KUALA LUMPUR (Feb 6): Shares of Public Bank Bhd rose 56 sen or 3.04% to RM19 today on the heels of its strong results for the fourth quarter ended Dec 31, 2014 (4QFY14), which bucked moderating trends in the banking industry.

As at 10.14am today, a total of 1.54 million shares had changed hands.

On Thursday, Public Bank (fundamental: 2.8; valuation: 1.2) reported a 21% rise in net profit to RM1.25 billion for 4QFY14 compared with RM1.03 billion a year ago on higher interest, fee and commission income.

The bank had also gained from higher income from Islamic banking and foreign exchange, as well as lower bad loan allowance which supported profit growth.

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

Year-to-date (YTD) net profit was also higher at RM4.52 billion compared to RM4.06 billion a year earlier. Revenue rose to RM16.86 billion from RM15.26 billion.

Public Bank had proposed a second interim dividend of 31 sen per share, rounding the total dividend for financial year 2014 (FY14) to 54 sen per share.

In a note today, Affin Hwang Investment Bank Bhd said Public Bank had beaten moderating industry trends in terms of loan growth, cost efficiencies, asset quality and return on equity (ROE).

Public Bank achieved a ROE of 19.9% compared to the industry average of 13% to 14%, cost-to-income ratio of 30% compared to an average of 48% among its peers and a loan growth of 10.8% year-on-year (y-o-y) compared to the industry’s 8.7% average y-o-y.

Affin Hwang also noted that in terms of asset quality, Public Bank’s loan loss cover stood at 122.4% (industry: 106%), credit cost of 11 basis points or 11bps (industry: 20bps) and a gross impaired loan ratio of 0.6% (industry: 1.66%).

The research firm said despite a cautious outlook for the sector, Public Bank’s established franchise would be its key competitive edge compared to its peers.

On a similar note, Hong Leong Investment Bank Bhd is confident that despite a challenging 2015 operating environment, Public Bank has avenues to sustain its earnings growth momentum.

The research firm noted that for 2015, it is still targeting above industry loans growth of 9% to 10% although this will be partly offset by lower net interest margin (NIM), which entails portfolio rebalancing and higher cost of fund from intense competition for deposits.

Hong Leong said this would be complemented by stable asset quality and lower credit cost as well as contained overheads.

(Note: The Edge Research’s fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)