Public Financial Holdings, a mid-sized lender controlled by Public Bank of Malaysia, said net profit last year rose 33.97 per cent, partly helped by a one-off gain of HK$108.5 million from the disposal a listed security investment. Net profit rose to HK$665.33 million from HK$496.63 million a year earlier. Net interest income increased 10 per cent to HK$1 billion even though interest expenses were up 71.8 per cent. Non-interest income gained 89.18 per cent to HK$391.67 million, or 36.7 per cent, excluding the gain. The lender recorded HK$9.8 million in impairment charges for its investment in a structured investment vehicle, but the total provision fell 16 per cent due a larger recovery on bad debts. Tan Yoke Kong, a director of the group, said the lender had about US$10 million invested in the investment vehicle. Mr Tan said the financial vehicle did not have exposure to subprime mortgages, adding that he expected it would not cause a material impact to the lender even if further provisions were needed. Shares of Public Financial surged 6.88 per cent yesterday after the result was announced, to close at HK$5.59. 'The performance of the company is in line with our expectations if the one-off item is excluded,' said Kevin Chan Wing-tak, an analyst at Nomura. He added that the lender also benefited from strong loan growth due to a robust economy. The lender's total loans grew by 38.8 per cent to HK$19.11 billion, while deposits also rose 38 per cent to HK$20.5 billion. Some analysts, however, were concerned that the bank's net interest margin could narrow further if it tried to use a price-cutting strategy to fight for business volume. 'We will maintain a strategy of offering higher deposit rates and close to market lending rates this year, as we aim to widen our customer base,' said Mr Tan. He said the group's target was to have 30 per cent growth in both loans and deposits this year.