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Public Bank Group Achieved 15.1% Net Profit Growth In The First Quarter Of 2021
11 May 2021
Public Bank Group Achieved 15.1% Net Profit Growth In The First Quarter Of 2021

Highlights on Financial Performance

Tan Sri Dato’ Sri Dr. Teh Hong Piow, the Founder, Chairman Emeritus, Director and Adviser of Public Bank is pleased to announce today, “The Public Bank Group started the year of 2021 with positive momentum. In the first quarter of 2021, the Public Bank Group achieved 15.7% growth in its pre-tax profit to RM2.00 billion compared to RM1.73 billion in the corresponding period in 2020. Net profit attributable to shareholders grew by 15.1% over the same period to RM1.53 billion.”

Tan Sri Teh commented that, “For the first quarter of 2021, the operating environment remained challenging as the Movement Control Order 2.0 was imposed to address the resurgence of COVID-19 cases. Despite these challenges, the Malaysian economy gradually gained momentum, on the back of improved sentiment arising from the global deployment of COVID-19 vaccines, together with various ongoing policy support. Under the improved economic environment, the Public Bank Group achieved better profit performance, driven by the continued expansion in loans and deposits businesses, and further boosted by fee-based revenue growth.”

During the first quarter of 2021, the Public Bank Group continued to achieve an efficient cost-to-income ratio of 31.8% and a high net return-on-equity of 13.5%.
Continued Expansion in Loans and Deposits
“The Public Bank Group continued to gain traction in its lending and deposit-taking businesses, despite the ongoing economic challenges,” said Tan Sri Teh.
As at the end of March 2021, the Public Bank Group’s total loans recorded an annualised growth of 4.8%. This was mainly supported by residential property financing, passenger vehicle financing and SME financing.

Tan Sri Teh further added, “With the low interest rate environment and economic stimulus measures, the Group recorded improvements in its housing loans approvals, with an increase of 26.5% in the first quarter of 2021 compared to the same period last year. Besides that, the Group’s proactive promotion and participation in various special financing schemes initiated by the Government and Bank Negara Malaysia to assist SMEs in overcoming their financial difficulties, had further contributed to the Group’s loan growth.” 
On deposit-taking, the Group’s total customer deposits achieved an annualised growth of 2.9% and domestic customer deposits registered an annualised growth of 3.0%. The lower-cost current and savings deposits continued to grow at a strong pace during the quarter with an annualised growth of 18.4%.
Strong Growth in Non-interest Income
Non-interest income increased by 16.6% in the first quarter of 2021 compared to the corresponding period in 2020, mainly supported by the stronger growth achieved in the Group’s unit trust business, fee and commission income as well as stockbroking income.
Tan Sri Teh added, “For the first quarter of 2021, the Public Bank Group’s unit trust business which is being managed by its wholly-owned subsidiary, Public Mutual, remained the main contributor to its non-interest income. Public Mutual recorded a commendable performance in the first quarter of 2021, with its pre-tax profit growing by 33.6% quarter-on-quarter to RM216.6 million. As at the end of March 2021, Public Mutual continued to capture a large retail market share of 32.2% and managed a total of 166 unit trust funds with assets under management totalling RM101.3 billion.”
Prudent Cost Management
Tan Sri Teh highlighted, “The Public Bank Group remained as the most cost-efficient bank in Malaysia, with cost-to-income ratio of 31.8%, significantly better than the domestic banking industry’s cost-to-income ratio of 42.8%. In light of the ongoing challenging operating condition, the Group will continue to manage cost prudently in order to sustain profitability.”  
Stable Asset Quality
As at the end of March 2021, the Public Bank Group’s gross impaired loan ratio stood at 0.4%, well below the banking industry’s gross impaired loan ratio of 1.6%.
Further, the Public Bank Group’s loan loss coverage ratio was maintained at a prudent level of 247.0% compared to the banking industry’s loan loss coverage of 111.8%. Including the RM1.1 billion regulatory reserves that has been set aside, its total reserves for loan losses was higher at 337.7%.

Tan Sri Teh commented, “The COVID-19 pandemic had posed a downside risk to the banking industry’s asset quality. However, on the back of various relief and stimulus measures initiated by the Government and Bank Negara Malaysia, coupled with the Group’s resilient credit profile, the Group is in a better position to navigate any asset quality risks.”

Provision of Repayment Relief Assistance

Since March 2020, in support of the Government and Bank Negara Malaysia’s initiatives, the Group has been constantly providing relief assistance to customers who faced financial difficulties amid this unprecedented crisis.

During the first wave of the COVID-19 pandemic in 2020, the Public Bank Group provided a six-month automatic loan moratorium to relieve customers’ repayment difficulty. As the six-month moratorium expired in September 2020, the Group had rolled out various flexible loan repayment assistance packages under the Targeted Repayment Assistance and Expanded Targeted Repayment Assistance programme to assist customers with various financial difficulties. Customers from different income segments, such as the B40 and M40 as well as SMEs and microenterprises have been offered assistance by the Group to help them navigate their current financial challenges.

For SME customers who seek additional funds for their businesses in this difficult time, the Public Bank Group has been proactively promoting various financing schemes initiated by the Government and Bank Negara Malaysia, such as the Special Relief Fund, Micro Enterprises Facility and Targeted Relief and Recovery Facility. These funds are offered at competitive interest rates and flexible tenure, which aim to help these SMEs go through this challenging period.

The Public Bank Group remains mindful of the prevailing headwinds on the repayment capability of its customers and continues to engage its customers to provide further financial assistance to those in need. As at the end of March 2021, the Group’s various financing and repayment assistance had benefitted about 1.8 million customers.

Healthy Capital and Liquidity Position

As at the end of March 2021, the Public Bank Group’s common equity Tier 1 capital ratio, Tier 1 capital ratio and total capital ratio stood at 13.8%, 13.8% and 16.9% respectively.

Tan Sri Teh commented, “Ensuring a stable and healthy capital position remains a key priority to the Public Bank Group. Its capital strength will continue to safeguard the Group from any financial stress caused by the COVID-19 pandemic. The Group continues to manage its capital proactively and ensure adequate capital buffers in pursuit of its organic business growth as well as strategies to cope with the new business normal.”

Tan Sri Teh further added, “As for liquidity management, the Public Bank Group ensures sufficient liquidity buffer is maintained at all times. The Group’s liquidity coverage ratio continued to stand at a healthy level of 128.3% as at the end of March 2021.”

Group’s Prospect

The Malaysian economy is poised to continue on a recovery trajectory, underpinned by continued policy measures and additional stimulus packages as well as the wider rollout of the COVID-19 vaccinations. The less stringent COVID-19 containment measures have reignited domestic economic activities, hence helping to boost business and consumer sentiments. Furthermore, monetary policy remains accommodative in support of a sustainable economic recovery.  

Tan Sri Teh commented, “With improved operating environment, the banking industry is expected to achieve better performance in 2021. Nevertheless, the Public Bank Group is mindful of ongoing downside risks that could pose further disruptions to the banking business. Thus, strategic business direction, prudent risk management practices and cost efficiency measures will remain on the Group’s business agenda so that the Group can continue to withstand uncertainties and respond appropriately to any changes.”

“While the Public Bank Group remains cautiously optimistic about the economic outlook, it will continue to strive hard for business growth in its core business segments in order to continue generating value for its stakeholders,” Tan Sri Teh concluded.

Y.Bhg. Tan Sri Dato' Sri Dr. Teh Hong Piow
Founder, Chairman Emeritus, Director and Adviser of Public Bank

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