KUALA LUMPUR (April 20): Public Bank Bhd's first quarter net profit rose 5% to RM1.23 billion from a year earlier on higher net interest and Islamic banking income.

Higher fee and commission income and lower bad allowance also supported the bottom line, Public Bank told Bursa Malaysia today.

Public Bank said net profit rose to RM1.23 billion in the first quarter ended March 31, 2016 from RM1.17 billion. Revenue was higher at RM5.04 billion versus RM4.6 billion.

"The growth in the group's profit was driven by continued healthy loans and customer deposits growth coupled with sustained strong asset quality," Public Bank said.

According to Public Bank, gross loans rose 9.5% to RM277.2 billion as at March 31, 2016 from a year earlier while deposits grew 7.4% to RM306.6 billion.

Despite its loan and deposit growth, Public Bank said it was mindful of a challenging operating backdrop ahead.

"Given the challenging operating conditions, the banking sector's loans growth is expected to moderate due to weak consumer and business sentiments as well as continued impact from stringent lending rules.

"As competition in deposit-taking business intensified, banks will continue to embark on initiatives to maintain an efficient funding position," Public Bank said.

At 12:30pm, Public Bank shares settled flat at RM19 for a market capitalisation of RM73.37 billion. The stock saw 1.5 million shares traded.