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Public Bank Achieves 13% Increase In Pre-Tax Profit To RM544 Million In First Quarter 2006

For Immediate Release

18 April 2006

Public Bank Achieves 13% Increase In Pre-Tax Profit To RM544 Million In First Quarter 2006

I am pleased to announce that the Public Bank Group posted a pre-tax profit of RM544 million for the first three months of 2006, an increase of 13% compared to the corresponding period in 2005. The Group’s net profit attributable to shareholders rose to RM387 million, an increase of RM41 million or 12% over the same period last year. The higher profit was contributed by growth in net interest income, net income from Islamic Banking business and higher other operating income.

The Public Bank Group’s net interest income grew by 12% to RM672 million compared to the same period last year due to continued strong loans growth and sustained strong asset quality.

Net income from Islamic Banking business rose 9% to RM105 million from the corresponding period in 2005 on the back of strong deposit and financing growth.

Other operating income posted a 16% growth compared to the corresponding period in 2005 to reach RM230 million, mainly due to higher foreign exchange gains, higher fees and transaction income from retail banking operations.

The Group’s commercial bank, Public Bank, registered a 25% increase in pre-tax profit compared to the first three months of 2005, and accounted for 80% of the Group’s pre-tax profit.

Key Highlights of the Public Bank Group’s Results

  • Earnings per share improved 10% to 11.7 sen from 10.6 sen in the previous corresponding period.
  • Total assets increased by 6% and was close to RM120 billion as at the end of March 2006.
  • Loans grew by 17.6% on an annualised basis, compared to the banking industry’s annualised growth rate of 6.6%.
  • Total deposits from customers, including repos, grew by 7.8% compared to the end of December 2005 to RM95 billion. Despite the Group’s higher loans growth compared to the industry’s loans growth, the Group was able to maintain high liquidity with a loans to deposits ratio of 73% as at the end of March 2006.
  • Annualised net return on equity improved further to 21.7% from 21.4% in 2005.
  • Risk-weighted capital ratio remained strong at 15.4% as compared to the banking industry’s ratio of 13.4% as at the end of February 2006.
  • Cost to income ratio improved to 36.5% from 36.7% in 2005 and compared favourably to the banking industry’s ratio of 42.7% in 2005.
  • Net non-performing loan ratio remained below 1.7% recorded at the end of December 2005. This was less than one-third of the banking industry’s ratio of 5.9% as at the end of February 2006.
  • Credit losses for every RM1 of loans decreased to 0.31% from 0.35% in 2005.

Continued Robust Loans Growth

In the first 3 months of 2006, the Public Bank Group’s loans and advances grew by RM3 billion or 4.4% to stand at RM71 billion as at the end of March 2006. As a result, the Group’s market share for loans and advances improved to 12.4% from 12.0 % in December 2005. The Group’s lending business continued to be directed at the retail sector, in particular loans for the financing of residential mortgages, purchase of passenger vehicles, and SMEs. Together, these sectors accounted for 73% of the total loan portfolio as at the end of March 2006.

Loans for residential mortgages expanded by 5.9%, while loans for the purchase of passenger vehicles and SMEs grew by 2.7% and 6.4% respectively in the first 3 months of 2006. The Group was able to sustain its growth momentum despite the intense competition in the retail credit and SME lending market due to Public Bank’s strong brand name, wide range of innovative and competitively priced products and services, and efficient extensive service delivery network.

Sustained Asset Quality

The Public Bank Group’s gross non-performing loans (“NPL”) and net NPL ratios as at the end of March 2006 were well-sustained from the position as at the end of December 2005. The NPL ratios on loans for residential mortgages and purchase of passenger vehicles remained generally stable as compared to the end of December 2005.

The Group’s low NPL ratios is a reflection of its continued prudent lending policies and practices complemented by strong credit management and proactive recovery processes. This is evident when compared to the past 5 years with the Group’s NPL dropping by 20% to RM1.4 billion despite a significant increase in the loan base to almost 3 times that of 5 years ago.

The Group maintained a high level of provisioning with its ratio of general allowance to net loans of 1.6% and a loan loss coverage of 98% at the end of March 2006 as compared to 55% coverage as at the end of 2001. The Group’s loan loss coverage was almost double the 51% coverage for the banking industry at the end of February 2006.

Strong Capital Position Sustained

The Public Bank Group’s capital base stood at RM10.9 billion as at 31 March 2006. The Group’s risk-weighted capital ratio of 15.4% was almost two times the minimum requirement of 8% and higher than the banking system’s risk-weighted capital ratio of 13.4% as at the end of February 2006.

Marching into 2006, the Public Bank Group expects the banking industry to be more challenging and competitive in an increasingly liberalised environment. The Group will continue to build on its strong loans growth momentum, and is well positioned to meet the challenges with its profitability track record, strong branding, superior asset quality and prudent credit management. Barring unforeseen circumstances, the Public Bank Group is expected to continue to record satisfactory performance for the rest of 2006.

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Y.Bhg. Tan Sri Dato' Sri Dr. Teh Hong Piow
Chairman, Public Bank
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Public Bank Posts Best Ever Results With Profit Of RM2.05 Billion

For Immediate Release

23 January 2006

Public Bank Posts Best Ever Results With Profit Of RM2.05 Billion

I am pleased to announce that Public Bank Group posted a record pre-tax profit of RM2.05 billion for 2005, which for the first time surpassed the RM2 billion mark. The results represented an 11% improvement compared to RM1.85 billion in 2004, despite an additional RM92 million set aside for general allowance in tandem with the Group’s continuing robust loan growth. Meanwhile, net profit attributable to shareholders improved by 14% to RM1.45 billion.

Despite the pressure on lending margins, the Group’s net interest income and net Islamic Banking financing income expanded by 7% to RM2.89 billion in 2005, underpinned by strong loan growth and further improvement in asset quality. Other operating income grew by 24% to RM918 million mainly as a result of higher sales of trust units due to the strong interest in the Group’s seven new unit trust funds launched, increase in fees from higher net asset value of unit trust funds under management, and higher fees and transaction income from retail banking operations. Other operating income accounted for 24% of total income compared to 22% in 2004. Meanwhile, the increase in other operating expenses was capped at 7%.

The Public Bank Group’s overseas operations, based primarily in Hong Kong, achieved a 25% improvement in pre-tax profit on the back of stronger loan growth, lower loan loss provisioning and overheads. Public Bank’s domestic operations registered an 8% increase in pre-tax profit, and accounted for 85% of the Group’s profit before taxation.

In view of the Public Bank Group’s improved performance, the Board of Directors is proposing a final dividend of 20 sen and a special dividend of 15 sen, totalling 35 sen less 28% taxation. Together with the interim dividend of 20 sen less 28% taxation, which was paid in August 2005, the total dividend paid and payable for 2005 totalled 55 sen or would amount to RM1.30 billion. The Group’s and Bank’s risk-weighted capital ratio remain strong, at 15.9% and 13.6% respectively, after payment of the proposed dividend.

Financial Highlights of the Public Bank Group
  • Earnings per share improved by 12% to 44.2 sen from 39.5 sen in 2004.
  • Net return on equity improved to 21.4% compared to 18.2% in 2004
  • Productivity continued to rise with the cost income ratio improving to 36.7% from 37.9% in 2004.
  • Total assets surpassed the RM100 billion mark to stand at a record RM111.6 billion, which was two and a half times the Group’s asset size of RM45.3 billion at the end of 2000.
  • Return on assets stood at 2% as at end of 2005.
  • Loans grew by 20% to RM68.1 billion in 2005 compared to the 8% increase recorded by the banking industry for the first eleven months of 2005.
  • Net non-performing loan ratio improved to 1.7% in December 2005 as compared to 2.1% a year ago, and was 72% lower than the banking industry’s ratio of 6.0% as at November 2005.
  • Demand deposits grew by 10% and savings deposits increased by 9%.
Improving Earnings and Dividends

The Public Bank Group has continued to deliver a rising trend in profitability over the years. The Group’s net profit has doubled in the past 5 years from RM720 million in 2001 to RM1.45 billion in 2005, whilst earnings per share rose by 69% from 26.2 sen per share to 44.2 sen per share over the same period. Net return on equity has also improved from 12.8% in 2002 to 21.4% in 2005. The Group’s strong profit performance is positively reflected in Public Bank’s share price. At the end of 2005, Public Bank’s market capitalisation stood at RM22.23 billion compared to RM7.04 billion at the end of 2000. In terms of ranking by market capitalisation, Public Bank has leaped from 10th position in 2000 to 5th in 2005, making it the largest non-government-linked company in Malaysia.
Public Bank’s dividend payout has also been on an uptrend, with a dividend payout ratio of 90% for 2005 compared to an average of 44% for the 3 years from 2001 to 2003. Public Bank’s dividends in respect of 2004, which included the payment of 2 special dividends, was even higher at RM2.12 billion and was 167% of the Group’s net profit for the year. The liberal dividend payout policy in the last two years is an integral part of the Group’s initiatives to improve its capital efficiency.

Continued Strong Growth in Retail Loans

In 2005, the Group’s loans and advances increased by 20% or RM11.2 billion to stand at RM68.1 billion at the end of 2005. With loan growth rates close to or in excess of 20% annually since 2001, the Group has become the second largest lender in Malaysia with 12% market share of the lending business at the end of 2005, more than double the 5% market share in 2001. The Group’s lending activities continued to be focused on the retail sector, with consumer loans for the financing of residential properties and vehicle hire purchase as well as commercial lending to SMEs accounting for 72% of the Group’s total loan portfolio and 76% of total new loans approved of RM27 billion in 2005.
Loans for residential mortagages grew by 27% to RM17.8 billion in December 2005. Meanwhile loans for the purchase of transport vehicles increased by 18% to RM16.7 billion, and loans to SMEs expanded by 13% to RM14.8 billion at the end of 2005.

Further Improvement in Asset Quality

The non-performing loans (“NPL”) of the Public Bank Group has charted an improving trend for the past 5 years, both in terms of the NPL ratios as well as the absolute amount of NPLs, despite the doubling of the Group’s loan size over the same period. The Group’s gross NPL of RM1,406 million as at the end of 2005 was RM104 million or 7% lower compared to December 2004. As a result, the Group’s gross and net NPL ratios, based on a 3-month classification, improved to 2.1% and 1.7% respectively, from 2.7% and 2.1% respectively at the end of December 2004. The Group’s net NPL ratio of 1.7% is less than one-third of the banking industry’s net NPL ratio of 6.0% as at November 2005.

The Group also maintained a high level of provisioning with its ratio of general allowance to net loans standing at 1.6% and its loan loss coverage ratio of 92% at the end of 2005 as compared to 52% for the banking industry at the end of November 2005.

Public Bank continues to be ranked the best amongst all banks in Malaysia in terms of asset quality as well as loan loss coverage.

Strong Growth in Lower-Cost Customer Deposits

The Public Bank Group continued to build a long-term core deposit funding base to mitigate the squeeze in net interest margins. Customer deposits expanded by RM11.9 billion to stand at RM84.1 billion in December 2005. The Group’s market share of domestic customer deposits stood at 12% in December 2005 compared to 7% five years ago.

The Group’s savings deposits grew by 9% while current accounts and fixed deposits both recorded 10% growth in 2005, significantly outpacing the industry’s growth rates for these deposits of 1%, 5% and 4% respectively for the first 11 months of 2005. Deposits from individuals made up 71% of the Public Bank Group’s core demand, savings and fixed deposits, providing the Group with a stable deposit base.

Capital Position Remains Strong

The Public Bank Group further geared up on its strong core capital position with a second issue of Subordinated Notes amounting to USD400 million in June 2005. This issue was named the Best Bank Bond for 2005 in The Asset Triple A Regional Awards for Best Deals.

The Group’s capital base stood at RM11.6 billion as at 31 December 2005 compared to RM10.1 billion at the end of 2004. The Group’s risk-weighted capital ratio of 15.9% as at 31 December 2005 was about twice the statutory minimum requirement of 8% and well above the banking system’s risk-weighted capital ratio of 13.8% at the end of November 2005.

Group Prospects

The Malaysian economy is expected to maintain its growth momentum in 2006, with GDP growth forecast of 5.5%, driven by private domestic demand. Domestic interest rates are expected to rise in 2006, which will provide some respite to the financial industry’s declining interest margins. The Public Bank Group’s strong lower-cost deposit structure will provide it with the capacity to remain competitive in the lending business. Rising interest rates will also be positive for interest margins as loans reprice faster than deposits in the rising interest rate environment.

The year 2006 will also see significant changes in the financials for companies in Malaysia with the implementation of new and revised Malaysian Financial Reporting Standards (“FRS”) from 1 January 2006. Although the implementation of the new and revised FRS will generally lead to greater volatility in profitability, however, the Public Bank Group expects the implementation of the FRS to have a positive impact on its bottom line.

In the challenging environment ahead, the Public Bank Group will continue to pursue its strategy of high organic loan growth and improved cost efficiency, whilst maintaining strong asset quality by keeping to the Group’s uncompromising prudent credit standards and practices. Public Bank will continue to enhance returns to shareholders through operational and capital efficiency, and maintain a liberal dividend payout ratio. Barring unforeseen circumstances, the Public Bank Group is expected to continue to record satisfactory performance for 2006.
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Public Bank Group Achieved Record Profit Of RM1.5 Billion For Nine Months Ended 30 September 2005

For Immediate Release

18 October 2015

Public Bank Group Achieved Record Profit Of RM1.5 Billion For Nine Months Ended 30 September 2005  

I am pleased to announce that the Public Bank Group achieved a pre-tax profit of RM1,501 million for the nine months ended 30 September 2005, an increase of 11% from RM1,347 million recorded in the corresponding period in 2004. The Group’s net profit attributable to shareholders rose by 14% to RM1,059 million over the same period.

The higher Group pre-tax profits was attributable to the increase in net interest income and Islamic banking net financing income, coupled with higher other operating income.

Despite the pressure on lending margin due to intense competition, the Group’s net interest income and net financing income from Islamic Banking business grew by RM146 million or 7% for the first nine months of 2005, on the back of continued strong loans growth, improvement in asset quality and the increasing pool of lower-cost customer deposits.

Other operating income rose by 25% to RM677 million during the same period, mainly as a result of higher gains from sale of trust units due to the launch of new unit trust funds and increase in management fees from higher net value of unit trust funds under management. Other operating income accounted for 24% of total income compared to 21% for the corresponding period in 2004.

The Public Bank Group’s overseas operations, based primarily in Hong Kong, achieved a 35% improvement in pre-tax profit on the back of lower loan loss provisioning. Public Bank’s domestic operations registered an 8% increase in pre-tax profit, and accounted for 85% of the Group’s pre-tax profit.

Financial Highlights Of The Public Bank Group
  • Earnings per share improved by 11% to 32.3 sen for the nine months ended 30 September 2005 from 29.0 sen in the same period in 2004.
  • Return on assets stood at 2.0% for the nine months ended 30 September 2005.
  • Net return on equity increased to 20.2% from 18.2% in 2004.
  • Productivity continued to rise with the cost income ratio improving to 36.8% from 38.1% for the same period in 2004. Operating overheads to average assets ratio has also improved to 1.4% in the current period from 1.7% in 2004.
  • Loans grew by 19.2% on an annualised basis compared to the banking industry’s annualised growth rate of 7.5%.
  • Total assets stood at RM106.4 billion in September 2005, more than twice the Group’s asset size of RM45.3 billion at the end of 2000.
  • Demand deposits grew by 6% in the first nine months of 2005, outpacing the industry’s growth rate of 4% for the first eight months of 2005. During the same period, Public Bank’s savings deposits expanded by 5% against 0.2% registered by the banking industry.
  • Net non-performing loans ratio further improved to 1.8% in September 2005 from 2.1% at the end of 2004, and was 72% lower than the banking industry’s ratio of 6.4% as at August 2005.
Continued Robust Loans Growth
The Public Bank Group has consistently achieved a high level of loans growth, in the region of 20% annually since 2001. During the first nine months of 2005, loans and advances increased by RM8.2 billion or 14% to stand at RM65.1 billion as at the end of September 2005. This represents a 2.5 fold increase in the Group’s lending compared to RM25.8 billion at the end of 2000.
The Group’s lending direction continued to be focused on the retail sector, with loans for the financing of residential mortgages, purchase of passenger vehicles and small- and medium-scale enterprises accounting for 73 % of the total loan portfolio as at the end of September 2005, and 77% of total new loans approved during the first nine months of 2005.

Loans for residential mortgages grew by 21% to RM16.9 billion as at the end of September 2005 compared to the 8% growth registered by the banking industry for this sector during the first eight months of 2005. Meanwhile, loans for the purchase of passenger vehicles increased by 15% to RM16.3 billion as at the end of September 2005 from RM14.2 billion as at the end of December 2004. In addition, loans to SMEs expanded by 10% to RM14.4 billion as at the end of September 2005 from RM13.1 billion nine months earlier.

Asset Quality Further Improved
The Public Bank Group’s non-performing loans (“NPL”) fell by 7% or RM112 million during the nine months ended 30 September 2005. As a result, the Group’s gross and net NPL, based on 3-month classification, improved to 2.1% and 1.8% respectively, from 2.7% and 2.1% at the end of December 2004 respectively. This is significantly less than the banking industry’s gross NPL ratio of 9.0% and net NPL ratio of 6.4% at the end of August 2005.

Public Bank continues to be ranked the best amongst all banks in Malaysia in terms of asset quality. The NPL of the Group has charted a consistently improving trend since 2001 both in terms of quantum as well as the NPL ratio. The consistently improving asset quality is a result of consistently prudent lending policies and practices which were complemented by strong credit management and pro-active recovery processes.

The Group maintained a high level of provisioning with its ratio of general allowance to net loans of 1.6%, and a loan loss coverage of 90% as at the end of September 2005, compared to 50% coverage for the banking industry at the end of August 2005.
Capital Position Remained Strong
The Group’s capital base stood at RM10.8 billion as at 30 September 2005, a 7% increase from the end of 2004. Public Bank is the second largest lender by market capitalisation, with strong shareholders’ funds of RM8.1 billion. The capital base also included Subordinated Notes totalling USD750 million, of which USD400 million was issued in June 2005.

The strength of the Public Bank Group was also reflected in its risk weighted capital ratio (RWCR) of 16.6% as at the end September 2005, which was higher than the RWCR of 13.6% for the banking industry at the end of August 2005 and more than twice the statutory minimum of 8%.

Group Prospects For 4Q05
The Malaysian economy is expected to continue to support the growth of the banking industry. Going forward, the Public Bank Group will continue to focus on its core activities of lending to the retail sector, with loans to small- and medium-sized enterprises, residential mortgages and passenger vehicle financing. The Public Bank Group will also focus on growing its low-cost deposits to mitigate the competitive pressures on interest margins. Barring unforeseen circumstances, the Public Bank Group is expected to continue to record satisfactory performance for the rest of 2005.

Tan Sri Dato' Sri Dr. Teh Hong Piow
Chairman
 
Public Bank Records RM1 Billion Profit In First Half Of 2005 And Declares An Interim Dividend Of 20%

For Immediate Release

21 July 2005

Public Bank Records RM1 Billion Profit In First Half Of 2005 And Declares An Interim Dividend Of 20%

I am pleased to announce that the Public Bank Group posted a record pre-tax profit of RM1.0 billion for the first six months of 2005, an increase of 14% from RM881 million achieved for the first half of 2004. The Group’s profit attributable to shareholders rose by RM98 million or 16% to RM711 million over the same period. Notwithstanding the pressure on lending margin due to intense competition, the Group managed to grow its net interest income and net financing income from Islamic banking operations by RM91 million or 7% as a result of sustained strong loan growth and continued improvement in asset quality. The focused and efficient execution of marketing strategies contributed to the continued strong growth in loans and deposits. The improved pre-tax profit was also attributable to higher non-interest income, in particular from increase in gains on sale of trust units and income from investment securities.

The Public Bank Group’s overseas operations, based predominantly in Hong Kong, achieved a 51% improvement in pre-tax profit on the back of lower loan loss provisioning. Public Bank’s domestic operations registered a 9% increase in profit before taxation, and accounted for 86% of the Group’s pre-tax profit.

The Board of Directors has declared an interim dividend of 20% less 28% taxation, which will result in a payout totalling RM471 million. The Group’s risk-weighted capital ratio would continue to remain strong at 17.0% after payment of the interim dividend.

Financial Review

  • Earnings per share improved by 14% to 21.7 sen from 19.1 sen in the first half of 2005.
  • Cost income ratio improved further to 36.9% from 38.4% in 2004.
  • Net return on equity improved to 21.0% for the first six months of 2005, compared to 18.2% in 2004. Return on assets stood at 2.0%.
  • Loans grew by 9.4% to RM62.3 billion in the first six months of 2005 compared to the 2.7% increase recorded by the banking industry for the first five months of 2005.
  • Net non-performing loans ratio declined to 1.9% and stood at only one quarter of the banking industry’s ratio of 7.2% as at May 2005.
  • Total assets increased by 12% in the first half of 2005 to RM103.1 billion due to strong growth in retail as well as corporate deposits. The Public Bank Group remains the third largest banking group in Malaysia.
  • The ratio of net loans to deposits was 75% compared to 77% at the end of December 2004 due to the strong growth of deposits.
  • Non-interest income increased by 21% compared to the corresponding period in 2004 and accounted for 23.6% of the Group’s total net income for the first half of 2005.

Continued strong growth in retail loans

The Public Bank Group’s loans and advances recorded strong growth of RM5.4 billion or 9.4% in the first six months of 2005. The Group approved a total of RM13.7 billion new loans during the same period, which was an increase of 14% compared to loan approvals in the first half of 2004. The Group’s lending operations continued to be retail focused, with loans for residential mortgages, financing of passenger vehicles, and loans to small- and medium-sized enterprises accounting for 73% of total loans outstanding and 77% of new loans approved. Loan approvals for residential mortgages grew by 27% from RM2.6 billion in the second half of 2004 to RM3.3 billion in the first six months of 2005. Meanwhile, Public Bank’s outstanding housing loans increased by 13% from RM14 billion in December 2004 to RM15.9 billion in June 2005, compared to the 3.4% growth rate registered by the industry for residential mortgages in the first five months of 2005.

Asset quality improves further

The Public Bank Group’s non-performing loans (“NPL”) fell by 5% or RM73 million during the six months ended 30 June 2005. As a result, the Group’s gross NPL ratio, based on 3-month classification, improved from 2.7% at the end of 2004 to 2.3%. The Group’s net NPL ratio also improved to 1.9% at the end of June 2005 from 2.1% six months earlier. The Group’s net credit charge-off ratio declined to 0.31% in the first half of 2005 compared to 0.34% in the corresponding period in 2004. Public Bank continues to be ranked the best amongst all banks in Malaysia in terms of asset quality. The Group maintained a comfortable level of provisioning with its ratio of general allowance to net loans standing at 1.6% and its loan loss coverage ratio of 87%.

Capital position remains strong

Public Bank Group’s capital base stood at RM11.11 billion as at 30 June 2005, an increase of 10% from the end of 2004. The Group’s capital base comprised mainly shareholders’ funds of RM8.15 billion and Subordinated Notes of USD750 million, of which USD400 million was issued in June 2005. The risk-weighted capital ratio of the Group, at 17.0%, was more than twice the minimum requirement of 8% and significantly higher than the banking system’s risk-weighted capital ratio of 13.3% at the end of May 2005.

Public Bank’s Subordinated Notes provide the Group with the capacity to expand its business and balance sheet without burdening shareholders for more equity capital, thus improving the return on equity.

Public Bank has to date spent RM785 million to buy back a total of 111.7 million Public Bank (Local) shares and 12.5 million Public Bank (Foreign) shares, representing in total 3.7% of the issued and paid-up capital of Public Bank. The share buy-back had resulted in an improvement of the Group’s return on equity by 1.8% to 21.0%.

Group prospects

The Public Bank Group continues to see opportunities for revenue and profit growth given the overall healthy macro-economic outlook and low interest rate environment which are supportive of business expansion, in particular for the consumer and small and medium-sized enterprises, markets which the Group is focused on. Barring unforeseen circumstances, the Public Bank Group is expected to continue to record satisfactory performance for the rest of 2005.

 
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Tan Sri Dato' Sri Dr. Teh Hong Piow , Chairman of Public Bank

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Public Bank Achieves 11% Increase In Pre-Tax Profit To RM480 Million In First Quarter 2005

For Immediate Release

13 April 2005

Public Bank Achieves 11% Increase In Pre-Tax Profit To RM480 Million In First Quarter 2005

I am pleased to announce that the Public Bank Group achieved a pre-tax profit of RM480 million for the first three months of 2005, an increase of 11% compared to the corresponding period in 2004. The Group's profit attributable to shareholders rose by RM41 million or 14% to RM345 million over the same period. Despite competitive pressures on lending rates, the Group's net interest income and net financing income from Islamic banking operations increased by RM43 million or 7% as a result of sustained strong loan growth, continued mobilisation of lower-cost customer deposits and strong asset quality. The higher pre-tax profit was also attributable to higher fee income and improved cost-efficiency and staff productivity.

The Public Bank Group's overseas operations, based predominantly in Hong Kong, achieved a 43% improvement in pre-tax profit on the back of higher recoveries. Public Bank's domestic operations registered a 7% increase in profit before taxation, and accounted for 86% of the Group's pre-tax profit.

Financial Highlights

  • Earnings per share improved by 10% to 10.6 sen from 9.6 sen in the first quarter of 2004.
  • Cost income ratio improved to 36.3% from 38.2% in 2004.
  • Net return on equity improved to 20.2% for the first quarter 2005, compared to 18.2% in 2004. Return on assets stood at 2.0%.
  • Loans grew by 4.8% to RM59.7 billion in the first three months of 2005 compared to the 0.6% increase recorded by the banking industry for the first two months of 2005.
  • Net non-performing loans ratio of 2.1% was 72% lower than the banking industry's ratio of 7.6% as at February 2005.
  • Total assets stood at RM97.5 billion, an increase of 6% from the end of 2004.
  • The ratio of net loans to deposits was 75% compared to 77% at the end of December 2004 due to the strong growth of wholesale deposits.

Continued strong growth in retail loans

The Public Bank Group's loans and advances recorded strong growth of RM2.7 billion or 4.8% in the first three months of 2005. The retail focus of the Group's lending operations is reflected by the composition of its loan book, with residential mortgages and financing of passenger vehicles, and loans to small-and medium-sized enterprises accounting for 72% of the total loan portfolio. During the first three months of 2005, new loan approvals to these sectors made up 76% of the RM6.7 billion of new loans approved.

Asset quality improves further

The Public Bank Group's gross non-performing loans ("NPL") ratio, based on 3-month classification, improved from 2.7% at the end of 2004 to 2.6% at the end of March 2005. The gross NPL ratios for the Group's key lending sectors stood at 3.5% for residential mortgages, 1.3% for vehicle financing and 2.3% for SME loans. In comparison, the banking industry registered gross NPL ratios of 8.5%, 3.8% and 12.0% respectively for residential mortgages, vehicle financing and SME loans at the end of 2004.

The Public Bank Group's net NPL ratio improved to 2.07% at the end of March 2005, and its credit charge-off ratio has declined to 0.35% in the first quarter of 2005 compared to 0.41% in the previous quarter. Public Bank continues to be ranked the best amongst all banks in Malaysia in terms of asset quality. The Group maintained a comfortable level of provisioning with its ratio of general allowance to net loans standing at 1.6% and its loan loss coverage ratio of 81.1%.

Capital position remains strong

As at 31 March 2005, the Public Bank Group's risk-weighted capital ratio stood at 15.2%, above the statutory minimum requirement of 8% and the banking system's risk-weighted capital ratio of 14.2% at the end of February 2005.

As a measure to improve capital efficiency, Public Bank has to date bought back a total of 111.7 million Public Bank (Local) shares and 12.5 million Public Bank (Foreign) shares, representing in total 3.7% of the issued and paid-up capital of Public Bank, at an average price of RM6.27 and RM6.61 per share respectively. Public Bank (Local) shares and Public Bank (Foreign) shares closed at RM6.95 and RM7.05 on 12 April 2005.

Group prospects

The Malaysian economy is expected to remain strong with GDP growth of 5% to 6% in 2005. The Public Bank Group will capitalise on the positive economic conditions to expand its core business activities, and will also continue to enhance its customer services and pursue greater cost-efficiency. Barring unforeseen circumstances, the Public Bank Group is expected to continue to record satisfactory performance for the rest of 2005.

Tan Sri Dato’ Sri Dr. Teh Hong Piow
Chairman

 
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Y.Bhg. Tan Sri Dato’ Sri Dr. Teh Hong Piow
Chairman, Public Bank

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