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Public Bank Group Achieved Pre-Tax Profit Of RM5.31 Billion for the First Nine Months of 2019

For Immediate Release

7 November 2019

Public Bank Group Achieved Pre-Tax Profit of RM5.31 Billion for the First Nine Months of 2019

For the first nine months of 2019, the Public Bank Group’s profit performance remained stable, on the back of a 2.3% growth in total revenue to RM16.78 billion. For the 9-month reporting period, the Group recorded a pre-tax profit of RM5.31 billion and net profit attributable to shareholders of RM4.11 billion, compared to RM5.31 billion and RM4.19 billion respectively in the corresponding period in 2018.
 
On a quarter-to-quarter comparison, the Group’s net profit attributable to shareholders of RM1.36 billion recorded in the 3rd quarter of 2019, represented an increase of 2.2% as compared to the net profit attributable to shareholders of RM1.33 billion achieved in the 2nd quarter of 2019.
 
Tan Sri Dato’ Sri Dr. Teh Hong Piow, the Founder, Chairman Emeritus, Director and Adviser of Public Bank said, “Recent developments in the operating environment posed further challenges to the banking industry. While macro headwinds remain, the reduction in Overnight Policy Rate (“OPR”) in May 2019 had also resulted in the decline in net interest margins for the banking sector, which affected the profit for the first nine months ended September 2019.”
 
Tan Sri Teh further added, “Despite these concerns, the Public Bank Group was able to sustain stable profit performance, mainly on account of the stable interest income from its growing financing and deposit business. The Group’s profitability was also complemented by its non-interest income which grew by 5.8% in the first nine months of the year. During the financial period, the Group also retained its competitive strength, as reflected in its efficient cost-to-income ratio of 34.3% and low gross impaired loans ratio of 0.5%. As a result, the Group sustained a resilient net return on equity of 13.3%.”
 
Sustained Growth in Loans and Deposits
 
In the first nine months of 2019, the Public Bank Group’s total loans rose by an annualised rate of 4.2% to RM327.2 billion. On the domestic front, the Group’s total loans grew by an annualised rate of 4.4%, higher than the banking system’s annualised loan growth of 3.3%. This loan growth is commendable when compared to the industry’s growth and continued to reinforce the Group’s strong market position in lending for residential properties, financing to the small and medium enterprises, as well as hire purchase financing.
 
On deposit-taking, the Public Bank Group achieved an annualised growth rate of 3.2% to RM347.2 billion in total deposits. Domestic deposits rose by an annualised rate of 3.4%, which was also higher as compared to the domestic banking system’s annualised deposit growth of 2.0%.
 
Tan Sri Teh added, “The Group has adopted a strategy to optimise its funding position and balance between deposit growth and cost of funding, whilst ensuring sufficient liquidity buffer. As at the end of September 2019, the Group’s funding position remained healthy with its gross loan to fund and equity ratio standing at 79.8%.”
 
Continued Growth in Non-interest Income
 
In the first nine months of 2019, the Public Bank Group achieved 5.8% growth in non-interest income, led by higher investment income and banking fee income.
 
Tan Sri Teh highlighted, “Public Mutual, the Public Bank Group’s wholly-owned unit trust management subsidiary, remained the main contributor to the Group’s total non-interest income. In the first nine months of 2019, Public Mutual managed a total of 152 unit trust funds representing net asset value of RM84.2 billion. Public Mutual also sustained its market leader position in the domestic private unit trust industry, with a retail market share of 35.3%.”
 
Prudent Cost Management
 
In the first nine months of 2019, the Public Bank Group’s cost-to-income ratio stood at 34.3%, significantly more efficient than the domestic banking industry’s average cost-to-income ratio of 44.6%.
 
Tan Sri Teh highlighted, “Effective cost management has long been a strong competitive edge for the Public Bank Group as it enables the Group to pursue continued business growth despite the rising cost pressure. With this strong buffer, the Group is able to continue investing in talent and technology to further enhance its productivity and strengthen its business sustainability.”
 
Upholding Strong Asset Quality
 
As at end-September 2019, the Public Bank Group’s gross impaired loan ratio remained stable at 0.5%, well below the domestic banking industry’s gross impaired loan ratio of 1.6%.
 
Notwithstanding this, the Group maintained a high impairment provision, as reflected in its loan loss coverage of 117.6%, which was well above the banking industry’s loan loss coverage of 88.8%. Including additional regulatory reserves set aside of RM1.9 billion, the Group’s loan loss coverage would be higher at 230.5%.
 
Tan Sri Teh highlighted, “As consumers face increased challenges from the macro environment, the banking industry is expected to experience higher impaired loans. The Public Bank Group is able to sustain a strong and stable asset quality despite its growing loan portfolio. This is supported by the Group’s consistent practices in prudent lending and proactive recoveries.”
 
Overseas Operations
 
For the first nine months of 2019, overseas operations contributed 11.0% to the Public Bank Group’s pre-tax profit, mainly attributed to the business of Public Financial Holdings Limited Group in Hong Kong and Cambodian Public Bank Plc (“Campu Bank”).
 
Tan Sri Teh added, “The Public Bank Group’s overseas operations have remained an important revenue source. For the first nine months of 2019, the Group’s total profits from its overseas business recorded a growth of 14.4%, mainly contributed by the growing profits from its Indo-China business, particularly Campu Bank and Public Bank Vietnam Limited.” 
 
Healthy Capital Position
 
As at the end of September 2019, the Public Bank Group’s common equity Tier 1 capital ratio, Tier 1 capital ratio and total capital ratio stood at a healthy level of 13.1%, 13.5% and 16.5% respectively.
 
Tan Sri Teh said, “The Public Bank Group’s healthy capital base provides a strong buffer to cushion against any potential risk and enables the Group to continue pursuing business opportunities which bode well for future growth.”
 
Group’s Prospects
 
Amid the persistence of adverse developments in the macro environment largely stemming from the external front, the domestic banking sector is likely to continue facing headwinds weighing on revenue growth.
 
On this note, Tan Sri Teh said, “The Public Bank Group will maintain a cautious stance amid the growing downside risks. However, this does not hinder the Group from pursuing continued business expansion. Pockets of opportunities remain for banks to explore in the growing Malaysian and regional economies. These include sustained demand for affordable housing and new growth opportunities arising from the advancement of digital banking.”
 
Tan Sri Teh concluded, “The Public Bank Group’s fundamental strength will continue to position the Group for future growth and to develop new competitive strength centred on the Group’s strategy to continue delivering values to its stakeholders.”
 
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Y.Bhg. Tan Sri Dato' Sri Dr. Teh Hong Piow
Founder, Chairman Emeritus, Director and Adviser of Public Bank
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