The decline is due to lower investment income, fee income and other income, and higher other opex
by ASILA JALIL / pic by BLOOMBERG
PUBLIC Bank Bhd is focused on increasing efforts to strengthen its balance sheet while pursuing digital transformation to remain resilient amid the pandemic.
The bank’s founder, chairman emeritus director and advisor Tan Sri Dr Teh Hong Piow said during the period, the group had taken multiple proactive initiatives in its business strategies to navigate through the trying times.
“These efforts enabled the group to continue to demonstrate resilience in its performance by registering a net return on equity of 12.4% and an efficient cost-to-income ratio of 31.7% during the nine months ended September 2021,” he wrote in a statement yesterday.
For its third quarter ended Sept 30, 2021 (3Q21), Public Bank’s net profit slipped 2.3% year-on-year (YoY) to RM1.36 billion due to lower investment income of RM99.5 million which was down by 80.6%, lower fee income and other income of RM45.6 million (down 6.9%), and higher other operating expenses (opex) of RM27.8 million (down 2.9%).
These declines were partially offset by higher net interest income of RM140.3 million which was up by 7.4%.
Revenue for the quarter was down by 6.2% YoY to RM4.81 billion.
The group added that other comprehensive loss for the period increased by RM154.6 million to RM194.4 million, mainly due to fluctuation from revaluation of financial investments in 3Q21, partially offset by gain on foreign currency translation in respect of foreign operations in the current quarter compared to a loss in the previous year corresponding quarter and higher gain on cash flow hedges.
For the cumulative nine months (9M21), Public Bank’s net profit rose 14.8% YoY to RM4.28 billion supported by its core business of lending and deposit-taking.
As at end-September 2021, the group’s total loans recorded an annualised growth of 3% to RM353.5 billion. Domestic loans grew at an annualised rate of 2.8% to RM330.5 billion.
Total customer deposits grew at an annualised rate of 4.8% to RM378.9 billion, supported mainly by its low-cost current and savings deposits which grew at an annualised rate of 12.2%.
Domestically, total customer deposits grew at an annualised rate of 5.1% to RM350.5 billion.
“The group was able to achieve continued loans and deposit growth, albeit at a moderate pace. As at end-September 2021, the group’s funding position remained stable with gross loan to fund and equity ratio of 79.7%,” Teh noted.
Conversely, revenue for the period was down by 4.1% to RM14.76 billion from RM15.39 billion in 9M20.
The bank said calculations in the previous corresponding period included modification loss on Covid-19 relief measures of RM498.4 million and the negative effect of the Overnight Policy Rate reduction of 125 basis points.
Due to this low base effect coupled with positive loans and deposits growth achieved in the current period, net interest income and net income from Islamic banking business grew by RM985.4 million and RM284.3 million, respectively.
Net fee and commission income increased by RM230.8 million on the back of higher fee income from fund management and banking-related services.
Loan loss coverage ratio stood at 320.8% as at end-September compared to the banking industry’s loan loss coverage of 120.5% including the RM400 million regulatory reserves that has been set aside, loan loss coverage ratio was higher at 358.5%.
As at the end-October, about RM81.9 billion or 25% of the group’s outstanding domestic loans are under the Repayment Assistance Programmes, benefitting over 435,000 customers.
“The group remains mindful of the prolonged difficulties faced by its customers. We will continue to proactively engage with its customers and provide financial relief assistance to those in need.”