Public Bank Q3 net profit up 22.5%

Tuesday October 19, 2010

By SHARIDAN M.ALI

sharidan@thestar.com.my

Higher net interest, finance and operating income are main contributors

PETALING JAYA: Public Bank Bhd’s net profit soared by 22.5% to RM782.7mil in the third quarter ended Sept 30 against the previous corresponding quarter bouyed by higher net interest, finance and operating income.

Revenue for the period under review was up by 18% to RM2.88bil.Earnings per share was up to 22.35 sen from 18.52 sen a year ago.

In terms of its nine-month performance, Public Bank’s net profit grew 19.7% to RM2.2bil while revenue increased to RM8.06bil reflecting a 11.7% rise from a year ago.

Earning per share for the period under review jumped by 17% to 63 sen.

Tan Sri Teh Hong Piow

According to chairman Tan Sri Teh Hong Piow, the improved profit performance of the group for the first nine months was mainly attributed to the strong growth in net interest and finance income and higher non-interest income.

“The three increases in the overnight policy rate this year totalling 0.75% translated into an improvement to the group’s net interest margin.

“The improved net interest margin, coupled with the strong organic growth in loans and core customer deposits, led to the group’s net interest and finance income improving by RM525mil or 15% in the first nine months this year from a year ago,” he said.

Teh added that the non-interest income of the group also recorded a growth of 18% from last year.

“The group also recorded a strong increase in total loans and advances by 10.3% growth for the first nine months to RM151.7bil as at end of September,” he said.

The lending activities of the group remained focused on the retail sector, particularly in loans to mid-market commercial enterprises, residential properties and passenger vehicles which accounted for 78% as of September.

Other financial details for the first nine months saw total assets increased to RM220.6bil.

The gross impaired loans ratio of the group as of September remained low at 1.2% as compared with the industry’s ratio of 3.4%.

Its overseas operations recorded a 14% improvement in earnings, due mainly to the decline in loan impairment allowances for the period under review.

OSK Research said Public Bank’s nine-month results were largely in line with consensus and its full-year estimates.

“The nine-month results represented 72% and 79% of consensus and our full-year forecast respectively, which we deem largely in line.

“We expect stronger sequential performance underpinned by higher net interest income from a larger loans base and stable net interest margin, coupled with stronger unit trust management fees as a result of higher assets under management,” it said in a note yesterday.

OSK maintained its “buy” call and target price of RM14.20.

“The stock has been a laggard, with its immediate term catalysts being lower provisions, stronger net interest margin and upside surprise to loans growth,” it said.

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