PETALING JAYA: Public Bank Bhd is maintaining a confident outlook for the Malaysian banking sector, as resilience in the industry is underpinned by ample liquidity and healthy capital buffers.
As such, its managing director and chief executive Tan Sri Dr Tay Ah Lek said: “The group remains committed to further strengthening its financial intermediary role as well as contributing to national development and economic growth.”
He said the lender will continue to capture valuable synergies from the business environment, further observing that there is continued financing demand for property and car ownership, as well as in the small and medium enterprise (SME) sphere of businesses.
Tay’s comments came as Public Bank – one of the five largest banking groups by assets in the country – posted a strong third quarter ended Sept 30, 2023 (3Q23), which saw net profit rise 7% year-on-year (y-o-y) to RM1.7bil, led by a revenue jump of 17.8% y-o-y to RM6.48bil.
Cumulatively, for the nine months ended September, the group posted earnings of RM5.03bil, representing a more pronounced 14.3% y-o-y improvement, as turnover surged 22.8% y-o-y to RM18.9bil.
While attributing the improved financial performance so far this year to the absence of the prosperity tax, which was imposed in 2022, the lender also noted that loan impairment allowance had decreased by 78.3%.
Notably, loans ratio had remained stable at 0.58%, reflecting the resilient risk profile of the group’s loan portfolio, while loan loss coverage ratio continued to stay at a prudent level of 186.9% as at end-September 2023.
StarPicks
MGB posts strong Q3FYE2023 results
In a filing with Bursa Malaysia in conjunction with its results announcement, Public Bank also said non-interest income (NOII) or financing income improved by 3.4% y-o-y mainly due to higher foreign exchange and stockbroking income, although it was partially offset by lower investment income.
It also revealed: “Other operating expenses increased by 3.7% whereas net interest income and Islamic banking income decreased marginally by 0.2%, which was mainly due to interest and financing margin compression despite healthy loan growth achieved during the period.”
Elaborating on loan growth, Public Bank said that for the first three quarters of 2023, its total loans had increased at a y-o-y rate of 5.9% to RM393.6bil, with its domestic loan portfolio seeing a strong annualised expansion rate of 5.7%, higher than the industry growth rate of 4.1% during the same period.
It said: “Domestic loan growth continued to be driven by residential property financing, hire-purchase financing and SME financing, which grew at an annualised rate of 6.4%, 10.8% and 1.5%, respectively.
“The group also continued to maintain its market leadership position in these key financing segments, with 20.5% market share in residential property financing, 30.5% in hire-purchase financing and 18.4% in SME financing.”
The lender reported that its total newly approved domestic loans increased by 10.2% for the first nine months of 2023 as compared with the same period last year, signifying a healthy loans pipeline going forward.
At the same time, total customer deposits expanded at a y-o-y rate of 4.7% to RM408.6bil, driven by domestic deposits which rose by 4.6% on an annualised basis to RM379.7bil, supported by consistent growth in retail deposits.
As at end-September 2023, Public Bank said it is maintaining a stable gross loan to fund and equity ratio of 81.9%.
Separately, it reported that NOII grew by 3.4% y-o-y to RM1.87bil in the first three quarters of 2023, with primary contributions from its foreign exchange and stockbroking businesses, which increased by 29.5% and 22.5% y-o-y, respectively.
In addition, it said: “Public Mutual Bhd, Public Bank’s wholly-owned unit trust fund management subsidiary, remained the main contributor to the group’s NOII.
“For the first nine months of 2023, Public Mutual recorded a pre-tax profit growth of 2.1% y-o-y to RM592.8mil, contributing 9.2% to the group’s profit.”
As at end-September, the group said Public Mutual had captured a large retail market share of 35.1%, with a total of 181 unit trust funds and net asset value of funds under management of RM95bil.
Compared with the preceding quarter ended June 30, Public Bank also saw positive results, registering a 5.1% increase in net profit from RM1.62bil, on the back of a quarter-on-quarter (q-o-q) revenue expansion of 3.5% from RM6.26bil.
It credited the sturdier showing for 3Q23 to a 3.5% q-o-q growth in net interest and Islamic banking income, while NOII financing income also improved by 2.7% during three months ended September.
On its continued multi-prong strategy, the group said it will keep up its provision of seamless banking services across various delivery mediums through its extensive network of physical and digital channels.
Of particular note, the lender also highlighted its pledge to continue supporting financing in residential properties, in tandem with the government’s initiatives to promote home ownership, especially for first-time home buyers.
“Similarly, Public Bank will remain supportive of its corporate and SME lending businesses by leveraging on its strong franchise and relationship with customers,” it said.
Concurrently, Tay believed that Public Bank’s agility, supported by its healthy capital and liquidity position, coupled with its resilient asset quality as well as prudent loan loss reserves, will enable the group to generate sustainable profit through challenging times and business cycles.