For Immediate Release
26 February 2020
Public Bank Group Achieved Pre-Tax Profit Of RM7.13 Billion For 2019 And Declared Higher Second Interim Dividend Of 40 Sen
Tan Sri Dato’ Sri Dr. Teh Hong Piow, the Founder, Chairman Emeritus, Director and Adviser of Public Bank, announced, “For the financial year of 2019, the Public Bank Group recorded a 1.9% growth in its operating revenue to RM22.45 billion. This had led to a higher pre-tax profit of RM7.13 billion, as compared to RM7.10 billion reported in the previous year. Net profit attributable to shareholders was recorded at RM5.51 billion. On a quarter-on-quarter basis, pre-tax profit and net profit attributable to shareholders grew by 3.4% and 3.2% respectively as compared to the third quarter of the year.”
Tan Sri Teh added, “2019 was a year with strong headwinds and increased challenges. Economic growth across developed and emerging countries had further moderated. The reduction in Overnight Policy Rate in May 2019 had placed further pressure on net interest margins which affected profitability of the domestic banking sector for the year. However, the Public Bank Group was still able to sustain stable profitability in 2019 through an above-industry growth in financing and deposit-taking businesses, a commendable growth of 8.4% in non-interest income and the strong asset quality.”
Tan Sri Teh further added, “Under the current challenging operating environment, the Public Bank Group is of the view that preserving strong asset quality and prudent cost management is the key to long term sustainability of earnings. Thus, the Group has been holding firm on its key principle of prudent credit management and continues to emphasise on productivity and operational efficiency. As a result, the Group continued to sustain the lowest gross impaired loan ratio of 0.5% and most efficient cost-to-income ratio of 34.4%, as compared to its domestic peers. Coupled with the Group’s stable profitability, the Group continued to achieve a resilient net return-on-equity of 13.6% in 2019.”
With this stable profitability performance and healthy balance sheet growth, Tan Sri Teh announced, “For the financial year of 2019, as the Public Bank Group continued to achieve solid financial strength, and also in appreciation of shareholders’ support, the Board of Directors is pleased to declare a higher second interim dividend of 40 sen. Together with the first interim dividend of 33 sen, the Group’s full year dividend for 2019 would amount to 73 sen, as compared to 69 sen paid in 2018. This would translate into a total of RM2.83 billion which represents 51.4% payout of the Group’s net profit for 2019. The second interim dividend will be paid on 20 March 2020, based on the dividend entitlement date of 12 March 2020.”
Healthy Growth in Loans and Deposits
The Public Bank Group continued to achieve healthy growth performance in its core business of financing. In 2019, the Group achieved a 4.1% growth in total loans. This was mainly driven by domestic loan growth of 4.5%, which was higher than the domestic banking system’s loan growth of 3.9%. This was attributable to the Group’s competitive market position in residential property financing, commercial property financing and hire purchase financing, with the Group continuing to capture leading market share in the domestic banking industry, which stood at 19.9%, 35.0% and 29.4% respectively as at the end of 2019.
On deposit-taking, the Public Bank Group achieved a 4.2% growth in total customer deposits. On domestic front, the Group achieved a stronger growth of 4.7% in total customer deposits, which was also higher than the domestic banking system’s deposit growth of 2.9%.
Tan Sri Teh said, “With the healthy loan and deposit growth during the year, the Group had continued to sustain a healthy funding position as reflected in its gross loan to fund and equity ratio of 79.2%.”
Continued Growth in Non-interest Income
For the financial year of 2019, the Public Bank Group continued to achieve a commendable growth of 8.4% in non-interest income, led by higher investment income.
Tan Sri Teh highlighted that, “Public Mutual, Public Bank’s wholly-owned unit trust subsidiary, remained the major contributor to the Public Bank Group’s non-interest income. In 2019, Public Mutual sustained its industry leading position, with retail market share of 35.0%. This is on the back of a continued growth of 10.0% in its total net asset value under management to RM86.6 billion as at the end of 2019, with a total of 156 unit trust funds being managed.”
Leading Cost Efficiency
In 2019, the Public Bank Group sustained its competitive strength in cost management, with its cost-to-income ratio at 34.4%, which remained the most efficient among peers. This was significantly better than the domestic banking system’s cost-to-income ratio of 44.6%.
Tan Sri Teh reiterated, “In line with the overall trend in the domestic banking landscape, the Public Bank Group faced rising cost pressure arising from investments in human capital, banking technology, compliance with regulations and building capabilities for future growth. However, the Group had maintained its long term practice of prudent cost management, which continued to efficiently and effectively support the Group’s organisational growth.”
Sustaining Superior Asset Quality
As at the end of 2019, the Public Bank Group’s gross impaired loans ratio remained low and stable at 0.5%, which continued to be well below the domestic banking system’s gross impaired loans ratio of 1.5%.
Tan Sri Teh highlighted, “When the banking industry is concerned about the uptick in impaired loans amid the increasing economic challenges, the Public Bank Group continued to lead by its strong asset quality, despite its growing loan portfolio. Notwithstanding this, the Group had maintained a high loan loss coverage ratio of 124.1%, which was higher than the domestic banking industry’s loan loss coverage ratio of 89.6%. Including the RM2.0 billion regulatory reserves that the Group had set aside, the Group’s loan loss coverage ratio was higher at 249.8%.”
Overseas Operations
The Public Bank Group’s overseas operations contributed 10.4% to the Group’s pre-tax profit in 2019. This was largely driven by the Group’s operations in Indo-China and Hong Kong.
Tan Sri Teh added, “Cambodian Public Bank Plc (“Campu Bank”) continued to sustain its position as the largest foreign bank in Cambodia, and reported a higher profit of USD82 million in 2019. The Group’s operation in Vietnam, Public Bank Vietnam Limited (“PBVN”), had also delivered commendable performance. In 2019, PBVN achieved 25.8% loan growth and posted 48.2% profit growth to VND387 billion. The Group is in the process of expanding its branch network and strengthening its sales force for its Vietnam operation. In addition to the existing branch network of 20 branches, PBVN has obtained regulatory approval to open another six more branches in 2020, with a target to reach 40 branches in the medium term.”
Healthy Capital Position
The Public Bank Group’s capital position remained healthy. The Group’s common equity Tier 1 capital ratio, Tier 1 capital ratio and total capital ratio stands at 13.5%, 13.5% and 16.8% respectively as at the end of 2019, after deducting the second interim dividend to be paid.
Tan Sri Teh commented, “The Public Bank Group places great focus on effective capital management. The Group adopts a balanced strategy in maintaining sufficient capital buffer to meet regulatory requirement, whilst ensuring capital efficiency in generating optimum return to its shareholders.”
Group’s Prospect
For 2020, the Malaysian economy is expected to continue to be driven by domestic demand, underpinned by the stable labour market and the ongoing fiscal investments. However, lingering uncertainties in the macro environment is likely to continue into 2020, with the banking sector bracing for another year of challenges.
Tan Sri Teh concluded, “With the expected uncertainties lying ahead, it is imperative to remain vigilant against multiple risks stemming from the challenging economic environment. However, the Group will remain cautiously optimistic, as its strong market position and sound foundation, coupled with a growing domestic economy, will continue to support and drive business growth in 2020. The Group will remain focused on organic growth strategy and continue to sharpen its competitive capabilities to strengthen resilience in its core business in retail and commercial banking. Sustaining stable profitability and preserving strong asset quality will remain as the Group’s strategic focus going forward.”
Y.Bhg. Tan Sri Dato' Sri Dr. Teh Hong Piow
Founder, Chairman Emeritus, Director and Adviser of Public Bank
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