Public Bank’s 53rd Annual General Meeting Held On 22 April 2019
In conjunction with Public Bank’s 53
rd Annual General Meeting held on 22 April 2019, the Founder, Chairman Emeritus, Director and Adviser of Public Bank, Tan Sri Dato’ Sri Dr. Teh Hong Piow is pleased to present a review of the Public Bank Group’s performance in 2018.
Performance Review
Tan Sri Teh said,
“The Public Bank Group made good business progress and achieved pre-tax profit of RM7.10 billion in 2018. Net profit attributable to shareholders rose by 2.2% to RM5.59 billion in 2018 from RM5.47 billion in 2017. As a result, earnings per share increased by 1.9% to 144.4 sen in 2018.”
Tan Sri Teh added,
“Despite facing a more challenging business climate, the Public Bank Group was able to sustain stable profitability in 2018 due to its continuous effort to drive revenue growth, coupled with the Group’s strong asset quality and prudent cost management. With that, the Group maintained its leading position amongst domestic banking groups in Malaysia with the highest net return on equity of 14.8%, most efficient cost to income ratio of 33.0% and lowest gross impaired loans ratio of 0.5%.”
Tan Sri Teh further added,
“In view of the Group’s stable financial performance in 2018, a second interim dividend of 37 sen was paid on 14 March 2019. Together with the first interim dividend of 32 sen paid in September 2018, the shareholders would have received a total dividend of 69 sen per share for 2018.” The total dividends paid amounted to RM2.68 billion, representing a payout of 47.9% of the Group’s net profit in 2018.
Healthy Growth in Loans and Customer Deposits
The Public Bank Group’s lending activities continued to be driven by the financing of residential properties and passenger vehicles, as well as lending to small and medium enterprises for the purchase of commercial properties and working capital.
Tan Sri Teh highlighted that,
“Despite intense market competition, the Public Bank Group achieved healthy loans growth of 4.2% in 2018, whilst the Group’s customer deposits expanded by 6.2%.”
Tan Sri Teh further added,
“The Public Bank Group retained its pole position in the domestic financing for the purchase of residential properties and commercial properties with market shares of 19.8% and 35.2% respectively as at the end of 2018.”
Superior Asset Quality
Tan Sri Teh said,
“The Public Bank Group’s gross impaired loans ratio of 0.5%, which is well below the banking industry’s gross impaired loans ratio of 1.5%, remained the best and ranked no. 1 amongst the Malaysian banking groups.”
With the adoption of MFRS 9 on 1 January 2018, the Group's loan loss coverage ratio further increased from 95.5% as at the end of 2017 to 126.0% as at the end of 2018, surpassing the banking industry’s loan loss coverage ratio of 97.9%. With the inclusion of regulatory reserves, the Group’s loan loss coverage ratio would be significantly higher at 237.5%.
International Operations
In 2018, the pre-tax profit of the Public Bank Group’s international operations increased marginally by 0.4% to RM690.7 million. The Group’s international operations contributed 9.7% to the Group’s total pre-tax profit in 2018, mainly from Public Financial Holdings Limited Group in Hong Kong and Cambodian Public Bank Plc.
Tan Sri Teh commented,
“The Public Bank Group has been actively growing its business in Vietnam through the expansion of branches. The Group opened five new branches in 2018, bringing the total branches to 18. The Group plans to open 8 new branches in 2019, subject to regulatory approval, to further expand its market presence in Vietnam.”
Stable Contribution from Non-Interest Income
In view of the more cautious sentiment in the market place, growing fee-based business had been a challenge in 2018. During the year, the Public Bank Group’s fee income growth was mainly driven by its unit trust and banking transaction businesses.
Tan Sri Teh said,
“The Group’s wholly-owned unit trust management company, Public Mutual, continued to be the major contributor to the Group’s non-interest income. As at the end of 2018, Public Mutual managed a total of 147 unit trust funds which amounted to a net asset value of RM78.75 billion, sustaining its top ranking in the domestic private unit trust business with a significant retail market share of 37.2%.”
Healthy Capital and Liquidity Position
The Public Bank Group’s capital position remained healthy with its common equity Tier I capital ratio, Tier I capital ratio and total capital ratio, after deducting second interim dividends, standing at 13.1%, 13.7% and 16.3% respectively as at the end of 2018. The Group’s liquidity position also remained healthy, as reflected in its gross loans to fund and equity ratio of 79.0% as at the end of 2018.
Tan Sri Teh commented that,
“The Public Bank Group will always ensure that its capital and liquidity position comply with regulatory requirements with adequate buffers available to support long term growth as well as pursuit of the Group’s strategic business objectives.”
Superior Returns to Shareholders
The Public Bank Group continues to deliver consistent and superior returns to its shareholders, both over the medium term and long term.
Tan Sri Teh highlighted,
“If a shareholder of Public Bank had bought 1,000 shares in Public Bank when it was listed in 1967, and assuming the shareholder had subscribed for all rights issues to date and had not sold any of the Public Bank shares, he would have 148,938 Public Bank shares worth RM3.3 million as at today. In addition, he would have received a total gross dividend of RM1.3 million. This translates into a total value of RM4.6 million, representing a remarkable compounded annual rate of return of 19% for each of the 51 years since 1967.”
Digital Initiatives
Tan Sri Teh said, “
Accelerating digitalisation is one of the Public Bank Group’s key focus area. The Group takes a practical approach in its pursuit of digital initiatives, going along customers’ needs and their readiness to adopt digital-driven services, at the same time mindful of the associated risks such as cyber security threat, and the short life cycle of application as a result of rapid advancement in technology.”
As of today, Public Bank has implemented several initiatives for digital payment services in line with industry trend, such as AliPay, Samsung Pay, WeChat Pay and DuitNow. For onboarding of new customers, Public Bank has also implemented the eSignature at all branches, which has significantly reduced the time taken to onboard customers.
Public Bank’s internet and mobile banking, PBe and PB engage, continue to be enhanced with new functions and features. In terms of the number of users, Public Bank’s internet and mobile banking have achieved good growth. Between 2014 and 2018, PBe users grew by 25% compounded annual growth rate (“CAGR”) to a total of 2.4 million users. Similarly, PB engage users also grew by 85% CAGR to 1.1 million users.
Currently, Public Bank is working on several fintech initiatives such as Big Data Analytics, Open API, eKYC, and blockchain.
Tan Sri Teh highlighted,
“Over the last three years, Public Bank has invested about RM400 million on IT-related capital expenditure, which include spending on digital infrastructure. Of this amount, about RM90 million was spent specifically on fintech-related initiatives. Going forward, the Bank is planning to invest another RM600 million in the next three years to further enhance ICT infrastructure, digital capability and knowledge.”
Corporate Responsibility
Tan Sri Teh said,
“As the third largest banking group in Malaysia, the Public Bank Group is committed to promote sustainable and responsible banking practices, and continue to maintain a business model that creates value for its stakeholders and the wider community. The Group has played, and continues to play a key role in supporting the broad range of the community’s financial needs - both through the products and services that the Group provides as well as through the funding that the Group contributes to the community.”
Through the Public Bank Group’s business, charitable donations and staff volunteerism, the Group continues to create positive social impact which will benefit the communities in which the Group operates. With total tax payment of RM1.53 billion made by the Group in 2018, the Group is a major contributor to the nation’s well-being and development. In recognition of Public Bank’s contribution to the country’s fiscal revenue, Public Bank was one of the 11 recipients of the “Best Tax Payer Award 2018” by Inland Revenue Board of Malaysia.
Tan Sri Teh added,
“One of the Public Bank Group's key focus area in sustainability is responsible lending, particularly in providing financing for first time home buyers and supporting the financing needs of the SME segment. With a lending portfolio for residential properties and SMEs amounting to RM110.5 billion and RM69.5 billion respectively as at the end of 2018, the Group is the largest domestic financier for these two key segments today, which is a testament to the Group's unwavering commitment in supporting home ownership and SMEs over the years. The Group has also continued to proactively participate in a broad range of government and Bank Negara Malaysia's initiated financing schemes for affordable homes and support of SMEs. For customers who are facing financial difficulties, the Group is committed to provide assistance which range from short term to longer term assistance such as rescheduling or restructuring of loans and granting of moratorium to customers who are affected by natural disaster. All these efforts reflect the integration of sustainability into the Group’s corporate culture, and the Group’s mission and strategies for its banking business.”
In 2018, the Public Bank Group has approved more than 42,000 housing loans amounting to RM16.18 billion in Malaysia, of which 62.3% were for the purchase of affordable properties. The Group has also supported the SME segment, the key engine of growth in the country, with easy access and hassle free financing to meet their business needs. In 2018, loans approved for SMEs amounted to RM11.05 billion and accounted for 20.7% of the Group's domestic loans portfolio. This year, the Group has also introduced the Skim Rumah Pertamaku - PB First Home Loan in support of the government's effort to assist low income earners to own a home. In 2018 alone, the Group has granted moratorium to more than 4,000 customers affected by flood which amounted to over RM600 million.
Tan Sri Teh further added,
“Over the next three years, the Group is targeting to approve a total of RM50 billion of housing loans and RM40 billion of SME loans, demonstrating its continued strong support of the government efforts in promoting home ownership and SME business in the country”.
Recognition of Banking Excellence
Over the years, Public Bank, under the astute leadership of its Founder, Chairman Emeritus, Director and Adviser, Tan Sri Dato’ Sri Dr. Teh Hong Piow, has won more than 500 awards in recognition of its banking excellence. These awards were conferred by reputable domestic and international publications as well as independent organisations. In 2018 alone, Public Bank garnered a total of 34 awards. Some of the notable awards received include:
- Best Bank in Malaysia 2018 by Alpha Southeast Asia
- Best Bank In Malaysia 2018 by Euromoney
- Best Retail Bank by Alpha Southeast Asia
- Best Domestic Bank in Malaysia 2018 by The Asset
- The Strongest Bank by Balance Sheet in Malaysia 2018 by The Asian Banker
- 8th Asian Excellence Recognition Awards 2018 for Best Investor Relations Company for Malaysia by Corporate Governance Asia
- The Asset Platinum Award 2018 for Excellence in Environmental, Social and Corporate Governance by The Asset
In the recent Lipper Fund Awards, Public Mutual broke the record for the most number of Lipper Fund awards won by a single company in a year with a total of 29 awards.
Outlook
On the strategic directions and outlook for the Public Bank Group, Tan Sri Teh commented that,
“The operating environment is expected to be more challenging. As innovation and the use of technology and information gather pace, the banking landscape will continue to change. To achieve sustainable growth, the Public Bank Group will continue to drive business and digital innovation to support operational efficiency and improve responsiveness. With the Group’s resilient financial performance track record and having overcome all the challenges faced in its 52 years journey, the Group is positive that its sound business model focusing on organic growth strategy in the retail banking business and prudent credit practices will enable the Group to continuously deliver long term value to all its stakeholders.”
Y.Bhg. Tan Sri Dato' Sri Dr. Teh Hong Piow
Founder, Chairman Emeritus, Director and Adviser of Public Bank

Y.Bhg. Tan Sri Dato' Sri Dr. Teh Hong Piow
Founder, Chairman Emeritus, Director and Adviser of Public Bank
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