PETALING JAYA: Public Bank Bhd could see its consolidated net assets and earnings per share fall by four sen following a HK$1.96 billion (RM1.1 billion) goodwill impairment at its Hong Kong-listed subsidiary.
The impairment is expected to contribute to Public Financial Holdings Ltd recording a net loss of between HK$1.9 billion and HK$2 billion for the financial year ending Dec 31 instead of a net profit of HK$80 million in 2025, The Edge reported.
The Hong Kong company said the impairment was driven by higher long-term interest rates, which increased the discount rate used to value goodwill, and weaker medium-term cash flow projections.
Rising funding costs were also squeezing net interest margins, as much of the group’s lending portfolio carries fixed interest rates or is linked to Hong Kong’s prime rate, which tends to remain stable across interest-rate cycles.
The impairment is a non-cash accounting item and will not affect the group’s operating cash flow.
Public Bank said the profit warning would have no operational impact on the bank or its other subsidiaries, although it could reduce consolidated net assets and earnings per share by four sen.
Nor will it affect the financial positions or regulatory capital ratios of its key Hong Kong operating subsidiaries, namely, Public Bank (Hong Kong) Ltd and Public Finance Ltd.
On a separate matter, Public Bank is seeking to privatise PFHL, where it holds a 73% stake, by acquiring the remaining 27% for HK$2.50 per share, or HK$734.75 million.
The proposed privatisation, announced last month, will be carried out through a court-sanctioned scheme of arrangement, with no increase in the offer price.