KUALA LUMPUR (Oct 16): Public Bank Bhd (KL:PBBANK) could see its consolidated net assets and earnings per share reduced by four sen, following an expected HK$1.964 billion — or about RM1.1 billion — goodwill impairment at its Hong Kong-listed subsidiary, Public Financial Holdings Ltd (PFHL).
The impairment is expected to contribute to a loss after tax of between HK$1.9 billion and HK$2 billion for the financial year ending Dec 31, 2026, compared with a net profit of HK$80 million in 2025.
Public Bank is proposing to privatise its 73.23%-owned PFHL for HK$2.50 per share or HK$734.75 million, to acquire the remaining 26.77% stake held by minority shareholders.
The proposed privatisation, announced in September, will be carried out through a court-sanctioned scheme of arrangement. Public Bank said the offer price would not be increased.
PFHL, in its profit warning filing with the Hong Kong stock exchange, said the impairment reflects higher long-term interest rates, which increased the discount rate used to value goodwill, and weaker medium-term cash flow projections. Rising funding costs are also squeezing net interest margins, as much of the group’s lending portfolio carries fixed interest rates or is linked to Hong Kong’s Prime Rate, which tends to remain stable across interest-rate cycles.
The impairment is a non-cash accounting item and will not affect the group’s operating cash flow. Public Bank said the profit warning would have no operational impact on the bank or its other subsidiaries, although it could reduce consolidated net assets and earnings per share by four sen.
The impairment will be recorded at the group level and will not affect the financial positions or regulatory ratios of its key Hong Kong operating subsidiaries, Public Bank (Hong Kong) Ltd and Public Finance Ltd.
The consolidated Common Equity Tier 1 capital ratio and total capital ratio of the Public Bank (Hong Kong) group remain above 25.5% and 26.5%, respectively, while its Liquidity Maintenance Ratio and Core Funding Ratio are above 60% and 150%, respectively.
Public Bank said its capital and liquidity positions remain above regulatory requirements and sufficient to meet its business and operational needs.
The profit warning is based on unaudited management accounts for the nine months ended Sept 30, 2026, projected fourth-quarter performance and other information available to the board. The figures have not been audited or reviewed and may change.
Public Bank reported a net profit of RM3.58 billion against RM14.9 billion revenue for the six-month period ended June 30, 2026. Earnings stood at 18.5 sen per share.
Public Bank’s shares closed 1.9% higher at RM4.83 on Friday, valuing the bank at RM93.7 billion. Year to date, the stock is up 6.39%.