Public Bank records almost flat earnings for 4Q17, declares 34 sen dividend

The bank has capitalised on the increased NII, higher net fee and commission income

By NG MIN SHEN / Pic By ISMAIL CHE RUS

Public Bank Bhd recorded an almost unchanged net profit for the final three months of 2017, helped by higher incomes from loans despite a challenging year for the banking sector.

The country’s second-largest lender based on market capitalisation recorded a net profit of RM1.49 billion in the fourth quarter ended Dec 31, 2017 (4Q17), compared to RM1.48 billion posted in the same period of 2016.

Teh says the RM7.1b pretax profit surpassed its previous record of RM7b

Public Bank — which is 23%-owned by 88-year-old founder and tycoon Tan Sri Teh Hong Piow — has been able to capitalise on the increased net interest income (NII), higher net fee and commission income.

The bank, which has been the envy of the local banking scene for its consistent financial performance and low cost-to-income ratio, has gross loans of RM304.5 billion at the end of last year compared to RM294 billion recorded in 2016.

Public Bank said revenue for the period rose 5.3% to RM5.35 billion from the RM5.08 billion registered the year before, it said in a statement yesterday.

NII climbed to RM1.89 billion during 4Q17 from RM1.8 billion recorded in 2016.

The group has proposed a second interim dividend of 34 sen per share, bringing the total dividend for the financial year 2017 (FY17) to 61 sen and representing a total payout of RM2.36 billion, or 43.1%, of the group’s FY17 net profit.

For the full financial year, the group’s net profit rose 5% to RM5.47 billion from the RM5.21 billion recorded the year before.

Teh — who is also Public Bank chairman — said the RM7.12 billion pretax profit surpassed its previous record of RM7 billion.

“Net profit attributable to shareholders grew by 5.1% to RM5.47 billion, translating to a net return on equity of 15.8% for 2017,” said Teh in a statement.

“With the resilient performance in 2017, the Public Bank Group continued to achieve a high net return on equity of 15.8%, while maintaining its low gross impaired loan ratio of 0.5% and an efficient cost-to-income ratio of 31.9%.

The banking group recorded a 3.6% loan growth as domestic lending grew 4.6%, outpacing the domestic banking industry’s loan growth rate of 4.1%, said Public Bank.

It said the loan growth was mainly attributed to the lending growth in its retail consumer and commercial banking segment, comprising financing for the purchase of residential properties and extension of credits to small and medium enterprises.

In addition, the group’s total customer deposits rose 3%.

“The group’s robust funding position was mainly supported by its strong retail franchise and large domestic depositor base of over six million customers who continue to place their trust and confidence in the group in safeguarding their funds,” said Teh.

Impaired loan ratio as at end-2017 stood at 0.5%, while loan loss coverage ratio registered at 95.5%.

Overseas operations expanded 10.8% in pretax profit to RM688 million in FY17 on contributions from Public Financial Holdings Ltd in Hong Kong and Cambodian Public Bank plc, comprising 9.7% to the group’s overall pretax profit.

“The group remains committed to expand its presence in the region through organic growth strategy and will continue to transfer its best practices from its domestic operations to accelerate business growth in its overseas operations,” said Teh.

The bank plans to open more branches in Vietnam in 2018, after having obtained the 100% foreignowned bank licence in 2016. It has 13 branches in Vietnam to date.

“The banking sector outlook is expected to be generally stable in 2018.

“The global economic recovery is strengthening and the Malaysian economic growth is expected to remain strong in 2018,” he said, adding that the stable outlook offers continued growth opportunities for the banking sector.