For Immediate Release
20 April 2015
Public Bank Group Achieved 15.2% Growth In Net Profit Attributable To Shareholders To RM1.17 Billion For The First Quarter Of 2015
The Founder and Chairman of Public Bank, Tan Sri Dato’ Sri Dr. Teh Hong Piow is pleased to announce that, “The Public Bank Group recorded yet another commendable set of results with net profit attributable to shareholders increasing by 15.2% year-on-year to RM1.17 billion for the first quarter of 2015. Pre-tax profit grew by 12.2% to RM1.49 billion for the same period.”
Tan Sri Teh said that, “The Public Bank Group has a head start in achieving its 2015 targets, particularly in its lending and deposit-taking businesses despite operating in a more subdued operating environment. The Group registered a strong loan growth at an annualised rate of 13.1% and in tandem with that, the Group’s customer deposits also increased favourably at an annualised growth rate of 12.8%.
In the first quarter of 2015, the Public Bank Group recorded a net return on equity of 17.1%, gross impaired loan ratio of 0.6% and cost-to-income ratio of 31.0%. Its ability of continuously achieving the best in net return on equity while maintaining the lowest gross impaired loan ratio and cost-to-income ratio has enabled the Group to rank highly amongst its banking peers in Malaysia.”
Strong Growth in Loans and Deposits
The Public Bank Group maintained a strong loan growth momentum at an annualised rate of 13.1% in the first quarter of 2015, largely supported by the domestic loans which grew by an annualised rate of 12.1% over the period.
As at the end of March 2015, the Group’s retail loan portfolio collectively accounted for 86% of its total loans, comprising mainly financing for the purchase of residential properties and passenger vehicles, as well as lending to small and medium enterprises (“SMEs”). In the first quarter of 2015, the Group’s SME lending continued to register strong growth momentum with an annualised growth rate of 21.1%.
The Public Bank Group’s funding and liquidity position remained supportive of its lending activities, backed by its strong retail depositor base of over 5 million customers. The Group’s total customer deposits grew at an annualised rate of 12.8%, with domestic customer deposits growing at an annualised rate of 12.1%.
Tan Sri Teh commented that, “The favourable deposit growth was mainly contributed by the steady inflows of fixed deposits, low cost savings and current accounts, which increased by an annualised rate of 14.9%, 12.4% and 12.5% respectively.” He further added that, “For funding purposes, the Public Bank Group will continue to launch attractive campaigns to reward both new and existing retail customers in placing more funds with the Group, as well as be partially supplemented by wholesale deposits. As at the end of March 2015, the loan-to-deposit ratio remained healthy at 88.0%”
Commendable Growth in Non-Interest Income
In the first quarter of 2015, the Group achieved a commendable growth of 15.7% in its non-interest income as compared to the corresponding quarter in 2014. The strong growth was attributed to higher income from its unit trust business, bancassurance, banking services and investment income.
Tan Sri Teh said that, “The Public Bank Group’s unit trust management business through its wholly-owned subsidiary, Public Mutual Berhad (“Public Mutual”), continued to contribute positively to the Group’s financial performance. For the first quarter of 2015, Public Mutual recorded a strong year-on-year double-digit growth of 20.3% in its pre-tax profit. As at the end of March 2015, Public Mutual managed 114 funds with a total net asset value of RM65.8 billion. It continues to be the market leader in the private unit trust business, capturing an overall market share of 39.1% as at the end of February 2015. It also has the highest market share of 58.6% and 50.9% amongst the private unit trusts companies in Malaysia, in the equity and Islamic unit trust fund sectors respectively.”
The Public Bank Group will continue to strengthen its infrastructure and mobilise its resources to capture opportunities to further increase its non-interest income contribution.
Sustainable and Efficient Cost Structure
Tan Sri Teh further highlighted that, “The Public Bank Group continued to remain as the most cost-efficient bank in Malaysia, with its cost-to-income ratio of 31.0% in the first quarter of 2015 as compared to the banking industry’s average ratio of 45.5%. The ability of the Group to operate in such an efficient cost structure certainly puts the Group in a better financial position, especially in times of uncertainty. ”
“To ensure cost sustainability amid the challenging business landscape, the Public Bank Group will continue to be prudent in its cost management by ensuring that its resources are aptly deployed to achieve the desired optimum results that can bring tangible values to the organisation and its stakeholders. The Group will continue to strive for higher productivity and operational efficiency while ensuring strict adherence to operation controls and regulatory compliances,” added Tan Sri Teh.
Superior Asset Quality
The asset quality of the Public Bank Group remained well-controlled and resilient with a low gross impaired loan ratio of 0.6% as at the end of March 2015, significantly lower than the Malaysian banking industry’s gross impaired loan ratio of 1.7%. The loan loss coverage ratio stood at 128.1%, which was higher and more prudent than the banking industry's coverage ratio of 97.9%. Inclusive of the regulatory reserves of RM1.5 billion that the Group has set aside for additional credit risks absorbent, the loan loss coverage of the Group is higher at 233.7%.
“While the Public Bank Group continues to extend credit facilities to its customers, the Group will ensure that its superior asset quality is safeguarded at all times by adopting a prudent approach in managing its credit risk. This includes consistent and effective implementation of both preventive and proactive measures in its lending activities, such as establishing strict and prudent credit practices as well as putting in place efficient and effective approval and recovery processes,” said Tan Sri Teh.
For the first quarter of 2015, the Public Bank Group’s overseas operations contributed 8.8% of the Group’s overall pre-tax profit.
Tan Sri Teh highlighted that, “Cambodian Public Bank Plc (“Campu Bank”), a wholly-owned subsidiary of Public Bank, continued to report strong growth of 44.8% in pre-tax profit to USD13.9 million for the first quarter of 2015 as compared to the corresponding quarter in 2014, and remains as one of the top three largest banks in Cambodia.”
In July 2014, Public Bank entered into an agreement for the acquisition of the remaining 50% equity interest in VID Public Bank (“VPB”) not held by the Group. The State Bank of Vietnam had on 23 March 2015 granted its approval on the acquisition and for Public Bank to transform VPB, the existing joint venture bank, into a 100% foreign-owned bank of Public Bank in Vietnam. Upon completion of the exercise, VPB will become a wholly-owned subsidiary of the Group.
Healthy Capital Position
The Public Bank Group is well-capitalised to support the Group’s organic business growth strategy. As at the end of March 2015, the Group’s common equity Tier 1 capital ratio, Tier 1 capital ratio and total capital ratio were at a healthy level of 10.5%, 11.7% and 15.2% respectively.
As part of its proactive capital management strategy, the Public Bank Group will continue to monitor its capital position to ensure healthy capital level at all times to support its continuous business growth whilst meeting the more stringent Basel III capital requirements.
“The Group will continue to focus on its core retail banking and financing business, whilst maintaining its prudent credit policies, as well as upholding strong corporate governance. The Group will also continue to leverage on its strong PB brand and its wide and efficient branch network as well as its excellent customer service to support long term sustainable growth.
The Malaysian economy is expected to remain resilient albeit at a more moderate growth pace of 4.5% to 5.5% in 2015, backed by domestic demand. On the banking landscape, we expect continued net interest margin compression due to external headwinds and intense market competition. Despite facing these challenges, the Public Bank Group is expected to maintain its satisfactory performance for the rest of 2015,” concluded Tan Sri Teh.
Y.Bhg. Tan Sri Dato' Sri Dr. Teh Hong Piow
Founder and Chairman of Public Bank