, further supporting the group’s core banking business on loans and deposits.
“The group continues to manage its balance sheet and asset quality conscientiously to ensure adequate safeguards amid the ongoing economic challenges. For H1’22, gross impaired loans ratio remained low at 0.3% despite the expiry of repayment assistance programmes under the Pemulih scheme. The group’s strong fundamentals and prudent management enabled the group to continue sustain a resilient net return-on-equity of 12.0% and efficient cost-to-income ratio of 33.5%, which are well within the group’s target for 2022.”
The board of directors is declaring a first interim dividend of 8.0 sen per share, which will result in a total dividend payout of RM1.55 billion, representing 55.2% of the group’s net profit for the half year ended June 30, 2022. The first interim dividend will be paid on Sept 23, 2022 based on the dividend entitlement date of Sept 14, 2022.
During H1’22, the group’s total loans recorded an annualised growth of 5.6% to RM368.0 billion, as compared with RM358.0 billion as at end-December 2021. Domestic loans grew at an annualised rate of 5.4% to RM343.6 billion, in line with the industry’s annualised growth rate of 5.4%. This was mainly attributed to the healthy growth of the group’s key lending segments for residential properties and hire purchase financing.
“Despite the significant economic headwinds and intense competition in the market, the group continued to sustain its domestic leading position in the residential properties, hire purchase financing and SME financing with market share of 20.5%, 30.5% and 20.5% respectively,” Teh commented.
In terms of funding, the group’s total customer deposits recorded an annualised growth of 4.1% to RM388.3 billion during the same period. Domestic deposits grew at an annualised rate of 3.6% to RM358.9 billion, as compared with the annualised industry growth of 4.0%. This was mainly attributed to the steady inflow of deposits, with the current and saving deposits growing by an annualised rate of 9.3%, and fixed deposits growing by an annualised rate of 6.0%.
The group’s liquidity and funding structure remained healthy with gross loan to fund and equity ratio of 81.0% as at June 30, 2022.
For H1’22, the group’s non-interest income was lower by 15.4% as compared with the previous corresponding period in 2021 due to the subdued market condition which affected the group’s unit trust management and stockbroking businesses, as well as investment income. However, the group’s unit trust business, undertaken by its wholly-owned subsidiary, Public Mutual remains the main contributor to the group’s non-interest income.
On the back of the resumption of more business activities, overhead expenses increased by 4.4% in H1’22. The group’s prudent cost management continued to sustain its cost-to-income ratio at an efficient level of 33.5%, significantly lower than the domestic banking industry’s cost-to-income ratio of 44.3%.
As at the end of June 2022, Public Bank’s gross impaired loans ratio remained low at 0.3%, well below the domestic banking industry’s average impaired loan ratio of 1.7%.
“Despite the resilient asset quality, the group continued to maintain a prudent level of loan impairment allowance. As at the end of June 2022, the group’s loan loss coverage ratio stood at 388.8%, significantly higher as compared with the banking industry’s loan loss coverage ratio of 108.5%. Including regulatory reserves, the group’s loan loss coverage ratio was higher at 407.2%.”
Upon the expiry of Pemulih repayment assistance programmes, about RM20.8 billion of the group’s domestic loans were still under the group’s in-house repayment assistance as at the end of July 2022, accounting for 6% of the group’s total domestic loans.
“With the expiry of repayment assistance programmes under the Pemulih scheme, the group observed a stable repayment trend among its customers. Nevertheless, the group is mindful of the ongoing challenges in the economy and will continue to provide assistance to customers who continue to face repayment difficulty.”
As at the end of June 2022, the group’s common equity Tier 1 capital ratio, Tier 1 capital ratio and total capital ratio stood at a healthy level of 14.1%, 14.2% and 17.2% respectively, while liquidity coverage ratio remained healthy at 113.7%.
“Challenges facing the banking industry are intensifying. The group will remain focused on sustaining a healthy capital and liquidity position for its business to continue thriving even in times of challenges.”
As the headwinds remain visible, the group will continue to embrace the challenges with focus on prudent cost and risk management. The group’s strong balance sheet, resilient asset quality and good corporate governance practices would continue to provide support in strengthening the
group’s business with greater cost efficiency and operational productivity.
“Against this backdrop, Public Bank will continue to remain cautiously optimistic in striving its business growth,” Teh said.