Public Bank nets RM639m profit in Q3

Public Bank nets RM639m profit in Q3
By Chong Pooi Koon
Published: 2009/10/16


Public Bank Bhd (1295), the country's third largest bank, reported a 3.7 per cent higher third-quarter net profit as it earned more from loans, despite a weak economy and even as it has set aside more money to cover potential bad debts.

Net profit for the three months to September 30 2009 came in at RM639 million, although revenue fell 12.7 per cent to RM2.4 billion.

The bank has put aside RM176.4 million of allowances for loan losses, 65 per cent more compared to the same time last year.

Managing director and chief executive officer Tan Sri Tay Ah Lek said Public Bank is on track to achieve a 14-15 per cent loans growth target this year, driven by demand for loans to small businesses, mortgages and car loans.

Public Bank is expected to maintain the earnings momentum and continue to record satisfactory performance for the rest of the year, he said in a statement yesterday.
"As the global recession begins to recede and with recovery on the horizon, the outlook for the banking industry is expected to improve. However, margins continue to be under pressure due to continued intense competition," he added.

Despite a difficult economy this year, Public Bank's net profit has expanded consistently in the first nine months this year.

Net profit in the second quarter grew 3.6 per cent to RM611 million from RM589 million in the first quarter, and improved further by 4.6 per cent in the latest quarter.

Loans grew by 14.3 per cent on an annualised basis, while deposits expanded by 19.5 per cent. This compares with the industry's 6.8 per cent growth for loans and 6.3 per cent for deposits.

Public Bank's non-performing loans ratio stayed below 1 per cent, the lowest among Malaysian banks.

OSK Research analyst Keith Wee said the lender's performance was largely in line with his expectations. He maintains a "buy" call on Public Bank shares with a RM11.80 target price.

"The stock is currently trading at an undemanding 13 times its fiscal 2010 price earnings multiple, against its historical mid-cycle average valuation of 14.8 times," Wee wrote in a note after the results announcement.

The stock closed flat at RM10.62 on Bursa Malaysia yesterday.


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