FOR IMMEDIATE RELEASE
27 November 2020
Public Bank Group Posted Pre-Tax Profit Of RM4.81 Billion For The Nine Months Ended September 2020
Highlights on Financial Performance
For the third quarter ended September 2020, the Public Bank Group’s pre-tax profit and net profit attributable to shareholders grew by 2.3% and 2.2% respectively, as compared to the corresponding quarter in 2019.
As for the first nine months of 2020, the Public Bank Group posted pre-tax profit of RM4.81 billion, 9.4% lower as compared to the corresponding period in 2019. Net profit attributable to shareholders stood at RM3.72 billion, 9.3% lower than the first nine months in 2019. This was mainly due to the moderating revenue growth arising from the COVID-19 pandemic, the effect of the Overnight Policy Rate (“OPR”) reduction during the year, as well as the one-off net modification loss of RM498 million incurred in the second quarter due to the COVID-19 relief measures offered to individuals and businesses.
Tan Sri Dato’ Sri Dr. Teh Hong Piow, the Founder, Chairman Emeritus, Director and Adviser of Public Bank, said, “The COVID-19 pandemic continued to pose significant uncertainties to the economic landscape and the business environment on all fronts. Further, a total of 125 basis points cut in the OPR this year and the higher provisions set aside in anticipation of the COVID-19 pandemic effect had continued to weigh on profitability.”
Tan Sri Teh added, “However, as the economy gradually reopened and supported by the various government relief and stimulus measures, the economic environment in the third quarter of 2020 had shown an improvement. The Public Bank Group recorded higher loan growth in the third quarter as compared to the earlier quarters. Total loans grew by an annualised rate of 4.8% in the first nine months of 2020. Domestic loans grew by an annualised rate of 5.6%, which was higher than the domestic banking industry’s annualised loan growth of 4.0%. On funding side, the Group posted annualised growth rate of 3.9% in both total deposits and domestic deposits.”
Non-interest income continued to support the Group’s financial performance, with 17.8% growth in the first nine months of 2020, mainly driven by higher investment income, as well as higher income from unit trust and stockbroking businesses.
Public Mutual, the Public Bank Group’s wholly-owned subsidiary, remained the main contributor to the Group’s non-interest income. As at end-September 2020, Public Mutual managed a total of 162 unit trust funds, with its total net asset value increasing from RM86.6 billion as at end-2019 to RM94.1 billion as at 30 September 2020. Public Mutual also remained as the market leader in the retail private unit trust industry, with a market share of 32.9%.
Tan Sri Teh highlighted, “Despite the various challenges faced in 2020, the Group recorded a resilient net return on equity of 11.3% in the first nine months of 2020. Cost-to-income ratio stood at 35.2%, as compared to the domestic banking industry’s cost-to-income ratio of 44.7%.”
Tan Sri Teh added, “Meanwhile, impaired loan ratio remained low at 0.3%, which was significantly better than the domestic banking industry’s impaired loan ratio of 1.4%. In addition, the Group maintained a high loan loss reserves of 209.1%. Including the RM1.7 billion regulatory reserves that the Group had set aside, total reserves for loan losses were even higher at 362.0%.”
Managing Impact of COVID-19
Tan Sri Teh highlighted, “While the difficult economic condition has continued to pose risks to asset quality, the Public Bank Group has remained in a good position to navigate the challenge. The Group’s resilient loan portfolio, prudent lending practices and strong credit risk profile have laid a solid foundation for the Group to manage any potential stress on asset quality. In addition to the various financial relief measures by the Government and Bank Negara Malaysia, the Group has also been taking pre-emptive initiatives in reaching out to customers who may need further financial assistance, and this will further mitigate any downside pressure to the Group’s asset quality.”
While the Group remains extra vigilant to sustain its business stability amid the highly uncertain environment, it has continued to extend its financial assistance to the customers.
In the third quarter of 2020, the Group continued to provide loan and financing moratorium to individuals and business enterprises. After the moratorium period ended on 30 September 2020, the Group has continued to proactively engage its customers to provide further financial assistance.
Tan Sri Teh said, “The Public Bank Group has been actively implementing post-moratorium loan repayment assistance programme for customers who have encountered loss or reduction in income due to the COVID-19 pandemic. The programme consists of various repayment packages which suit varying customers’ financial conditions. To ensure customer awareness and convenience in seeking further assistance, the Group has carried out various activities and facilities, such as weekend Repayment Assistance Clinic, digital application platform, virtual roadshow, as well as SMS and email blast through its extensive communication channels.”
Tan Sri Teh added, “Additionally, the Group has continued to be an active participating financial institution offering various Government and Bank Negara Malaysia’s special financing schemes to the small and medium enterprises (“SMEs”) which are affected by the COVID-19 pandemic. These include Bank Negara Malaysia’s Special Relief Facility, PENJANA SME Financing Scheme, PENJANA Tourism Financing Scheme, Government Guarantee Scheme, Bank Negara Malaysia’s SME All Economic Sectors Facility, SME Automation and Digitalisation Facility, Agrofood Facility and Micro Enterprises Facility. The Group has approved more than RM3 billion financing to about 14,000 businesses under such special financing schemes.”
Tan Sri Teh further added, “During this challenging period, the Public Bank Group’s active participation in all the various financial relief measures, including loan moratorium, loan restructuring and rescheduling and special financing schemes, has benefitted more than 1.8 million customers.”
Healthy Capital and Liquidity Position
Tan Sri Teh said, “As always, the Public Bank Group has been highly vigilant in its capital and liquidity management to ensure its capital strength and balance sheet remain resilient throughout this unprecedented difficult period.” As at the end of September 2020, the Public Bank Group’s capital position was standing strong, with its Common Equity Tier 1 Capital Ratio, Tier 1 Capital Ratio and Total Capital Ratio at 13.6%, 13.7% and 16.8% respectively. The Group’s liquidity coverage ratio also remained healthy at 159.0%.
Group’s Prospect
The global economic growth is set to contract this year due to the wide-ranging and severe impact arising from the COVID-19 pandemic on economic activities and social movements. On the domestic front, while the Malaysian economy is expected to be on the negative trajectory for the whole of 2020, gradual economic recovery and the significant support measures by the Government and Bank Negara Malaysia will continue to cushion the adverse impact of the pandemic. However, the resurgence of COVID-19 among the community has remained a concern.
Tan Sri Teh said, “In line with the concerted efforts by the Government and Bank Negara Malaysia to provide financial relief to individuals and businesses and spur the country’s economy, the Public Bank Group will continue to take a proactive and accommodative stance in the provision of assistance to its customers.”
Tan Sri Teh concluded, “Against this unprecedented challenging environment, the Group has been managing well in safeguarding its bottom line. As the outlook remains highly uncertain, the Group will continue to focus and be extra vigilant to ensure prudent credit policies, robust risk management, cost efficiency and good corporate governance. As the Group embraces challenges with these strong core competencies, the Group will also remain agile and leverage on the opportunities arising from the shift in customer demand and needs during this challenging time.”
Y.Bhg. Tan Sri Dato' Sri Dr. Teh Hong Piow
Founder, Chairman Emeritus, Director and Adviser of Public Bank
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