This article first appeared in The Edge Financial Daily on April 30, 2019 - May 6, 2019

KUALA LUMPUR: Public Bank Bhd, the country’s third largest lender by assets, is actively pursuing opportunities in Cambodia in view of the growth potential of the Indochina market.

Already, Cambodian Public Bank plc (Campu Bank) is the largest foreign bank in Cambodia.

“Public Bank’s operations in Vietnam, despite still being a small contributor to the group’s profit currently, is also a key focus of the group’s overseas business growth strategy,” Public Bank founder, chairman emeritus and adviser Tan Sri Dr Teh Hong Piow said in a statement yesterday.

He said that since Public Bank Vietnam Ltd (PBVN) became a wholly-owned foreign unit of the group in 2016, the group has been strengthening its presence in Vietnam.

He  said in the medium term, the group is targeting to build a wide network of about 40 branches in Vietnam.

“This will further strengthen the group’s foothold in the Indochina market, particularly in Vietnam, in addition to Cambodia. From seven branches in 2015, PBVN has expanded to a network of 18. This year, there will be further opening of eight new branches, subject to regulatory approval,” he added.

The bank’s overseas operations continued to record stable profitability for the first quarter ended March 31, 2019 (1QFY19), contributing 10.3% to the group’s total pre-tax profit.

Public Financial Holdings Ltd in Hong Kong and Campu Bank remained the main contributors to the group’s overseas business profits.

A separate filing with Bursa Malaysia showed the group posting a marginal 0.34% increase in first-quarter net profit to RM1.410 billion from RM1.405 billion a year ago, mainly due to lower loan impairment allowance of RM71.7 million and higher investment income of RM38.1 million.

Earnings per share fell to 36.32 sen for 1QFY19 compared with 36.39 sen for 1QFY18. Quarterly revenue, however, rose 4.1% to RM5.57 billion from RM5.35 billion in 1QFY18. Gross loans grew 4.4% to RM320.4 billion as at March 31, 2019 compared with RM306.8 billion as at March 31, 2018, mainly driven by growth in property financing and corporate lending.

Total deposits from customers rose 5.2% year-on-year to RM343.0 billion as at March 31, 2019.

Teh said Public Bank was able to sustain its performance in 1QFY9 despite challenges in the operating environment.

He said the bank  had approved loans totalling RM13.4 billion in 1QFY19, of which 57% was granted to retail consumers for the purchase of residential properties and passenger vehicles; whereas 20.3% represented lending to small and medium enterprises.  

The group’s total customer deposits grew at an annualised rate of 4.5% for 1QFY19.

On  prospect for 2019, Teh said, while the Malaysian economy is expected to remain on a sustained growth path, it is likely to be another year of challenges.

“The increasingly challenging macro environment will continue to pose downside pressure on the Malaysian banking sector. However, tapping on the expanding domestic economy and domestic demand, the ongoing demand for financing and banking products will continue to create opportunities for banks to pursue.

“The group will continue to grow its business while remaining cautious on downside risks. While the group’s long-term banking strength will continue to place it in good stead to embrace growth, the group will further strengthen its core competencies such as digital capabilities and superior customer service, to capture prospective opportunities and deliver sustained performance in this changing environment,” he said.