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Public Bank’s Q2 net profit drops 24.8pct to RM1bil, revenue at RM4.74bil

KUALA LUMPUR: Public Bank Bhd’s net profit dropped 24.8 per cent to RM1.0 billion in the second quarter (Q2) ended June 30, 2020, from RM1.33 billion recorded in the same period a year ago.

In an exchange filing today, the bank said the lower earnings were mainly due to the one-off net modification loss related to Covid-19 relief measures amounting to RM498.4 million.

It was also due to the negative effect of Overnight Policy Rate (OPR) reductions during the period as well as higher loan impairment allowance.

Public Bank’s Q2 revenue decreased 15.36 per cent to RM4.74 billion from RM5.60 billion, dragged by lower overall net interest income (NII) and net income from Islamic banking business of RM319.2 million and RM101.9 million respectively.

For the first half, Public Bank’s net profit shrank 15 per cent to RM2.33 billion from RM2.74 billion, while revenue dropped 8.24 per cent to RM10.25 billion from RM11.17 billion.

Public Bank said its loan growth was expected to be modest in 2020 given the extremely challenging economic environment.

However, the group expects to sustain its market position in the domestic residential and commercial property financing by leveraging on its established market presence.

“In tandem with the government’s initiative on home ownership, we will continue to provide competitive pricing and flexible loan product packages.

“We will also leverage on its strong franchise in the small and medium enterprise (SME) segment and seize opportunities by offering innovative products and services.”

The group said it was actively participating in the various government’s financial relief schemes to provide funding to SME businesses.

“We will continue to expand our corporate lending business and strengthen further its relationship with customers.”

In a separate statement today, Public Bank founder and chairman Tan Sri Dr. Teh Hong Piow said the group had registered continued expansion in loans in 1H of 2020, albeit at a more moderate pace.

“Our total domestic loans grew at an annualised rate of 2.6 per cent. On deposit-taking, the group’s total domestic customer deposits posted an annualised growth rate of 3.3 per cent, while our funding position remained stable with a healthy liquidity coverage ratio of 145.7 per cent as at the end of June 2020,” he said.

Public Bank’s NII continued to complement its profitability with 8.2 per cent growth, mainly arising from unit trust business, higher investment and brokerage income.

Its cost-to-income ratio stood at 37.9 per cent in 1H, compared to domestic banking industry’s rate of 44.7 per cent.

Public Bank approved more than RM1.7 billion financing to about 8,000 SME customers under the Special Relif Facility (SRF) with a low 3.5 per cent per annual financing rate to alleviate cash flow constraint faced by SMEs.

Teh said Public Bank group would continue to focus on its organic growth strategy in retail and commercial banking.

“With the various measures taken to provide financial assistance to SMEs and support home ownership, we believe there is still demand for financing.

“However, as the outlook remains uncertain, we will remain cautious and place greater focus on risk management in our pursuit of business growth,” he said.

Source: NST