Public Bank focuses on organic growth in FY21

by SHAHEERA AZNAM SHAH / pic by BLOOMBERG

PUBLIC Bank Bhd will focus on organic growth through its retail and commercial banking amid the Covid-19 pandemic, supporting the small and medium enterprises (SMEs) and residential properties financing.

With the current Covid-19 pandemic situation, the bank stated that it will remain vigilant and agile in balancing growth with calculated risks.

“The economy will also be supported by the SMEs who had benefitted from the funding assistance through various initiatives by the government and Bank Negara Malaysia, including Penjana SME Financing, Penjana Tourism Financing, Special Relief Facility and Micro Enterprises Facility.

“The bank will continue to support financing in residential properties in tandem with the government’s initiative to promote homeownership, especially for first-time homebuyers.

“The bank will also continue to support financing for the purchase of passenger vehicles and lending to SMEs,” it told Bursa Malaysia yesterday.

Public Bank’s net profit for the year declined 11.61% year-on-year (YoY) to RM4.87 billion from RM5.51 billion, mainly due to the one-off Day 1 net modification loss related to Covid-19 relief measures amounting to RM498.4 million incurred during the second quarter of 2020 (2Q20).

It added that the lower earnings were due to the negative effect of the cumulative Overnight Policy Rate (OPR) reduction of 125 basis points (bps) during the year.

The bank’s revenue for the year also declined by 9.58% YoY to RM20.3 billion.

For its 4Q20, Public Bank’s net profit declined by 18.35% YoY to RM1.15 billion due to the higher loan impairment allowance of RM513.3 million due to preemptive allowance set aside in the anticipation of the potential pandemic impact.

The bank said the lower profit was partially offset by the higher net fee and commission income by RM121.6 million, derived from higher income from fund management and stockbroking businesses, as well as the higher net income from Islamic banking business by RM48.8 million.

Revenue for the quarter declined by 13.3% to RM4.92 billion. The bank issued an interim dividend of 13 sen per share during the quarter, to be paid on March 22, 2021.

Public Bank’s total loan growth stood at 4.6% for FY20, supported by the residential property financing, passenger vehicle finance and SME financing, while its domestic loans grew 5.4%.

Total customer deposits grew by 3.5% in 2020, while domestic deposits rose 3.8%

Non-interest income (NII) increased by 17.5% compared to 2019, mainly due to stronger growth achieved in the bank’s unit trust business, investment income, as well as stockbroking income.

“The bank’s unit trust business, undertaken by its wholly-owned subsidiary, Public Mutual Bhd, remained the main contributor to the group’s total NII.

“For 2020, Public Mutual registered a 10.5% increase in pretax 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,” Public Bank founder and chairman emeritus Tan Sri Dr Teh Hong Piow stated in a release.

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 of end-2020.


Read our previous report here

Public Bank’s 4Q20 earnings decline on higher loan impairment allowance