KUALA LUMPUR (Aug 28): Public Bank Bhd's net profit for the quarter ended June 30 (2QFY20) fell 24.84% year-on-year to RM1 billion from RM1.33 billion last year, as it booked in a net modification loss of RM498 million arising from the loan moratorium granted to customers amid the Covid-19 outbreak.

For the first time since FY05, it declared no interim dividend for the period, as opposed to 33 sen per share in 2QFY19. Overall, quarterly group operating revenue slid 15.35% to RM4.74 billion, from RM5.6 billion.

Besides the one-off modification loss, the banking group had to contend with the negative effect of the 100-basis-point cut in overnight policy rate during the period, it said in its exchange filing on the results today.

It also recorded higher impairment allowance in anticipation of possible impact from the pandemic, while net fee and commission income fell on lower banking activities. However, investment income came in higher, it said.

By segment, operations that showed year-on-year (y-o-y) growth were retail operations, capital market operations and investment banking, while other segments recorded declines and its head office and funding centre segment swung to a loss.

For the first half ended June 30 (6MFY20), Public Bank's net profit fell 15.02% y-o-y to RM2.33 billion from RM2.74 billion, while revenue slid 1.02% to RM10.25 billion from RM11.17 billion.

Excluding the RM498 million modification loss in 2Q20, the figure would have declined by a slower pace of 1.2% y-o-y, it said.

In a statement, Public Bank chairman Tan Sri Teh Hong Piow said the group registered moderating growth in loan expansion in 6MFY20.

“The group’s total domestic loans grew at an annualised rate of 2.6%. On deposit-taking, the group’s total domestic customer deposits posted an annualised growth rate of 3.3%,” Teh said.

“The group’s funding position remained stable with a healthy liquidity coverage ratio of 145.7% as at the end of June 2020,” he added.

Meanwhile, the group said its non-interest income grew 8.2% y-o-y, mainly driven by its unit trust business and higher investment and brokerage income.

“On asset quality, the group’s gross impaired loan ratio stood at 0.4% as at end-June 2020, which remained well below the banking industry’s gross impaired loan ratio of 1.5%. The group’s loan loss coverage ratio remained high at 158.7%. Including the RM1.9 billion regulatory reserves the group had set aside, total reserves for loan losses would be higher at 301.7%," he added.

On prospects, Public Bank said it is seeking organic growth in retail and commercial banking, while focusing on cost and risk management amid uncertain economic outlook.

Shares of Public Bank slipped 8 sen or 0.48% to RM16.54 at the time of writing, which gave the banking group a market capitalisation of RM64.52 billion. The counter has fallen close to 15% year to date.

Edited by Tan Choe Choe