KUALA LUMPUR:  Public Bank Bhd reported a 21% rise in net profit to RM1.25 billion for the fourth quarter ended Dec 31, 2014 (4QFY14) from RM1.03 billion a year ago on higher interest, fee and commission income.

Higher Islamic banking and foreign exchange income besides lower bad loan allowance also supported profit growth, according to Public Bank’s (fundamental: 2.8; valuation: 1.2) statement to Bursa Malaysia yesterday.

Revenue rose to RM4.53 billion from RM3.92 billion a year earlier.

For the full year, Public Bank registered a higher net profit of RM4.52 billion versus RM4.06 billion a year earlier. Revenue rose to RM16.86 billion from RM15.26 billion.

The group proposed a second interim dividend of 31 sen in 4QFY14, bringing full-year dividends to 54 sen.

Public Bank chairman Tan Sri Teh Hong Piow said in a separate statement the group had seen growth amid global volatility.

Despite net interest margin compression, Teh said Public Bank had posted higher loan and deposit growth.

“Despite facing net interest margin compression, the group’s net interest income grew by 6.5% during the year, mainly contributed by continued strong loan and deposit growth as well as the positive impact arising from the hike in the overnight policy rate in July 2014 and the rights issue which was completed in August 2014.

“While the Malaysian economy remained resilient through 2014, the growth sentiment has been moderating especially towards the third quarter of 2014 amid concerns about the volatility in the equity market, weak ringgit and decrease in oil prices,” Teh said.

Public Bank recorded loan growth of 10.8% in FY14, while customer deposit was 10.2% higher.

“On the banking industry front, we expect the net interest margin compression to persist as the competition for both loans and deposits market share remains intense,” said Teh.

Public Bank shares rose 0.44% to settle at RM18.44 yesterday, bringing a market capitalisation of RM71.21 billion. Public Bank shares has gained 0.55% this year, underperforming the FBM KLCI’s 2.33% rise.

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This article first appeared in The Edge Financial Daily, on February 6, 2015.