Public Bank 2Q net profit at RM1.38b, dividend 7.5 sen
KUALA LUMPUR: Public Bank posted higher net profit of RM1.38bil in the second quarter ended June 30, 2021 compared with a year but on a quarter-on-quarter it showed a decline due to higher preemptive provisions for loan impairment.
The banking group announced on Friday 2Q net profit climbed 38.4% from RM1bil a year ago. Its revenue rose by 3.8% on-year to RM4.92bil from RM4.74bil. Earnings per share were 7.13 sen compared with 5.16 sen. It declared an interim dividend of 7.5 sen.
Public Bank founder and chairman Tan Sri Teh Hong Piow said: “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 RM700mil regulatory reserves that has been set aside, its total reserves for loan losses was even higher at 331.5%.”
In the first half, its net profit rose by 25% to RM2.91bil from RM2.33bil in the previous corresponding period. Its revenue, however, slipped to RM9.95bil from RM10.25bil.
In his comments on the first half results, Teh 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.
“Last year, the Public Bank Group’s financial performance was significantly affected by the Covid-19 pandemic and its spillover effect on the economy.
"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,” he said.
Teh added that due to 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," he said.
As at the end of June 2021, the 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 Public Bank Group’s non-interest income increased by 6.4%, mainly arising from the good growth achieved in itunit trust business, fee and commission income and stockbroking income.
However, this was offset by a reduction in investment income.
“Amid the current extremely challenging operating environment, unit trust offers a good alternative investment," he said, adding Public Mutual registered a pre-tax profit growth of 32.2% in the first half compared to the corresponding period in 2020.