Friday 29 Mar 2024
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KUALA LUMPUR (Nov 27): Public Bank Bhd’s net profit for the third quarter ended Sept 30, 2020 (3QFY20), rose 2.2% year-on-year to RM1.39 billion from RM1.36 billion, despite lower revenue, as it recorded higher investment income during the quarter.

It also registered higher net fee and commission income on higher income from stock-broking and fund management, higher Islamic banking income, higher net interest income, and higher other operating income, its stock exchange filing today showed.

These were partially offset by higher loan impairment allowance of RM285.4 million, it said, in anticipation of the potential effect of Covid-19 pandemic.

The bank also saw other comprehensive loss of RM39.7 million for the quarter due to the loss on foreign currency translation in respect of foreign operations in the current quarter, as compared with a gain recorded in the previous year’s corresponding quarter, lower gain on revaluation of financial investments and loss on remeasurements of defined benefit plans.

Quarterly revenue fell 8.6% to RM5.13 billion from RM5.61 billion. Like in the two previous quarters of this year, the bank did not announce any dividend for 3QFY20. In contrast, it paid 33 sen for the nine months ended Sept 30, 2019.

Public Bank founder and chairman emeritus Tan Sri Dr Teh Hong Piow said the pandemic continued to pose significant uncertainties to the economic landscape and business environment, while the total 125 basis points cut in the overnight policy rate (OPR) this year and higher provisions set aside in anticipation of the pandemic’s effect, continued to weigh on profitability.

“However, as the economy gradually reopened and been supported by the various government relief and stimulus measures, the economic environment in the third quarter of 2020 had shown an improvement,” Teh said in a statement.

He added that the bank saw higher loans growth in 3QFY20 versus the earlier quarters, growing by an annualised rate of 5.6% — higher than the domestic banking industry’s annualised loan growth of 4%.

Quarter-on-quarter, its net profit grew 39% to RM5.13 billion from RM5.61 billion, while revenue rose 8.3% from RM4.74 billion.

The sequential increase in net profit was attributed to the one-off day one net modification loss recognised in 2QFY20 and lower negative effect of OPR reductions in the current quarter, which translated into higher overall net interest income and net income from Islamic banking business.

For the nine months ended Sept 30, the banking group's net profit fell 9.3% to RM3.72 billion from RM4.11 billion, while revenue declined 8.3% to RM15.39 billion from RM16.78 billion.

Non-interest income continued to support the bank’s financial performance with 17.8% growth during the nine-month period, driven by higher investment income, as well as higher income from the unit trust and stockbroking businesses.

Public Mutual was the main contributor of non-interest income, with the wholly-owned subsidiary managing a total of 162 unit trust funds with its total net asset value increasing from RM86.6 billion as at end-2019 to RM94.1 billion as at Sept 30.

“Despite the various challenges faced in 2020, the group recorded a resilient net return on equity of 11.3% in the first nine months of 2020. Cost-to-income ratio stood at 35.2%, as compared to the domestic banking industry’s cost-to-income ratio of 44.7%,” said Teh.

“Meanwhile, impaired loan ratio remained low at 0.3%, which was significantly better than the domestic banking industry’s impaired loan ratio of 1.4%. In addition, the group maintained a high loan loss reserves of 209%. Including the RM1.7 billion regulatory reserves that the group had set aside, total reserves for loan losses were even higher at 362%,” he added.

Going forward, the group will continue to be vigilant in ensuring prudent credit policies, robust risk management, cost efficiency and good corporate governance.

It will also continue to take a proactive and accommodative stance in the provision of assistance to its customers, as it has actively been implementing its post-moratorium loan repayment assistance programme for customers who have been affected by loss or reduction in income due to the Covid-19 pandemic.

To date, more than 1.8 million customers have benefitted from various financial relief measures that the bank is participating in, including Bank Negara Malaysia’s Special Relief Facility, PENJANA SME Financing Scheme, PENJANA Tourism Financing Scheme and Government Guarantee Scheme.

Public Bank shares fell 12 sen or 0.64% to RM18.60 today, giving it a market capitalisation of RM72.21 billion.

Edited ByTan Choe Choe
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