KUALA LUMPUR (May 20): Public Bank Bhd (KL:PBBANK), Malaysia’s third-largest banking group by assets, said on Monday its net profit slipped 3.5% for the first quarter ended March 31, 2024 (1QFY2024) from a year earlier, mainly due to higher personnel costs and higher provisions.

Net profit stood at RM1.65 billion, or 8.52 sen per share, compared with RM1.71 billion, or 8.83 sen per share, a year ago, Public Bank said. Net interest income rose 2.8% year-on-year (y-o-y) to RM2.73 billion, while non-interest income edged up 0.5% to RM649.64 million.

“Public Bank will remain vigilant in its business approach, and will continue to maintain its prudent risk profile to weather ongoing risks,” the company said. “Tapping on the improved economic outlook, the group will continue to take a proactive approach to embracing growth opportunities.”

The net interest margin — a measure of profitability from interests charged on loans after deducting returns paid to depositors — slipped five basis points y-o-y to 2.21%, but improved six basis points from 4QFY2023, it said.

During 1QFY2024, Public Bank booked allowances for impairment on loans, advances and financing totalling RM63.4 million, compared with RM1.54 million over the same quarter last year. Other operating expenses — including staff costs — rose 10% to RM1.20 billion from a year earlier.

Public Bank, however, cautioned of downsides risks, including weaker-than-expected global demand, geopolitical conflicts, and volatility in global financial markets.

“Amid financial market uncertainty, the treasury operations will remain vigilant in its business approach, and will maintain a prudent risk profile, while further strengthening its risk management capabilities to weather ongoing market risks,” the bank said.

In terms of asset quality, gross impaired loans — debts deemed irrecoverable as a percentage of total loans — stood at 0.6%, while loan loss coverage was 168.7%, nearly twofold that of the banking industry’s loan loss coverage ratio of 92.1%. When regulatory reserves were included, the loan loss coverage ratio would be higher at 200%.

Public Bank’s common equity tier 1 capital — a measure of a bank’s capital strength based on the highest quality of regulatory capital — stood at 14.5%.

“Public Bank continues to ensure that it remains well capitalised and well funded at all times to support its business growth, while safeguarding the interests of its stakeholders,” the bank said.