This article first appeared in The Edge Financial Daily on October 27, 2017

KUALA LUMPUR: Public Bank Bhd, the country’s third-largest lender by assets, reported a 13.5% rise in third-quarter (3Q) net profit, on higher net interest income and net fee and commission income as well as lower loan impairment allowance.

Net profit for the three months ended Sept 30, 2017 (3QFY17) rose to RM1.4 billion from RM1.24 billion a year ago. Earnings per share increased to 36.38 sen from 32.06 sen in 3QFY16. Quarterly revenue grew 5.6% to RM5.3 billion from RM5.03 billion a year ago.

For the cumulative nine months (9MFY17), Public Bank’s net profit rose 7% to RM3.98 billion from RM3.72 billion a year ago. Revenue increased 3.3% to RM15.51 billion from RM15.02 billion in 9MFY16.

In a statement yesterday, Public Bank founder and chairman Tan Sri Dr Teh Hong Piow said as at end-September 2017, the group’s net return on equity stood at 15.4%, with a cost-to-income ratio of 32.8%. Its gross impaired loan ratio remained low at 0.5%.

“The Public Bank group continued its focus on the financing for the purchase of residential properties, passenger vehicles, and lending to small and medium enterprises, which remain our major sources of income. The group has also continued to retain leading market share in these lending segments,” said Teh.

For 9MFY17, Public Bank’s total loans recorded 3.3% annualised growth to RM301.3 billion. The group’s domestic loan portfolio grew at a higher annualised rate of 4.6%, compared with the banking industry’s annualised growth rate of 3.5%.

Public Bank’s total deposits grew at an annualised rate of 5.4% to RM322.6 billion in 9MFY17. Its non-interest income also grew 7.6% year-on-year in 9MFY17, mainly due to favourable growth in income from its unit trust management business, as well as fee income from its transactional banking services.

“Non-interest income has remained integral to the Public Bank group’s revenue source. The group will further strengthen its capability in growing this revenue stream by offering innovative products, and through proactive marketing and cross-selling strategies,” said Teh.

He also said the group remains committed to growing its overseas operations, particularly in Indochina and Hong Kong. “In pursuit of the group’s organic growth strategy, we will continue to explore opportunities for the opening of new branches and diversification of products and services to grow our regional operations.”

On prospects, Teh said Public Bank remains cautious as downside risks will continue to exert pressure on consumer sentiment. Public Bank shares closed up two sen or 0.1% at RM20.48 yesterday, with a market capitalisation of RM79.01 billion.