Public Bank FY19 profit slips 1.41%; group declares 40 sen dividend

This article first appeared in The Edge Financial Daily, on February 27, 2020.
Teh: With the expected uncertainties lying ahead, it is imperative to remain vigilant against multiple risks stemming from the challenging economic environment.

Teh: With the expected uncertainties lying ahead, it is imperative to remain vigilant against multiple risks stemming from the challenging economic environment.

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KUALA LUMPUR: Public Bank Bhd’s net profit for the financial year ended Dec 31, 2019 (FY19) dipped 1.41% year-on-year (y-o-y) to RM5.51 billion from RM5.59 billion, following adverse impacts from Bank Negara Malaysia’s overnight policy rate (OPR) cut and higher operating overheads.

In a bourse filing, the group said this translated into lower earnings per share (EPS) of RM1.42 from RM1.44 for FY18. Full-year operating revenue came in 1.87% higher at RM22.45 billion, compared to RM22.04 billion for FY18.

The group declared a second interim dividend of 40 sen per share for the fourth quarter ended Dec 31, 2019 (4QFY19), higher than the 37 sen dividend declared for 4QFY18. The entitlement and payment dates for the dividend fall on March 12 and 20 respectively.

The group’s total dividend payout for the year stood at 73 sen per share, versus 69 sen for FY18.

Net profit for 4QFY19 remained somewhat flat at RM1.41 billion, while revenue rose marginally to RM5.67 billion, from RM5.63 billion a year ago. EPS stood at 36.21 sen, compared with 36.2 sen for 4QFY18.

Despite negative impacts from the OPR cut, Public Bank noted that overall net interest income improved marginally by 0.1% to RM7.57 billion for FY19, from RM7.56 billion the year prior.

Additionally, the group saw investment income increase to RM121.9 million, while registering RM63.2 million in net income from its Islamic banking business.

Furthermore, it saw a lower impairment allowance for loans and other assets at RM21.7 million.

“These were partially offset by higher operating overheads of RM245.7 million (-6.9%) in tandem with increased business activities, while net fee and commission income was lower by RM37.6 million (-2.1%) resulting mainly from lower banking fee income and unit trust management-related fee income,” the group said.

Public Bank added that gross loans grew by 4.1% y-o-y to RM330.5 billion in FY19, from RM317.3 billion posted in FY18, on the back of growth in mortgage refinancing, hire purchase financing and corporate lending.

Moreover, total deposits increased by 4.2% to RM353.3 billion. As of Dec 31, 2019, its gross impaired loan ratio remained stable at 0.5%, on the back of stringent credit underwriting and proactive recovery processes.

Public Bank’s common equity tier-1 capital ratio, tier-1 capital ratio and total capital ratio stood at 13.5%, 13.5% and 16.8% respectively. Its gross loans to fund and equity ratio was at 79.2% at the end of FY19.

On prospects, the group said lingering uncertainties in the macro-environment are likely to continue into 2020, with the banking sector bracing for another year of challenges.

“With the expected uncertainties lying ahead, it is imperative to remain vigilant against multiple risks stemming from the challenging economic environment. However, the group will remain cautiously optimistic as its strong market position and sound foundation, coupled with a growing domestic economy, will continue to support and drive business growth in 2020,” said the group’s founder, chairman emeritus, director and adviser Tan Sri Dr Teh Hong Piow in a separate statement.

“The group will remain focused on organic growth strategy and continue to sharpen its competitive capabilities to strengthen resilience in its core business in retail and commercial banking. Sustaining stable profitability and preserving strong asset quality will remain as the group’s strategic focus going forward,” Teh added.