KUALA LUMPUR (Aug 29): Public Bank Bhd’s net profit for the second quarter ended June 30, 2022 (2QFY22) rose by 2.35% to RM1.42 billion, from RM1.38 billion posted a year ago.

The year-on-year increase was more modest than its 12.66% growth in pre-tax profit to RM2.02 billion, from RM1.8 billion for 2QFY21, due to the impact of Cukai Makmur (the one-off prosperity tax), the bank's filing with Bursa Malaysia showed.

Earnings per share (EPS) rose to 7.30 sen from 7.13 sen a year ago.

The higher profit was chiefly due to a 79.8% lower loan impairment allowance of RM316.1 million and 5.3% higher net interest allowance of RM111.1 million, which was somewhat mitigated by a 61.2% reduction in investment and other income to RM100.1 million, a 7.2% increase in other operating expenses to RM72 million, and 7.2% lower net fees and commissions of RM37.3 million.

“The lower loan impairment allowance was mainly due to adequate pre-emptive allowances made in the prior years,” it said.

The group’s comprehensive loss (net) also widened to RM258.9 million, from RM106.3 million a year ago, mainly due to fluctuations from revaluation of financial investments in 2QFY22 that were partially offset by a higher gain on foreign currency translation in respect of foreign operations and a higher gain on cash flow hedges.

Meanwhile, revenue for the quarter rose slightly to RM4.97 billion from RM4.92 billion a year ago.

“The board of directors is declaring a first interim dividend of eight 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 (1HFY22). The first interim dividend will be paid on Sept 23, based on the dividend entitlement date of Sept 14," said Public Bank founder and chairman Tan Sri Dr Teh Hong Piow in a separate statement.

For 1HFY22, Public Bank’s net profit dipped to RM2.82 billion from RM2.91 billion a year ago, due to the imposition of the prosperity tax.

EPS fell to 14.50 sen from 15.01 sen, while revenue also slipped to RM9.86 billion from RM9.95 billion for 1HFY21.

Net interest income rose 3.4% to RM4.32 billion, thanks to healthy loan and deposit growth and better net interest margins.

“For 1HFY22, the 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% and an efficient cost-to-income ratio of 33.5%, which are well within the group’s target for 2022,” said Teh.

Public Bank’s loans rose at an annualised rate of 5.6% to RM368 billion, from RM358 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 healthy growth of the group’s key lending segments for residential properties and hire purchase financing,” said the banking group.

Meanwhile, its total customer deposits saw an annualised growth of 4.1% to RM388.3 billion, while domestic deposits grew at an annualised rate of 3.6% to RM358.9 billion.

 “The Public Bank group’s liquidity and funding structure remained healthy, with the gross loan to fund and equity ratio at 81% as at June 30,” said Teh.

Teh added that the group’s loan loss coverage ratio as at end-June stood at 388.8%. Including regulatory reserves, its loan loss coverage ratio rose to 407.2%.

 As at the end of June, the group’s common equity Tier 1 capital ratio stood at 14.1%, followed by its Tier 1 capital ratio at 14.2% and total capital ratio at 17.2%, while the liquidity coverage ratio remained healthy at 113.7%, according to Public Bank.

On its prospects, the banking group said while the transition to Covid-19 endemicity had strengthened Malaysia’s recovery, major headwinds in the form of global geopolitical conflicts, a resurgence of Covid-19 cases, growing inflationary pressure and global supply chain disruptions remain.

 “As the headwinds remain visible, the Public Bank 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,” said Teh.

At the noon break on Monday (Aug 29), Public Bank was up one sen or 0.22% to RM4.64, with a market capitalisation of RM90.07 billion.