PETALING JAYA: Public Bank Bhd posted net profit of RM717.39mil for the first quarter ended March 31, up 50.6% from RM476.22mil a year earlier, on strong growth in its operating profit.
The earnings were driven by higher net interest income, including net financing income from its Islamic banking operations, and also a goodwill payment of RM200mil.
“The net profit represents 29% of the market consensus of the full-year net profit of RM2.47bil,” chairman Tan Sri Teh Hong Piow said in a statement yesterday.
Revenue rose 22.8% to RM2.64bil from RM2.15bil in the previous corresponding quarter while earnings per share jumped to 21.39 sen from 14.19 sen.
The group's performance received a boost from growth in its net interest and financing income and strong growth in other operating income. However, this was partially offset by higher operating expenses and loan-loss allowances due to a higher business volume, Teh said.
“Net interest income and net income from Islamic banking for the quarter grew 17% to RM1.02bil, surpassing the RM1bil mark for the first time,” he said, attributing the better results to the improvement in the group’s lending and deposit-taking businesses and asset quality.
The Public Bank group’s other operating income grew 93% to RM558mil from RM289mil a year earlier.
It also recorded strong growth in its wealth management business, particularly fund management and bancassurance distribution through its 10-year regional strategic alliance with ING/Asia Pacific Ltd. It also received a goodwill payment of RM200mil from ING in the first quarter.
Teh said the allowances for losses on loans, advances and financing were 80% higher at RM128.57mil compared with RM41.49mil a year earlier, partly due to additional specific allowances made for old non-performing loan (NPL) accounts secured by properties which were more than seven years old. These accounts were fully provided for with no value assigned to the collateral, he said.
“Public Bank group’s total assets stood at RM178.1bil as at the end of March, which was almost three times the total assets of RM61.9bil as at the end of 2002,” he said.
Total loans and advances grew by RM5.6bil, or at an annualised rate of 22%, to RM106.6bil at the end of March. Total customer deposits increased at an annualised rate of 16.4% to RM144.5bil during the period.
“The net NPL ratio further improved from 1.2% as at end-December 2007 to 1.1% as at end-March, which was about one third the banking industry’s net NPL ratio of 3.1%.
“The group’s risk-weighted capital ratio remained strong at 12.2% as at end-March,” Teh said.
The group’s international operations achieved 25% growth in pre-tax profit in the first quarter, with its Hong Kong operations accounting for two-thirds of total profit.
However, Teh expects the intense competition in the financial services sector to continue to exert pressure on lending margins.
“The Public Bank group will continue to focus on its core business of lending to consumers and SMEs (small and medium-scale enterprises) and promote a wider range of deposit products in both its domestic and overseas markets,” he said.
He also said the group would expand fee-based revenue by widening its suite of wealth management products and services.
Public Bank is the fourth largest Bursa Malaysia-listed company by market capitalisation. As at last Friday, its market cap stood at RM38.60bil.
Analysts said Public Bank was the top pick among the country's banking stocks. Of the 18 analysts polled by Bloomberg, 15 recommended a “buy” while three had a “hold” call.
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