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Public Bank Bhd (1295) is optimistic of solid earnings growth this year despite a tough economy and has pledged to maintain a high dividend payment.

The largest lender in the country based on market value, and among the most profitable in the region, believes it can maintain its strong earnings momentum and last year’s record profit.

“We expect 2009 to be extremely challenging. However, the past few years of building size and market share coupled with the strengthened asset quality will keep us resilient in the face of challenges,” co-chairman Tan Sri Thong Yaw Hong told the 3,600 share-holders who attended an annual general meeting in Kuala Lumpur yesterday.

Public Bank’s net profit increased 22 per cent to a record RM2.58 billion last year as it earned more from loans and other non-interest income.

Together with a planned final dividend which involved cash and treasury shares, the bank declared an equivalent of 89.8 sen gross dividend last year.
“Shareholders can expect the liberal dividend payout to continue in future, barring unforeseen circumstances,” chairman Tan Sri Dr Teh Hong Piow promised.

Still, the prospect of a deeper recession worldwide and a worsening domestic economy could make it more challenging to meet its target of 15 per cent loan growth this year, chief operating officer Leong Kwok Nyem told reporters later.

The latest 50 basis points cut in the Overnight Policy Rate (OPR) will trim two to three basis points off its net interest margin, but is not expected to have a significant impact on its profits, Leong added.

Public Bank’s core net interest margin, or the difference between what it earned on loans and paid for funds, stands at 2.4 per cent currently.

Leong said that the lower Statutory Reserve Requirement, or zero-interest deposit placed with Bank Negara Malaysia, helps to offset the impact of margin squeeze.

Falling deposit rates also helps, while its large portfolio of car loans – which locks in fixed rates for years – gives the lender an edge.

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MALAYSIAN conglomerate MMC Corp Bhd (2194) booked a 31.5 per cent fall in fourth-quarter net profit, hit by a RM141.9 million windfall tax at its power division.

MMC, which is developing the Jazan Economic City in Saudi Arabia, posted October-December net profit of RM128 million. Its full-year net profit was RM527 million, from RM552 million.

The company, which controls power firm Malakoff Bhd, said its power generation business reported lower earnings during the three-month period, after it set aside RM141.9 million for the windfall profit levy.

Malakoff owns 40 per cent of Kapar Energy, a 2,420-Megawatt independent power producer in the central Selangor state.
“The group’s performance was affected by a lower contribution from the energy and utilities division as a result of the full provision for the windfall profit levy and the impairment loss on investment in an associate,” MMC said in an earnings statement yesterday.

It said the impairment loss was worth RM50.6 million. Despite a deepening economic crisis around the globe, the company forecast its financial performance to stay firm in 2009.

“Notwithstanding the current adverse economic scenario, the board expects the group’s financial results in 2009 to be satisfactory compared to those achieved in the last financial year,” it said. It did not elaborate.

Ahead of the results, MMC’s shares rose 0.7 per cent to RM1.41 as the broader market gained 0.3 per cent. The stock slumped 78 per cent last year, underperforming the benchmark stock index’s 39 per cent loss. – Reuters

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Chemical Company of Malaysia Bhd (CCM) (2879) has registered a pre-tax profit of RM120.268 million for its financial year ended December 31, 2008, up from RM105.551 million the previous year.

The country’s largest generic pharmaceutical manufacturer set a new record of RM2.165 billion in revenue, an increase of 55 per cent from RM1.397 billion in 2007.

The fertilisers division was the group’s top revenue earner last year, CCM said in a statement yesterday.

The division’s revenue nearly doubled to record a 94.2 per cent increase in revenue to RM1.4 billion from RM723.8 million in the same period in 2007, it said.
Pre-tax profit rose significantly by 138.4 per cent to RM83.5 million from RM35.0 million previously for the division, it added.

The division’s higher performance over the previous year was achieved on the back of rising prices and improved margins in the first three quarters of 2008, which started to soften in the last quarter.

The group’s chemicals division reported an 18.7 per cent growth in revenue to RM606.5 million from RM511.1 million in 2007.

However, the division’s pre-tax profit at RM14.7 million was 3.1 per cent lower than the previous year due to year-end stock impairment charges incurred, reflecting market falls in product prices and underperformance of its water systems business.

The pharmaceuticals division’s revenue improved seven per cent to RM232.7 million from RM217.4 million in the corresponding period the previous year.

However, its pre-tax profit was 33 per cent lower at RM37.2 million from RM56.3 million previously.

CCM attributed the decrease to reduced margins arising from higher raw material prices coupled with lower selling prices of products to the government sector.

The CCM board has recommended a final dividend of 1.8 sen per ordinary shareless tax at 25 per cent and 4.9 sen tax exemption for the financial year ended December 31, 2008. – Bernama

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