Wednesday, February 20th, 2019


US stocks edge up ahead of Fed minutes

NEW YORK, Feb 20 — Wall Street stocks edged higher early today ahead of Federal Reserve meeting minutes that will shed light on last month’s dovish tilt by the central bank. About 10 minutes into trading, the Dow Jones Industrial Average was up…

Public Bank proposes 37 sen dividend for Q4

PETALING JAYA: Public Bank Bhd has proposed to declare a second interim dividend of 37 sen for the fourth quarter ended Dec 31, 2018 despite its net profit declining 5.4% to RM1.41 billion against RM1.49 billion in the previous corresponding period.

Revenue for the quarter, however, grew 5.3% to RM5.63 billion from RM5.35 billion.

Together with the first interim dividend of 32 sen per share, the bank’s full-year dividend for 2018 amounts to 69 sen or a total dividend payout of RM2.7 billion, representing 47.9% of its net profit for 2018.

Public Bank’s full-year net profit rose 2.2% to RM5.59 billion from RM5.47 billion a year ago on the back of a 5.7% increase in revenue to RM22.04 billion from RM20.86 billion.

“2018 was marked by a more moderate economic growth, with increased head-winds on both global and domestic fronts and banks were faced with a more challenging business climate. Against this backdrop, the Public Bank group was able to sustain stable profitability due to its continuous efforts to drive its loans and deposits business, coupled with the group’s strong asset quality and prudent cost management,” said Public Bank founder Tan Sri Teh Hong Piow (pix).

The bank achieved 4.2% loan growth in 2018 and its lending strategy remained focused on consumer financing for the purchase of residential properties and passenger vehicles, as well as extension of credit to small and medium enterprises for purchase of commercial properties and working capital.

Its total customer deposits achieved growth of 6.2% to RM339.2 billion in 2018. The deposit growth contributed to the group’s strong funding position, as reflected in its gross loan to fund and equity ratio of 79.0% as at the end of 2018.

Public Bank continued to maintain a low gross impaired loans ratio of 0.5%, well below the domestic banking system’s gross impaired loans ratio of 1.5%.

“Further, the Public Bank group’s loan loss coverage ratio stood high at 126.0% as at the end of 2018. Including the RM1.8 billion regulatory reserves that the group had set aside, the group’s loan loss coverage ratio would be 237.5%. This has provided the group a strong buffer to weather any uncertainties ahead,” said Teh.

After the payment of the second interim dividend, the group’s common equity Tier 1 capital ratio, Tier 1 capital ratio and total capital ratio will stand at 13.1%, 13.7% and 16.3% respectively.

In 2018, Public Bank’s overseas operations contributed 9.7% to the group’s overall pre-tax profit, largely contributed by Public Financial Holdings td Group in Hong Kong and Cambodian Public Bank Plc.

Looking ahead, Public Bank expects the overall outlook for the domestic banking sector to remain stable underpinned by resilient private sector activity.

“There will be continued growth opportunities for the domestic banking industry underscored by ongoing demand for affordable housing and the growing small and medium enterprises,” said Teh.

Public Bank’s share price gained 6 sen or 0.24% to close at RM25.06 today on 4,402,500 shares done.

Asian stocks, currencies boosted by China-US trade deal optimism

HONG KONG: Growing optimism that China and the United States will reach a trade deal lifted most Asian equities today while the positive sentiment also provided support to regional currencies against the safe-bet dollar.

The yuan was among the big gainers following a report that the US has called on China to stabilise the unit as part of any agreement between the world’s top economic powers.

Wall Street returned from a long weekend to provide a healthy lead as US President Donald Trump said trade talks – which resumed in Washington on Tuesday – were “going very well” but were “very complex”.

He also indicated he could put back the March 1 deadline for talks to be concluded – when US tariffs on Chinese goods are due to more than double – saying it is “not a magical date”.

Observers say that while there are no details about the negotiations the fact they are still talking and China appeared responsive to the call for yuan stability was good news.

Hong Kong rose 1% while Shanghai ended up 0.2% and Tokyo closed 0.6% higher. Seoul, Taipei and Manila each climbed more than 1%, Singapore put on 0.4% but Sydney slipped 0.2%.

The upbeat mood on trading floors gave investors confidence to buy higher-risk currencies, pushing the South African rand around 1% higher and Australia’s dollar up 0.7%. The yuan also climbed 0.7%.

The pound held its gains after strong British jobs and wages data, while it was also getting support from hopes that Prime Minister Theresa May could win changes to her Brexit deal with the European Union as she heads to Brussels later in the day.

While EU leaders have said they are not willing to bend on the agreement, analysts say there could be some movement that would help her push it through parliament and avoid a messy divorce that could hammer the British economy.

“The EU is showing some possible concessions about the timing of the exit, as (European Commission chief) Jean-Claude Juncker has said a delay beyond the European parliamentary elections in May would not be opposed, but the UK has to request it, which they have not done,“ said Alfonso Esparza, senior market analyst at OANDA.

In Europe at mid-day today, London’s FTSE 100, Frankfurt’s DAX 30 and Paris’ CAC 40 were all up 0.3% each. – AFP

January CPI seen falling for first time since 2009

KUALA LUMPUR: Malaysia’s consumer prices are expected to fall in January, the first decline in nearly a decade, amid a drop in domestic fuel prices, a Reuters poll showed today.

Malaysia’s consumer price index in January was forecast to fall 0.2% from a year earlier, the first decline since November 2009 when it fell 0.1%, according to the median estimate among 13 economists surveyed.

Individual estimates, however, ranged between an annual decline of 0.8% and a rise of 0.5% in the index.

Malaysia’s decision to switch to a weekly managed float mechanism for retail fuel in January as well as lower global crude oil prices likely weighed on transport costs, economists in the poll said. Inflation has been benign since the government removed an unpopular consumption tax in June 2018 and reinstated a narrower sales and service tax three months later.

Annual inflation in November and December were 0.2%, matching the rate in August when it touched a three-and-a-half-year low.

The central bank said last week Malaysia was not at risk of deflationary pressure. Headline inflation, which came in at 1% in 2018, was likely to average higher this year, Bank Negara Malaysia said.

“Inflation remains distorted by administrative measures – the central bank will likely focus on the growth metric for monetary policy decision making,” Standard Chartered said in a note ahead of the CPI data.

Foreign holdings of Malaysian bonds shrink for third month in a row

PETALING JAYA: Foreign holdings of Malaysian bonds declined RM2.3 billion in January, the third consecutive month of outflows, said RAM Ratings.

This was due to a sell-off for both short- and long-term government securities and corporate bonds.

“This has been a consistent trend through the last few months amid lingering global trade and geopolitical uncertainties,” the rating agency said in a statement today.

Nonetheless, it believes that the US Federal Reserve’s shift to a more dovish tone in its monetary policy statement released late January should support investor appetite for Malaysian and emerging market bonds in general.

“It has expressed that it will be more “patient” in future policy decisions, which contrasts against its earlier message of “further gradual increases”. In response to this, the benchmark 10-year MGS (Malaysian Government Securities) yield took a dive earlier this month, falling below the psychological level of 4% on Feb 13”.

On the domestic front, RAM said the private sector issuance was relatively robust in January with a gross issuance value of RM5.8 billion.

For the quasi-government segment, January remained quiet (issuance value of RM100 million), as observed in the last few years, further dampened by the bumped up issuance in Q4 2018.

“We expect this relatively muted trend to persist through the rest of this year, primarily due to the government’s project-rationalisation initiatives and the lengthening of project time lines, which should constrain new debt-raising initiatives,” noted RAM head of research Kristina Fong.

Meanwhile, the rating agency said appetite for government bonds was also very healthy in January, as indicated by the bid-to-cover (BTC) ratios.

“Both the 10-year GII and 7-year MGS achieved very strong BTC ratios of 4.13 and 3.91 times, respectively. The BTC ratio for the slightly larger 5-year GII came in at 1.97 times. Government issuance summed up to RM13 billion for the month (January 2018: RM10.5 billion).”

Heineken’s 2018 net profit up 4.6%

PETALING JAYA: Heineken Malaysia Bhd, which posted a 4.6% jump in its net profit for the financial year ended Dec 31, 2018 (FY18), remains cautious about its outlook given the challenging environment due to intense competition, implementation of the sales & service tax (SST), and the continued presence of contraband beer in the market.

In line with rising global commodity prices, the group also expects an increase in cost of operations including raw materials and packaging.

Finance director Szilard Voros said how the group will perform in FY19 also depend on the market, adding that it will benefit if consumers remain optimistic and if efforts to curb illicit trade are stepped up.

“But we remain cautious because SST was just introduced in September so that also comes with a lag… we also need to see how things settle down after Chinese New Year and see what is the normalised performance and if there’s a growth continuation,” he told reporters at a media and analyst briefing today after announcing the group’s financial results.

Managing director Roland Bala (pix) said the external environment remains challenging. Amidst slowing global growth rates, currency volatility and uncertainty in the commodity markets, he said the group will need to adopt a cautious approach in cost management.

“Moving forward, we will continue to invest in our core brands and leverage on our portfolio. As consumer taste profile changes, we will make bets on brands that we believe will have scale,” he added.

Heineken’s net profit for the fourth quarter ended Dec 31, 2019 grew 6.8% to RM100 million compared with RM93.64 million in the same quarter last year due to higher revenue as well as efficient and effective management of commercial spend and overheads.

Group revenue grew 12.3% to RM662.28 million as compared to RM589.96 million in the same quarter in 2017 mainly due to increase in sales volume driven by the flagship Tiger brand.

For the full year period, net profit grew 4.6% to RM282.2 million from RM270.06 million a year ago, while revenue rose 8.3% to RM2.03 billion from RM1.87 billion.

It has proposed a final dividend of 54 sen per share for the quarter under review, bringing the full-year dividend payout to 94 sen.

CIMB Niaga posts 16.9% net profit growth in 2018

PETALING JAYA: CIMB Group Holdings Bhd’s 92.5%-owned T Bank CIMB Niaga Tbk reported an audited consolidated net profit of 3.5 trillion rupiah (RM1 billion) for the financial year ended Dec 1, 2018 a 16.9% growth compared with a year ago.

The bank said the improved net profit came on the back of a 13.8% increase in on-interest income to 3.8 trillion rupiah and a 63 basis-point improvement in credit charges from 2.26% to 1.63% as provisions declined 25.7%.

CIMB Niaga’s loan loss coverage remains comfortable at 105.86%.

“We aim to maintain a targeted growth trajectory while keeping asset quality as a priority,” said CIMB Niaga president director Tigor M. Siahan.

Total loans grew by 1.8% to 188.5 trillion rupiah mainly from growth in mortgages of 11.2% to 30 trillion rupiah, small- and medium enterprise loans of 8.5% to 29.6 trillion rupiah and credit card of 5.5% to 8.6 trillion rupiah.

With total assets of 266.8 trillion rupiah as at Dec 31, 2018, CIMB Niaga maintained its position as Indonesia’s second largest private owned bank by assets.

Its capital adequacy ratio stood at 19.66% as at end-December 2018, representing a 106 basis-point increase from the previous year.

“Going forward, we will continue to focus on expanding our consumer and SME businesses, building our CASA (current account savings account) franchise and strengthening our Sharia business proposition and Sharia-compliant product offerings,” Tigor added.

Ranhill to partner Thai adviser for Kedah power plant project

PETALING JAYA: Ranhill Holdings Bhd and its water business’ adviser in Thailand, Treasure Specialty Co Ltd (TS Co), are planning to explore collaboration to propose the development of a 1150MW gas-fired combined cycle gas turbine (CCGT) power plant project in Kedah.

Ranhill told the stock exchange today that the parties have agreed to explore the collaboration on an exclusive basis based on their respective expertise and resources, with the intention to export the entire power generated from the power plant to Thailand.

TS Co and its group of investors may subscribe up to 30% of the interest in the project, whereas Ranhill may subscribe to no less than 70% interest in the project.

Both parties will be responsible to source for its own equity injection and may source for additional investors, Ranhill added.

The parties believe that the proposed project, utilising existing infrastructures for gas-fired CCGT, will be able to provide a cost competitive solution to the provision of clean electricity power to the provinces of Southern Thailand.

Ranhill said the discussion and collaboration is for a period of six months from the date of the collaboration agreement, but may be extended by the parties.

The project is subject to approval from relevant authorities in both Malaysia and Thailand, it added.

Swiss bank UBS fined €3.7b in French tax fraud case

PARIS, Feb 20 — A Paris court today fined Swiss banking giant UBS €3.7 billion (RM17 billion) in a tax fraud case, a record for such a case in France. The bank was convicted of illegally helping French clients to hide billions of euros from…

IOI Q2 earnings hit by lower plantation profit, forex translation loss

PETALING JAYA: IOI Corp Bhd saw its net profit tumble 67.2% in the second quarter ended Dec 31, 2018 (Q2 FY19) to RM195.5 million, from RM595.9 million in the previous corresponding quarter.

It was due to lower plantation profit and total net foreign currency translation loss on foreign currency denominated borrowings and deposits, the group told Bursa Malaysia today.

Its plantation segment profit for Q2 FY19 of RM117.3 million was 66% lower than the RM340.9 million for Q2 FY18, mainly due to lower crude palm oil (CPO) and palm kernel (PK) prices realised.

Average CPO price and PK price realised for Q2 FY19 was RM1,932/MT and RM1,444/MT, respectively versus RM2,644/MT and RM2,621/MT for Q2 FY18.

However, its resource-based manufacturing segment recorded a higher profit of RM139.3 million for Q2 FY19 from RM128.3 million underpinned by higher sales volume and margins from oleochemical and refining sub-segments as well as share of associate result from Bunge Loders Croklaan Group BV.

IOI’s revenue for the quarter dipped 6.4% to RM1.88 billion compared with RM2.01 billion in the same period a year ago.

It has proposed to declare an interim dividend of 3.5 sen per share for the quarter under review.

For the six-month period, the group’s net profit plunged 65% to RM339.3 million from RM955.9 million a year ago, while revenue was slightly down by 3.1% to RM3.76 billion, from RM3.88 billion previously.

On prospects for plantation segment, IOI expects its fresh fruit bunches production to decline in Q3 FY19 in line with seasonal trend.

However, with the increase in current CPO price, it foresees a slight improvement in Q3 FY19 financial performance from the plantation segment.

“Movements in the US dollar/ringgit and euro/ringgit exchange rates will continue to result in non-cash forex translation gain or loss on our US dollar and euro–denominated borrowings,” it added.