KUALA LUMPUR (Feb 25): Public Bank Bhd, the country's third largest lender, posted a 20.3% increase in net profit to RM1.38 billion for the fourth quarter ended Dec 31, 2021 (4QFY21) from RM1.15 billion a year ago, mainly due to lower loan impairment allowance of RM274.3 million and higher net interest income of RM149.9 million.

However, this was partially offset by lower investment and other income.

This resulted in a higher earnings per share of 7.11 sen for 4QFY21 compared with 5.91 sen for 4QFY20.

Quarterly revenue, however, fell by a marginal 1.2% to RM4.86 billion from RM4.92 billion.

The banking group declared a second interim dividend of 7.7 sen per share for the financial year ended Dec 31, 2021 (FY21), payable on March 22. This brings total dividends for the year to 15.2 sen, representing a total payout of RM2.95 billion or 52.2% of the group’s FY21 net profit.

The better quarterly performance lifted the group's net profit for the full year FY21 to RM5.66 billion, up 16.1% from RM4.87 billion in the previous year, even though revenue fell 3.4% to RM19.62 billion from RM20.3 billion in FY20.

Public Bank attributed the improved profit growth in FY21 to the low base effect in the prior year when the Covid-19 pandemic unprecedentedly caused a public health crisis, which led to closure of most economic activities.

"Included in the previous year (FY20) were modification loss on Covid-19 relief measures of RM498.4 million and the negative effect of overnight policy rate reduction of 125 basis points," it said in a bourse filing on Friday (Feb 25).

Due to this low base effect, coupled with positive loans and deposits growth achieved in FY21, the group's net interest income and net income from Islamic banking business came in higher at RM1.14 billion (+15.8% year-on-year) and RM302.3 million (+23.1% y-o-y) respectively.

Net fee and commission income also increased by 11.3% y-o-y in FY21, on higher fee income from fund management and banking related services. These were partially offset by lower investment income of RM387.5 million, which fell 86.6% y-o-y in FY21, which was in tandem with current market condition, higher loan impairment allowance of RM94.9 million (-8.6% y-o-y), and higher other operating expenses of RM55.8 million (-1.4% y-o-y).

"The higher loan impairment allowance was mainly arising from pre-emptive allowance made in anticipation of the potential effect of the pandemic," said Public Bank.

“Despite the challenges in 2021, Public Bank Group was able to steer through the difficult year with sustained balance sheet strength. The group continued to demonstrate its resilience with net return-on-equity of 12.4% and efficient cost-to-income ratio of 31.6%,” its founder, chairman emeritus, director and adviser Tan Sri Dr Teh Hong Piow said in a separate statement.

“As the economy gradually recovers, the group will continue to focus on further strengthening its business resilience, including preserving asset quality, maintaining cost discipline and upholding high standards of corporate governance.

"The group will continue to remain agile and responsive to the changing environment to ensure long-term sustainability of its business and to better serve the interest of all its stakeholders," he added.

At noon break, Public Bank shares settled up nine sen or 2.1% at RM4.37, with some 12 million shares done. Its market capitalisation stood at RM84.82 billion.