KUALA LUMPUR (Oct 27): Public Bank Bhd's (KL:PBBANK) investment holding unit LPI Capital Bhd (KL:LPI) saw its net profit drop 15.7% in the third quarter, weighed down by lower investment returns and net fair value losses amid rising bond yields.
For the three months ended Sept 30, 2026 (3QFY2026) the unit posted a net profit of RM96.8 million compared with RM114.8 million a year prior. However, quarter-on-quarter, net profit rebounded 44.7% from RM66.9 million in 2QFY2026.
In its bourse filing on Tuesday, the group said its investment holding segment profit was hit by lower tax-exempt dividend income following the disposal of its Public Bank shares in May, while the general insurance segment recorded net fair value losses of RM12.1 million, compared with gains of RM2.3 million a year earlier. It attributed the fair value losses to a spike in bond yields.
Higher yields generally hurt insurers as they take larger paper losses from lower prices of the bonds they hold and force them to book losses if they sell. However, they can boost their investment income later when premiums collected are reinvested at higher rates.
Revenue for the quarter grew marginally to RM555.52 million from RM549.31 million a year prior, supported by higher insurance revenue from its core general insurance segment, which rose 3.9% to RM519.54 million from RM499.9 million a year ago.
For the nine-month period ended Sept 30, 2026 (9MFY2026), the group’s net profit dropped to RM263.21 million from RM295.98 million, while revenue expanded to RM1.65 billion from RM1.57 billion. Insurance revenue grew to RM1.54 billion over the period.
In its outlook, the group said it will continue to prioritise profitable growth over premium growth and strengthen technical pricing and risk segmentation amid a volatile business environment.
“Against this volatile business environment outlook, the LPI Group will continue to prioritise profitable growth over premium growth. The key objective will be sustainable underwriting profitability, rather than just increasing market share,” it said.
LPI Capital's soft 3Q comes as Japan's MS&AD Insurance Group Holdings Inc is exploring taking over the 44% stake Public Bank holds in the company. If a deal is realised, the merger of MS&AD's MSIG and LPI Capital's Lonpac could create one of the biggest insurance groups in Malaysia with potential market share of over 16%.
A takeover of LPI Capital could also earn Public Bank about RM521 million.
At the time of writing, LPI shares traded eight sen or 0.60% lower at RM13.18 on Tuesday, giving the group a market capitalisation of RM5.25 billion.