Public Bank Bhd net profit in the second quarter ended June 30, 2020 fell 24.8% to RM1.00 billion from RM1.33 billion a year ago mainly due to the one-off net modification loss related to Covid-19 relief measures amounting to RM498.4 million, coupled with the negative effect of Overnight Policy rate reductions during the period.For the first half year ended June 30, 2020, its net profit decreased 15.0% to RM2.33 billion from RM2.
In addition to the modification loss incurred in respect of the Covid-19 related relief measures, the group’s profitability was also affected by the compression in net interest margin due to the reductions in OPR, and higher provisions set aside for the expected increase in impaired loans due to the pandemic. However, the adverse impact on profitability was mitigated by the continued expansion of the group’s loan and deposit portfolio, and higher non-interest income.
Despite the effect of the modification loss and reductions in OPR, the group’s cost-to-income ratio of 37.9% in the first half of 2020 remained significantly better than the domestic banking industry’s cost-to-income ratio of 44.7%.