PETALING JAYA: Public Bank Bhd’s net profit for the second quarter ended June 30, 2021 jumped 38.2% to RM1.38 billion from RM1.00 billion a year ago mainly due to the lower base effect in the previous corresponding quarter arising from one-off day 1 net modification loss on Covid-19 relief measures of RM498.4 million and the negative effect of OPR reduction.
Its revenue went up 3.8% to RM4.92 billion against RM4.74 billion in the same quarter last year.
For the six months period, its net profit jumped 2.9% to RM2.91 billion from RM2.33 billion a year ago, while revenue dipped 2.9% to RM9.95 billion against RM10.25 billion previously.
Public Bank founder, chairman emeritus, director and adviser Tan Sri Dr Teh Hong Piow (pix) said the group’s continued profitability was largely supported by its core business of lending and deposit-taking, and further driven by its non-interest income.
Teh said given the low base effect from a year ago, coupled with the recovery of the Malaysian economy into 2021, the group registered improved performance in the first half of 2021. However, the spike of Covid-19 cases and the imposition of more stringent containment measures in the second quarter of 2021 had continued to weigh on the group’s business performance.
“Given the highly challenging environment, the group had undertaken more proactive measures on recalibrating its business strategies and continued to place great emphasis on prudent risk management and enhancing productivity. These efforts enabled the group to register a net return-on-equity of 12.9% and an efficient cost-to-income ratio of 31.6% during the first half of 2021.”
It declared a first interim dividend of 7.5 sen per share with a total dividend payout of RM1.46 billion, representing 50.0% of the group’s net profit for the half year ended June 30, 2021. The dividend will be paid on Sept 23, 2021.
As at the end of June 2021, the Public Bank group’s total loans recorded an annualised growth of 3.7% to RM352.1 billion. Domestic loans grew at an annualised rate of 3.5%, underpinned by growth in the retail banking segment comprising residential property financing, passenger vehicle financing and SME financing.
On the funding side, the group’s total customer deposits grew at a healthy annualised rate of 5.1%, of which the low cost current and savings deposits grew at an annualised rate of 11.2%. As at the end of June 2021, the group’s funding position remained stable with a healthy gross loan to fund and equity ratio of 79.9%.
In the first half of 2021, the group’s non-interest income increased by 6.4%, mainly arising from the good growth achieved in its unit trust business, fee and commission income and stockbroking income. However, this was offset by a reduction in investment income.
The group’s cost-to-income ratio remained stable at 31.6% in the first half of 2021, significantly better than the domestic banking industry’s cost-to-income ratio of 42.8%.
As at the end of June 2021, the group’s gross impaired loan ratio stood at 0.4%, well below the banking industry’s gross impaired loan ratio of 1.6%.
“Despite its resilient asset quality, the group continued to adopt a conservative stance in its preemptive provisioning to cushion against potential asset quality risks. As at the end of June 2021, the group’s loan loss coverage ratio stood high at 275.1% compared to the banking industry’s loan loss coverage of 111.8%. Including the RM700 million regulatory reserves that has been set aside, its total reserves for loan losses was even higher at 331.5%.”
As at the end of June 2021, the group’s common equity Tier 1 capital ratio, Tier 1 capital ratio and total capital ratio stood at a healthy level of 14.3%, 14.3% and 17.5% respectively.
“The group will continue with its proactive capital management to ensure a stable and healthy level of capital is maintained at all times to support its business growth, with adequate capital buffers to absorb any potential shocks from the highly uncertain economic environment.”
In terms of liquidity management, the group’s liquidity coverage ratio remained at a healthy level of 137.0% as at the end of June 2021.
“As strong headwinds persist, the group will remain vigilant of the significant uncertainties on the road to recovery ahead. The group will remain committed to disciplined cost control and prudent risk management in order to build ample buffers to absorb possible adverse shocks caused by the pandemic. With its strong PB brand, resilient asset quality and excellent customer service, the group is well positioned to forge ahead with continued business growth and deliver its commitment of excellence to all its stakeholders,” Teh said.