Public Bank rings in profit in 1Q
PETALING JAYA: Public Bank Bhd , the nation's third-largest lender by asset size, remains confident in the positive outlook for the Malaysian economy, despite acknowledging that global growth will be increasingly susceptible to policy and political uncertainties.
Looking at its own operations, the lender emphasised that ensuring it remains well-capitalised at all times to support business growth is a top priority.
It also aims to optimise returns to stakeholders, underpinned by a healthy capital and liquidity position.
This, coupled with resilient asset quality and prudent loan loss reserves, will enable the group to generate sustainable returns, it added.
Releasing its results for the first quarter ended March 31 (1Q25) yesterday, Public Bank saw a 5.6% year-on-year (y-o-y) climb in net profit to RM1.75bil, translating to an earnings per share of 9.04 sen, up from 8.52 sen.
Revenue grew by 10% to RM7.31bil.
The group attributed the improved performance to growth in net interest income, as well as a surge in non-interest income (NOII) contribution from its newly acquired insurance business, and higher investment and foreign-exchange (forex) income.
Public Bank also saw steady growth in loans and deposits, with annualised rates of 5.6% and 3.5%, respectively.
Other key financial metrics included a net return on equity (ROE) of 12.4%, a cost-to-income ratio of 35%, a gross impaired loans ratio of 0.5%, a loan-to-fund and equity ratio of 83.9%, and strong capital ratios, with Common Equity Tier 1 at 14% and total capital at 16.8%.
Delving deeper into the numbers, the lender's net interest and financing income rose by 3.5% to RM2.8bil.
This was supported by stable net interest margins and healthy loan and deposit growth.
Meanwhile, NOII surged by 18.9% to RM772.1mil, driven by contributions from LPI Capital Bhd 's general insurance business, along with improved investment and forex earnings.
Public Bank reported that the NOII growth was largely due to the recent acquisition of a 44.15% stake in the insurer, which added RM32.6mil to net profit attributable to shareholders.
Notably, it anticipates further growth in NOII through synergies and cross-selling opportunities with LPI.
Concurrently, Public Mutual Bhd, Public Bank's wholly-owned unit trust subsidiary, contributed RM208mil to pre-tax profit, representing 9% of the group's total.
Public Mutual held a 33.9% retail market share, with RM97bil in net asset value across 185 unit trust funds.
Meanwhile, domestic operations, which account for over 94% of total loans, remained solid, with a impaired loans ratio of 0.4%, significantly below the industry average of 1.4%.
Public Bank reported that its loss coverage ratio stood at 159.9%, well above the industry's 91.2%, and reached 233.4% when including regulatory reserves, reflecting prudent risk management.
Public Bank managing director and chief executive Tan Sri Dr Tay Ah Lek commented that despite prevailing challenges in the operating environment, the group's latest financial performance reflects the resilience and strength of its fundamentals.
'Prudent cost management yielded an efficient cost-income ratio of 35%, coupled with continued top-line growth, and ROE stood at 12.4%,' he pointed out.
As of March 2025, the group's total loans reached RM430.1bil, with domestic loans growing by 6.3% to RM403.9bil, attributed to notable increases in residential property financing, hire purchase financing, and commercial property financing.
'These segments maintained strong market shares of 20.1%, 32.5%, and 32%, respectively.
'Deposits supported a solid liquidity position, with a gross loan-to-fund and equity ratio of 83.9%,' said the bank in a statement.
Compared to the previous quarter ended Dec 31, the group saw a 3% decline in net profit, dropping from RM1.8bil, despite turnover increasing from RM7.06bil.
The lender attributed the lower quarter-on-quarter profitability primarily to the reversal of over-provision of tax in the preceding quarter.
Losses on foreign currency translation and cash flow hedges in the current quarter, compared to gains recorded in the previous quarter, as well as gains on remeasurement of defined benefit plans and revaluation of property in the prior quarter, also contributed to the difference in sequential profitability.
In a report released earlier this month, CIMB Securities named Public Bank among its top picks for the banking sector, citing attractive dividend yields.
However, the research house kept its 'neutral' call on the industry as a whole.
An April report from Philip Capital observed that Public Bank is a 'recognised quality name' within the banking sector, consistently holding one of the highest asset qualities.
Additionally, the research house noted that the lender has increased its dividend payout ratio guidance to 60% and is targeting a 2025 ROE of approximately 13%.
'Our key assumptions are a sustainable ROE of 12.7%, a cost of equity of 8.9%, and a long-term growth rate of 3.5%,' it said, while also putting a 'buy' recommendation on the counter.
CIMB Securities and Philip Capital have set respective target prices of RM5.10 and RM5.30 for Public Bank.
Looking ahead, the bank said it will continue to support the financing of residential properties, in tandem with the government's initiatives to promote home ownership, especially for first-time home buyers.
It will also continue to support financing for the purchase of passenger vehicles and for small and medium enterprise.
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