Stellar performance for Public Bank
By Adeline Paul Raj
Published: 2011/01/26
Public Bank's net profit rises 21 per cent to a record last year and expects a similar magnitude of earnings growth this year
PUBLIC Bank Bhd (1295), the country's third largest lender, saw net profit rise by 21 per cent to a record last year and said it can probably maintain a similar growth rate this year despite stiffer competition.
"Given the healthy economy that is expected for this year, we expect a similar magnitude of earnings growth can be achievable, barring unforeseen circumstances," its chief operating officer Leong Kwok Nyem told reporters at a financial results briefing yesterday afternoon.
The group, which expects the Malaysian economy to expand by as much as 6 per cent this year, is also targetting to maintain its annual return on equity (ROE) at 27 per cent in the next two to three years.
ROE, a measure of how well re-invested earnings are used to generate additional earnings, improved to 27.1 per cent last year from 26.1 per cent the year before.
The group's fourth quarter net profit last year rose by 25 per cent to RM846 million, its highest quarterly earnings ever.
This brought net profit for the full year to RM3.05 billion compared with RM2.52 billion in 2009. Revenue improved by 13.6 per cent to RM11 billion. The results came in within analysts' expectations.
Chairman Tan Sri Teh Hong Piow, in a press statement, said the improved performance last year was mainly due to better income from loans, and higher fees from businesses like unit trusts. It had also set aside less money to cover potential bad loans.
The group's earnings from overseas rose by 30 per cent, helped by a marked improvement in its Hong Kong operations.
It expects to achieve a lending growth of between 14 per cent and 15 per cent this year, after a 13.8 per cent growth to RM156.5 billion last year.
Public Bank, the market leader for consumer loans, may see a small contraction in net interest margins this year as rivals price loans more competitively, managing director Tan Sri Tay Ah Lek said.
He, however, expects the impact on the group's earnings to be mitigated by hikes in the Overnight Policy Rate that may come in the second half of the year.
Bank Negara Malaysia may raise the OPR, which stands at 2.75 per cent now, by between 25 and 50 basis points in the second half, he said.
Analyst Eileen Tan of Affin Securities expects the group's net profit to expand at a slower rate of 10 per cent this amid stronger competition and a moderating economy. Economic growth is widely expected to slow down from a possible 7 per cent growth last year.
Meanwhile, Leong ruled out merging with any other bank in Malaysia, saying the group's position remained strong.
"Our domestic loan growth grew by about 16 per cent last year, adding close to RM20 billion of loans to the balance sheet. That's almost the size of a small bank," he remarked.
The group will continue with its organic growth strategy at home and abroad, with plans this year to add three more branches each in Hong Kong and Shenzhen, as well as some in Cambodia.
Public Bank's overseas operations are set to account for a tenth of its net profit in two to three years' time compared with 8 per cent now, Tay said.
On dividends, the group declared a second interim cash dividend of 25 sen less tax and a single tier dividend of 8 sen.
This brings the total net dividend for 2010 to RM1.59 billion, or 52 per cent of the group's net profit for the year. It expects to maintain a payout ratio of between 50 per cent and 53 per cent this year, Leong said.
Its share price closed unchanged at RM13.34 yesterday.
Read more: Stellar performance for Public Bank http://www.btimes.com.my/Current_News/BTIMES/articles/pubby-2/Article/index_html#ixzz1CHKNK8T8
Public Bank: Buy, target price RM14.80
Published: 2011/01/28
Kenanga Research expects Public Bank Bhd's (1295) outlook for 2011 to remain positive as the bank is well positioned to meet the challenges of a rising interest rate, low duration bond book and least asset risks.
The research firm said the bank's management has started managing its interest rate risk with the aim of growing fees income by 30 per cent year-on-year in financial year 2011.
"We believe the driver of earnings growth has shifted to fee incomes, instead of interest incomes previously," Kenanga Research said in a research note yesterday.
Kenanga Research has upgraded its rating for Public Bank to "buy" from "hold" previously and raised the target price to RM14.80. - Bernama
Read more: Public Bank: Buy, target price RM14.80 http://www.btimes.com.my/Current_News/BTIMES/articles/panga/Article/index_html#ixzz1CHLQFuJ6
By Adeline Paul Raj
Published: 2011/01/26
Public Bank's net profit rises 21 per cent to a record last year and expects a similar magnitude of earnings growth this year
PUBLIC Bank Bhd (1295), the country's third largest lender, saw net profit rise by 21 per cent to a record last year and said it can probably maintain a similar growth rate this year despite stiffer competition.
"Given the healthy economy that is expected for this year, we expect a similar magnitude of earnings growth can be achievable, barring unforeseen circumstances," its chief operating officer Leong Kwok Nyem told reporters at a financial results briefing yesterday afternoon.
The group, which expects the Malaysian economy to expand by as much as 6 per cent this year, is also targetting to maintain its annual return on equity (ROE) at 27 per cent in the next two to three years.
ROE, a measure of how well re-invested earnings are used to generate additional earnings, improved to 27.1 per cent last year from 26.1 per cent the year before.The group's fourth quarter net profit last year rose by 25 per cent to RM846 million, its highest quarterly earnings ever.
This brought net profit for the full year to RM3.05 billion compared with RM2.52 billion in 2009. Revenue improved by 13.6 per cent to RM11 billion. The results came in within analysts' expectations.
Chairman Tan Sri Teh Hong Piow, in a press statement, said the improved performance last year was mainly due to better income from loans, and higher fees from businesses like unit trusts. It had also set aside less money to cover potential bad loans.
The group's earnings from overseas rose by 30 per cent, helped by a marked improvement in its Hong Kong operations.
It expects to achieve a lending growth of between 14 per cent and 15 per cent this year, after a 13.8 per cent growth to RM156.5 billion last year.
Public Bank, the market leader for consumer loans, may see a small contraction in net interest margins this year as rivals price loans more competitively, managing director Tan Sri Tay Ah Lek said.
He, however, expects the impact on the group's earnings to be mitigated by hikes in the Overnight Policy Rate that may come in the second half of the year.
Bank Negara Malaysia may raise the OPR, which stands at 2.75 per cent now, by between 25 and 50 basis points in the second half, he said.
Analyst Eileen Tan of Affin Securities expects the group's net profit to expand at a slower rate of 10 per cent this amid stronger competition and a moderating economy. Economic growth is widely expected to slow down from a possible 7 per cent growth last year.
Meanwhile, Leong ruled out merging with any other bank in Malaysia, saying the group's position remained strong.
"Our domestic loan growth grew by about 16 per cent last year, adding close to RM20 billion of loans to the balance sheet. That's almost the size of a small bank," he remarked.
The group will continue with its organic growth strategy at home and abroad, with plans this year to add three more branches each in Hong Kong and Shenzhen, as well as some in Cambodia.
Public Bank's overseas operations are set to account for a tenth of its net profit in two to three years' time compared with 8 per cent now, Tay said.
On dividends, the group declared a second interim cash dividend of 25 sen less tax and a single tier dividend of 8 sen.
This brings the total net dividend for 2010 to RM1.59 billion, or 52 per cent of the group's net profit for the year. It expects to maintain a payout ratio of between 50 per cent and 53 per cent this year, Leong said.
Its share price closed unchanged at RM13.34 yesterday.
Read more: Stellar performance for Public Bank http://www.btimes.com.my/Current_News/BTIMES/articles/pubby-2/Article/index_html#ixzz1CHKNK8T8
Public Bank: Buy, target price RM14.80
Published: 2011/01/28
Kenanga Research expects Public Bank Bhd's (1295) outlook for 2011 to remain positive as the bank is well positioned to meet the challenges of a rising interest rate, low duration bond book and least asset risks.
The research firm said the bank's management has started managing its interest rate risk with the aim of growing fees income by 30 per cent year-on-year in financial year 2011.
"We believe the driver of earnings growth has shifted to fee incomes, instead of interest incomes previously," Kenanga Research said in a research note yesterday.
Kenanga Research has upgraded its rating for Public Bank to "buy" from "hold" previously and raised the target price to RM14.80. - Bernama
Read more: Public Bank: Buy, target price RM14.80 http://www.btimes.com.my/Current_News/BTIMES/articles/panga/Article/index_html#ixzz1CHLQFuJ6
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