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Public Bank Group Posted Net Profit Of RM4.87 Billion For 2020 And Declared A Total Dividend Payout Of RM2.52 Billion

For Immediate Release

25 February 2021


Public Bank Group Posted Net Profit Of RM4.87 Billion For 2020 And Declared A Total Dividend Payout Of RM2.52 Billion
 

Highlights on Financial Performance
 
For the financial year 2020, the Public Bank Group posted pre-tax profit and net profit attributable to shareholders of RM6.29 billion and RM4.87 billion respectively, both lower by 11.9% and 11.6% as compared to 2019. The lower profit in 2020 was mainly attributable to the net interest margin compression arising from the 125 basis points Overnight Policy Rate (“OPR”) reductions during the year, and the one-off net modification loss of RM498 million incurred 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, “2020 was a year full of unprecedented challenges. The onset of COVID-19 pandemic inflicted significant economic disruptions and uncertainties. Coupled with several OPR reductions during the year, it had placed further pressure on the banking sector. Against this backdrop, the Public Bank Group was still able to show steady performance and sustain its profitability.”
 
Operating profit before loan loss allowances recorded a growth of 1.6% to RM7.40 billion, as compared to RM7.28 billion a year ago. This was mainly attributed to steady loan and deposit growth as well as a commendable growth in fee-based revenue. The overall net profit was however adversely affected by the higher provisions set aside in anticipation of the COVID-19 pandemic effect, on top of the one-off net modification loss incurred in respect of the COVID-19 related relief measures.
 
Tan Sri Teh added, “Once again, the Public Bank Group’s business model demonstrated strength and resilience during this challenging time. This was supported by disciplined execution of the strategic priorities, along with prudent risk management practices. The Group continued to maintain its resilient fundamentals in 2020, delivering net return on equity of 11.2% whilst sustaining its low gross impaired loan ratio of 0.4% as well as efficient cost-to-income ratio of 34.6%.”
 
In view of the sustained profit performance, Tan Sri Teh announced, “The Board of Directors is pleased to declare a dividend of 13 sen per share, which amounted to a total dividend payout of RM2.52 billion, representing 51.8% payout of the Group’s net profit for 2020. Despite facing various challenges in 2020, the Group’s continued dividend payout during this difficult time reflects its appreciation of shareholders’ support.”
 
The dividend will be paid on 22 March 2021, based on the dividend entitlement date of 12 March 2021.
 
Steady Growth in Loans and Deposits
 
“During this challenging time, the Public Bank Group continued its growth traction in its lending and deposit-taking businesses,” said Tan Sri Teh.
 
For 2020, the Group recorded 4.6% growth in total loans, supported by residential property financing, passenger vehicle financing and SME financing. Domestically, total loans grew by 5.4%, higher than the banking industry’s loan growth of 3.4%.
 
On deposit-taking, the Group’s total customer deposits achieved a 3.5% growth, while domestic deposits registered a growth of 3.8%. In particular, the Group’s low cost demand and savings deposits recorded a strong growth of 18.9% during the year.
 
Commendable Growth in Non-interest Income
 
Non-interest income recorded a commendable growth in 2020, increasing by 17.5% as compared to 2019, mainly due to stronger growth achieved in the Group’s unit trust business, investment income as well as stockbroking income.
 
Tan Sri Teh added, “The Public Bank Group’s unit trust business, undertaken by its wholly-owned subsidiary, Public Mutual, remained the main contributor to the Group’s total non-interest income. For the year 2020, Public Mutual registered a 10.5% increase in pre-tax profit to RM714.8 million. It continued to capture a retail market share of 33.4% and managed a total of 164 unit trust funds. Total net asset value of its funds under management increased by 15.8% during the year, surpassing the RM100 billion mark for the first time, to RM100.3 billion as at the end of 2020.”
 
Prudent Cost Management
 
Tan Sri Teh highlighted, “Amid the current economic environment and challenging revenue growth, the Group continues to maintain cost discipline and high productivity to help sustain its earnings. The Group continues to stand out amongst its peers in terms of cost efficiency. In 2020, the Group’s cost-to-income ratio remained at an efficient level of 34.6%, significantly better than the domestic banking industry’s cost-to-income ratio of 42.8%.”
 
Sustaining Resilient Asset Quality
 
As at the end of 2020, the Public Bank Group’s gross impaired loan ratio stood at 0.4% and remained well below the banking industry’s gross impaired loan ratio of 1.6%.
 
With the pre-emptive provisions set aside in anticipation of the COVID-19 effect, the Group’s loan loss coverage ratio increased further to 227.7% as compared to the banking industry’s loan loss coverage of 107.5%. Including the RM1.2 billion regulatory reserves that has been set aside, its total reserves for loan losses was higher at 325.1%.
 
Tan Sri Teh commented, “The COVID-19 pandemic continues to pose a downside risk on asset quality. However, with the various government relief and stimulus measures, the impact will be less severe. These relief measures, including the targeted repayment assistance programme, coupled with the Group’s solid foundation, alongside its prudent lending policy and strong credit risk profile, will enable the Group to weather the asset quality challenges.”
 
Managing Impact of COVID-19
 
In the fourth quarter of 2020, the Public Bank Group continued to extend its financial assistance to its customers. In addition to the targeted repayment assistance for customers who have encountered loss or reduction in income due to the COVID-19 pandemic, an expanded targeted repayment assistance for individuals and microenterprises has been implemented with effect from December 2020.
 
Tan Sri Teh said, “The targeted repayment assistance programme consists of various flexible repayment packages that suit varying customers’ financial needs, including individuals, SMEs and corporate customers.”
 
Tan Sri Teh added, “Further, the Group has continued to leverage on the various special financing schemes initiated by the Government and Bank Negara Malaysia to assist SMEs to overcome their financial difficulties. As at the end of 2020, the Group approved more than RM3 billion for over 15,000 businesses under such financial assistance programmes.” 
 
Tan Sri Teh further added, “The Group’s loan moratorium, and various loan repayment assistance programmes, along with the various special financing schemes in which the Group participates actively, have benefitted about 1.8 million customers during these trying times”. 
 
Healthy Capital and Liquidity Position
 
Ensuring healthy capital and liquidity position remain one of the key priorities of the Public Bank Group, particularly under the current challenging time. As at the end of 2020, the Public Bank Group’s common equity Tier 1 capital ratio, Tier 1 capital ratio and total capital ratio stood at 14.0%, 14.0% and 17.1% respectively.
 
Tan Sri Teh commented, “The Public Bank Group’s resilient capital position is a testament to its vigilant approach in capital management to ensure adequate capital buffers in pursuit of business growth and delivery of an optimum return to its shareholders, while meeting regulatory requirements.”
 
Tan Sri Teh further added, “As for liquidity management, the Public Bank Group has been focusing on its well-diversified funding and liquidity profile to maintain a healthy liquidity position. The Group’s liquidity coverage ratio continued to stand at a healthy level of 138.0% as at the end of 2020.”
 
Group’s Prospect
 
After falling into a contraction in 2020 due to economic disruption caused by the COVID-19 outbreak, the Malaysian economy is expected to rebound gradually in 2021. Fiscal measures by the Government and Bank Negara Malaysia’s accommodative monetary policy will continue to drive the country’s economic recovery. The roll-out of the COVID-19 vaccine is also likely to provide support in reviving the economy. The outlook, however, remains uncertain hinging on the development and containment of the pandemic.
 
Tan Sri Teh concluded, “Amid the prevailing economic conditions, the Public Bank Group will remain vigilant and agile in balancing growth with risks. As the Group focuses on organic growth strategy in retail and commercial banking, it will continue to strengthen its resilient business model and core competencies, including its superior asset quality, efficient cost management and customer service excellence. Holding on to its tradition of prudent risk management and strong corporate governance, the Group remains steadfast in its unwavering commitment to safeguarding the interest of all 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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