The financial institution declares a 1st interim dividend of 8 sen per share despite a 3.4% drop in its 1H22 net profit

by S BIRRUNTHA / pic BLOOMBERG

PUBLIC Bank Bhd’s net profit for the second quarter ended June 30, 2022 (2Q22), rose by 2.35% to RM1.42 billion from RM1.38 billion posted a year ago, mainly due to lower loan impairment allowance of RM316.1 million.  

Revenue marginally increased 1.1% to RM4.97 billion from RM4.92 billion in 2Q21.

“The improved revenue was supported by higher net interest income of RM111.1 million, but partially offset by lower investment and other income of RM100.1 million, higher other operating expenses of RM72 million, and lower net fee and commission income of RM37.3 million.  

“Lower loan impairment allowance was mainly due to adequate pre-emptive allowance that had been made in the prior years,” it said in a filing to Bursa Malaysia yesterday.

As a result, the bank registered a higher earnings per share of 7.3 sen for the period against 7.13 sen previously.

For the first half of the year (1H22), Public Bank’s net profit fell 3.4% to RM2.82 billion from RM2.91 billion in 1H21 due to the impact of the one-off prosperity tax.

Cumulative revenue dropped by 0.9% to RM9.86 billion from RM9.95 billion in 1H21.

Public Bank has declared a first interim dividend of eight sen per share, resulting in a total dividend payout of RM1.55 billion or 55.2% of its net profit for 1H22.  

The first interim dividend will be paid on Sept 23 based on the dividend entitlement date of Sept 14.

Commenting on the financial performance, Public Bank founder Tan Sri Dr Teh Hong Piow said the transition to endemicity alongside the pick-up in business activities and consumer sentiment had resulted in an improved business environment.

He noted that this further supported the group’s core banking business on loans and deposits.

“The group continues to manage its balance sheet and asset quality conscientiously to ensure adequate safeguards amid the ongoing economic challenges.  

“For 1H22, gross impaired loans ratio remained low at 0.3% despite the expiry of repayment assistance programmes under the Pemulih scheme.  

“The group’s strong fundamentals and prudent management enabled the group to continue sustain a resilient net return-on-equity of 12% and efficient cost-to-income ratio of 33.5%, which are well within the group’s target for 2022,” he said in a separate statement.

Public Bank’s total loans grew 5.6% to RM368 billion in 1H22 from RM358 billion as at end-December 2021.

Domestic loans grew at an annualised rate of 5.4% to RM343.6 billion, in line with the industry’s annualised growth rate of 5.4%.  

This was mainly attributed to the healthy growth of the bank’s key lending segments for residential properties and hire purchase financing.

Meanwhile, the bank’s liquidity and funding structure remained healthy with gross loan to fund and equity ratio of 81% as at June 30, 2022.

Non-interest income was lower by 15.4% compared to the previous corresponding period in 2021 due to the subdued market condition which affected its unit trust management and stockbroking businesses, as well as investment income.

However, Public Bank’s unit trust business, undertaken by wholly owned Public Mutual, remained the main contributor to its non-interest income.

As at the end-June 2022, Public Bank’s gross impaired loans ratio remained low at 0.3%, well below the domestic banking industry’s average impaired loan ratio of 1.7%.

Looking ahead, Teh said as the headwinds remain visible, the bank will continue to embrace the challenges with focus on prudent cost and risk management.

“The group’s strong balance sheet, resilient asset quality and good corporate governance practices would continue to provide support in strengthening the group’s business with greater cost efficiency and operational productivity.

“Against this backdrop, Public Bank will continue to remain cautiously optimistic in striving its business growth and ensure its stakeholders’ interests are safeguarded at all times,” he added.

Public Bank’s share price closed unchanged at RM4.63 yesterday, giving it a market capitalisation of RM89.87 billion.