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Public Bank Group Achieved Pre-Tax Profit Of RM1.82 Billion In The First Quarter Of 2019

For Immediate Release

29 April 2019

Public Bank Group Achieved Pre-Tax Profit Of RM1.82 Billion In The First Quarter Of 2019
Tan Sri Dato’ Sri Dr. Teh Hong Piow, the Founder, Chairman Emeritus, Director and Adviser of Public Bank, announced today, “For the first quarter of 2019, the Public Bank Group continued to sustain its financial performance, with the Group delivering pre-tax profit of RM1.82 billion, up 1.4% from the corresponding period in 2018. Net profit grew by 0.3% over the same period to RM1.41 billion.”
The Public Bank Group’s consistent profitability was mainly contributed by the Group’s healthy loan and deposit growth, coupled with its sustained strong asset quality. Despite the increasingly challenging banking landscape, the Group achieved 4.8% annualised growth in its total domestic loans and 4.9% annualised domestic deposit growth in the first quarter of 2019.
Tan Sri Teh added, “When the operating environment was still clouded by rising headwinds and persistent uncertainties, the Public Bank Group was able to sustain its performance. With the stable performance in the first quarter of 2019, the Group continued to sustain its leading position as the most cost efficient Malaysian bank with the best asset quality. This is clearly reflected in the Group’s high net return-on-equity of 14.0%, efficient cost-to-income ratio of 33.8% and lowest gross impaired loan ratio of 0.5%.”
Healthy Growth Momentum in Loans and Deposits
In the first quarter of 2019, despite challenges in the operating environment, the Public Bank Group’s total gross loans grew at an annualised rate of 3.9%, while domestic loans grew at a faster pace at 4.8% annualised rate. The expansion in the Group’s loan portfolio was mainly attributed to the healthy growth in its residential properties financing, lending to the small and medium enterprises (“SMEs”) and corporate customers for the purchase of commercial properties and working capital. The Group’s market position also continued to stand strong as it sustained its significant domestic market share of 19.8%, 35.2% and 28.7% in the financing for the purchase of residential properties, commercial properties and passenger vehicles respectively.
Tan Sri Teh added, “The Group’s strong position in the financing market reflects its proactive role in supporting the financing needs of consumers and businesses. To preserve financial stability and sustainability, the Group also places great emphasis on prudent and responsible lending practices. In the first quarter of 2019, the Group had approved RM13.4 billion loans in total, of which 57.0% was granted to retail consumers for the purchase of residential properties and passenger vehicles; whereas 20.3% represented lending to SMEs. This reflects the Group’s continuous support of homeownership and SMEs in the country.”
In tandem with the healthy loan growth, the Group’s total customer deposits grew at an annualised rate of 4.5% for the first quarter of 2019. The Group’s liquidity position remained healthy with its funding position being continuously supported by stable deposits.
Tan Sri Teh reiterated, “Amid the more moderate growth in the economy and rising competition in the domestic banking landscape, banks continued to face margin pressure in growing their financing and deposit portfolio. The Group has therefore increased its focus on its asset and liability management. This includes efforts in growing its low-cost current and savings deposits as well as tapping on its new PB Enterprise platform to enhance its cash management services.”
Stable Non-interest Income
Heightened uncertainties in the global economy and increased volatility in the financial market continued to pose challenges to banks in growing their non-interest income. Despite the challenging backdrop, the Public Bank Group continued to generate stable fee-based revenue, which were mainly driven by its unit trust business and banking transaction business.
Tan Sri Teh highlighted, “Public Mutual, the Public Bank Group’s wholly-owned unit trust management subsidiary, remained the largest contributor to the Group’s non-interest income. As at the end of the first quarter of 2019, Public Mutual had a total of 148 unit trust funds under its management, translating into a total net asset value of RM81.6 billion. This also resulted in Public Mutual sustaining its pole position in the domestic private unit trust industry, with a significant retail market share of 36.4%.”
Prudent Cost Management
In the first quarter of 2019, the Public Bank Group continued to record an efficient cost-to-income ratio of 33.8%, significantly better than the banking industry’s average cost-to-income ratio of 44.6%.
Tan Sri Teh said, “Amid rising cost pressure, the Group continued to practise efficient deployment of resources to further enhance productivity. Prudent cost management has always been part of the Group’s operating strategy in pursuing revenue growth whilst sustaining high return to its shareholders.”
Sustained Strong Asset Quality
The Public Bank Group continued to place strong emphasis on maintaining strong asset quality, with its gross impaired loan ratio remaining the lowest at 0.5% in the first quarter of 2019, as compared to the banking system’s gross impaired loan ratio of 1.5%.
Tan Sri Teh added, “As at the end of March 2019, the Group sustained a high loan loss coverage ratio of 124.7%, well above the banking industry’s loan loss coverage of 96.2%. Including additional regulatory reserves set aside of RM1.9 billion, the Group’s loan loss coverage ratio would be much higher at 244.0%.”
Overseas Operations
The Public Bank Group’s overseas operations continued to record stable profitability, contributing 10.3% to the Group’s total pre-tax profit in the first quarter of 2019. Public Financial Holdings Limited Group in Hong Kong and Cambodian Public Bank Plc (“Campu Bank”) remained the main contributors to the Group’s overseas business profits.
Tan Sri Teh highlighted, “In view of the growing potential of the Indo-China market, the Public Bank Group is actively pursuing opportunities in this area leveraging on its long-established footprint, particularly in Cambodia whereby Campu Bank continues to be the largest foreign bank in Cambodia.”
Tan Sri Teh further added, “The Public Bank Group’s operations in Vietnam, despite still being a small contributor to the Group’s profit currently, is also a key focus of the Group’s overseas business growth strategy. Since Public Bank Vietnam Limited (“PBVN”) became a wholly-owned foreign subsidiary of the Group in 2016, the Group has been strengthening its presence in Vietnam. From 7 branches in 2015, PBVN has today expanded to a network of 18 branches. This year, there will be further opening of 8 new branches, subject to regulatory approval. In the medium term, the Group is targeting to build a wide network of about 40 branches in Vietnam. This will further strengthen the Group’s foothold in the Indo-China market, particularly in Vietnam in addition to Cambodia.”
Healthy Capital Position
The Public Bank Group’s capital position remained stable, as reflected in its common equity Tier 1 capital ratio, Tier 1 capital ratio and total capital ratio which stood at 12.9%, 13.4% and 16.0% respectively as at the end of March 2019.
Tan Sri Teh reiterated, “The Group has in place a robust capital management framework to guide its capital management strategy. The Group is always mindful that as it pursues business growth, it is important to ensure its capital position complies with regulatory requirement and is aligned with the Group’s risk appetite.”
Group’s Prospect
While the Malaysian economy is expected to remain on a sustained growth path in 2019, it is likely to be another year of challenges given the prevailing external headwinds. This is expected to continue to weigh on domestic sentiments, with increased downside risks to the domestic economic environment.
Tan Sri Teh said, “The increasingly challenging macro environment will continue to pose downside pressure on the Malaysian banking sector.  However, tapping on the expanding domestic economy and domestic demand, the ongoing demand for financing and banking products will continue to create opportunities for banks to pursue. The Public Bank Group will continue to grow its business while remaining cautious on downside risks. While the Group’s long term banking strength will continue to place the Group in good stead to embrace growth, the Group will further strengthen its core competencies, such as digital capabilities and superior customer service, to capture prospective opportunities and deliver sustained performance in this changing environment.”
Y.Bhg. Tan Sri Dato' Sri Dr. Teh Hong Piow
Founder, Chairman Emeritus, Director and Adviser of Public Bank

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