Malaysia's Public Bank profit down 5.3% to $345.31m in Q4

Earnings were hit by sluggish loan growth and a decline in asset management income.

The earnings of Malaysian lender Public Bank fell 5.3% YoY to $345.31m (MYR1.41b) in Q4. For the full-year period, earnings marginally increased 2.2% YoY to $1.37b (MYR5.59b).

The firm’s revenue trends fell prey to NIM pressure, the decline in asset management income, and below-industry loan growth of 4.2% in 2018.

“The group’s relatively slower loans growth vs industry was due to certain lumpy corporate loans growth that industry had benefited from and not Public Bank, given the group’s focus on consumer and small and medium enterprise (SME) loans,” UOB Kay Hian said ina  report. “Although management has set a 5.0% loans growth target for 2019, it alluded that continued weakness in business loans application and approval trends due to policy uncertainties coupled with softening property market trends do place potential downside risk to their targets.”

Also read: Looming loan slowdown threatens Malaysian banks' 2019 earnings

For 2019, Public Bank expects a mid single-digit compression in margins against intensified industry-wide competition for retail deposits. They also see downside risk to loans growth judging from a moderation in current loans approval and application trend.

“We also noted that if capital markets continue to remain volatile and sluggish in 2019, this could impact management’s and our current 5% non-interest income growth assumption for 2019 as asset management fees, which contribute a significant 40% of the group’s total non-interest income, could falter,” UOBKH explained.