Public Bank has appointed Ms. Lai Wai Keen as an Independent Non-Executive Director with effect from 29 May 2012.

Ms. Lai holds a Bachelor of Economics (Hons) - Business Administration degree from the University of Malaya and a LLB degree from the University of London.

She possesses extensive experience with Bank Negara Malaysia (BNM) and Perbadanan Insurans Deposit Malaysia (PIDM), concentrated in senior management and project leader positions, including significant central banking assignments.

Ms. Lai has over 20 years of banking regulatory experience with BNM, including in bank regulation, corporate communications, international negotiations and relations, deposit insurance systems and protection scheme for insurance policy holder.

She was seconded to PIDM as General Manager, Policy and International in 2005 until her retirement in January 2011.

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Ms. Lai Wai Keen
Independent Non-Executive Director of Public Bank
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Public Bank has appointed Mr. Lai Wan as an Independent Non-Executive Director with effect from 26 April 2012.

Mr. Lai has 39 years of experience in the banking and finance related industries. He had served Bank Negara Malaysia for 20 years and the last position held before his resignation in 1985 was as the Deputy Manager, Bank Examination Department.

Mr. Lai had working experience in three finance companies from 1985 to 1994 where he had held senior management positions.

Mr. Lai joined The Pacific Bank Bhd in 1994 as General Manager and was appointed the President/Chief Executive Officer in 1997 until his retirement on 31 December 2000. He was the Adviser and later appointed the Chief Executive Officer of PacificMas Bhd from 2001 to 2003.

Upon retirement from full time employment in 2003, Mr. Lai continued to be engaged in finance related industries through his directorships in various companies until 2011.

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Mr. Lai Wan
Independent Non-Executive Director of Public Bank
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Chairman's Review
The Founder and Chairman of Public Bank, Tan Sri Dato’ Sri Dr. Teh Hong Piow said, “The Public Bank Group delivered another strong set of results with a record pre-tax profit of RM1.25 billion and net profit of RM941 million for the first quarter of 2012.”

With effect from this year, the Group adopted fully the Malaysian Financial Reporting Standards (MFRS) 139, which resulted in a lower collective assessment allowances on the Group’s loans and financing. This resulted in a write-back of excess collective assessment allowances, leading to an increase in the Group’s shareholders’ funds as at the beginning of 2012 by RM859 million, which in turn enhanced the Group’s core equity capital ratio by 0.5%.

Tan Sri Teh highlighted that, “As a result of the retrospective application of MFRS 139, comparative pre-tax profit and net profit for the corresponding quarter in 2011 have been restated upwards by RM75 million and RM56 million respectively to RM1.17 billion and RM884 million respectively. Against the restated profits for the previous corresponding quarter, the Group’s pre-tax profit and net profit growth for the first quarter of 2012 are 6.2% and 6.4% respectively.

Excluding the impact of the higher restated profits in the previous corresponding quarter, the Public Bank Group’s pre-tax profit and net profit for the first quarter of 2012 would have shown a higher growth of 13.5% and 13.7% respectively.

Despite the higher restated shareholders’ equity base, the Group continued to lead in terms of having the highest net return on equity of 24.7% amongst the Malaysian banking groups. The Group also maintained its top ranking in asset quality and cost efficiency in the banking industry with notably lower gross impaired loan ratio of 0.8% and cost-to-income ratio of 31.8% for the first quarter of 2012.”

The Public Bank Group’s balance sheet growth indicators remained healthy. In the first quarter of 2012, the Group’s gross loans grew by RM4.2 billion, or 2.4% to reach RM 181.9 billion as at the end of March 2012. Domestic loan book grew at a faster pace of 3.1%. The Group’s customer deposits grew by 3.4% to reach RM207.1 billion as at the end of March 2012, while domestic customer deposits grew at a stronger rate of 3.6%. “On an annualised basis, both domestic loans and domestic customer deposits recorded healthy double-digit growth of 12.3% and 14.5% respectively.” said Tan Sri Teh.

Healthy Loan and Deposit Growth
The lending activities of the Public Bank Group remained focused on the retail sector which accounted for 85% of the total loan portfolio of the Group, mainly comprising loans to mid-market commercial enterprises as well as loans for the financing of residential properties and purchase of passenger vehicles.

Tan Sri Teh highlighted that, “Public Bank continued to sustain its market leadership position in domestic lending for residential mortgages, commercial property financing and passenger vehicles financing with market shares of 18.2%, 33.2% and 26.0% respectively. The Group’s financing in residential and commercial properties grew by an annualised rate of 13.7% and 21.5% respectively during the quarter, compared to the industry’s annualised growth of 11.8% and 16.0% respectively in the first two months of the year.”

Tan Sri Teh added, “The Group remained supportive in promoting small- and medium-sized enterprise (SME) activities particularly for working capital and investment financing. Financing to SME expanded strongly by an annualised rate of 18.2% in the first quarter of 2012”

“The Public Bank Group’s funding position remained robust supported by its strong retail franchise and large domestic depositor base of over 4.7 million customers. Domestic core customer deposits grew at an annualised rate of 17.9%, compared to the domestic banking industry’s annualised growth of 9.7%,” said Tan Sri Teh. The strong domestic core deposit growth was mainly attributed to steady inflows of fixed deposits and savings deposits which grew by an annualised rate of 23.1% and 12.5% respectively, outperforming the Malaysian banking industry’s annualised growth of 13.1% and 0.5% respectively.

Growth in Fee-based Income
Non-interest income of the Public Bank Group grew by 4.8% in the first quarter of 2012 as compared to the corresponding quarter in 2011, mainly driven by higher banking transactional income and income from the Group’s unit trust business as well as higher investment income.

Tan Sri Teh explained, “The Group’s unit trust management business through its wholly-owned subsidiary, Public Mutual, continued to show commendable performance with a pre-tax profit growth of 12.9% in the first quarter of 2012. Public Mutual’s net assets under management grew by 6.0% during the quarter from RM44.8 billion as at the beginning of the year to RM47.4 billion as at the end of March 2012. Public Mutual had continued to maintain its pole position in the private unit trust business with an overall market share of 44% as at the end of February 2012, and with market shares in the equity and Islamic unit trust fund sectors of 61% and 57% respectively. Public Mutual continues to build and nurture its large force of unit trust consultants, a highly effective distribution channel to drive the Group’s unit trust business, with its unit trust customer base growing to over 2.7 million accounts.”

Continued Disciplined Cost Management
Tan Sri Teh further commented, “The Public Bank Group continues to drive cost efficiency initiatives to further improve its productivity. The Group remained the most cost-efficient bank in Malaysia with its cost-to-income ratio of 31.8% as compared to the banking industry’s average cost-to-income ratio of 46.0%.” Increase in operating expenses in the first quarter was mainly attributed to increase in personnel costs which were in line with the investment in human resources and larger headcount to support business expansion.

Lending with Uncompromised Asset Quality
“The Public Bank Group has not only maintained its top ranking in asset quality amongst its peers, but also further improved its gross impaired loans ratio from 0.9% as at the beginning of the year to 0.8% as at the end of March 2012, significantly lower than the Malaysian banking industry’s gross impaired loan ratio of 2.7%,” said Tan Sri Teh. The strong asset quality of the Group is due to, inter alia, its prudent lending policies and strong risk management practices, its affluent customer base, as well as the prompt and timely loan recovery efforts undertaken.

Tan Sri Teh further added, “Despite the write-back of excess collective assessment allowances as a result of the full adoption of MFRS 139, the Public Bank Group's loan loss coverage ratio continued to remain high at 117%, compared to the banking industry's coverage ratio of 97%.” New impaired loans formation further improved to an annualised rate of 0.32% in the first quarter of 2012 from 0.34% in 2011.

Overseas Operations
The Public Bank Group’s overseas operations contributed 6.1% of the Group’s overall pre-tax profit for the first quarter of 2012. Cambodian Public Bank Plc, a wholly-owned subsidiary of Public Bank, reported a strong growth in pre-tax profit of 79% in the current quarter as compared to the corresponding quarter in 2011 with the improved business sentiment and higher loan recoveries. Campu Bank remains one of the largest banks in Cambodia by balance sheet size.

Capital Position Remained Healthy
The Public Bank Group’s capital position remained healthy, with its Tier 1 capital ratio and risk-weighted capital ratio standing at 10.3% and 14.4% respectively as at the end of March 2012. Tan Sri Teh commented, “The Group will continue to be proactive in maintaining a healthy level of capital at all times to support the Group’s business growth strategies whilst maximising its shareholder return.”

Group’s Prospect
Tan Sri Teh remarked that, “Along with the expectation that the Malaysian economy will grow by 4% to 5% in 2012, the Public Bank Group continues to strive in a healthy domestic operating environment due to the stable financial system, favourable employment conditions, sustained consumer and business sentiment as well as the accommodative monetary policy environment promoted by Bank Negara Malaysia.

The Group will continue to focus on its core retail banking and financing business whilst maintaining its prudent credit policies, and further improve on its cost efficiency. The Group remains steadfast in its commitment to upholding strong corporate governance and implementation of sound risk management policies to support long-term growth.

Moving forward, the Group is expected to maintain its earnings momentum and continue to record satisfactory performance for the rest of 2012.

* * * * * * * *


Y.Bhg. Tan Sri Dato' Sri Dr. Teh Hong Piow
Chairman of Public Bank
* * * * * * * *

In conjunction with Public Bank’s 46th Annual General Meeting held on 19 March 2012, the Founder and Chairman 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 2011.

Performance Review
Tan Sri Teh said, “2011 was another commendable year for the Public Bank Group.The Group delivered another record net profit of RM3.48 billion, 14.3% higher as compared to 2010. The Group’s pre-tax profit grew by 12.8% to RM4.61 billion. 

With the improved earnings, the Group delivered a net return on equity of 26.8% for the year. Cost to income ratio was efficient at below 30% whilst gross impaired loan ratio improve further to 0.9%. The Group successfully maintained its leading position amongst Malaysian banking groups in terms of highest return on equity, and the best cost efficiency and asset quality.”

Tan Sri Teh commented that, “The Public Bank Group’s strong performance is a result of its strategy to remain focused on its core retail consumer and commercial banking businesses whilst maintaining its tradition of prudently managing the asset quality of its balance sheet.

Gross loans expanded by 13.5% to stand at RM177.7 billion as at the end of 2011. Domestic loans growth was stronger at 14.1% in 2011. Customer deposits increased by 13.3% to reach RM200.4 billion as at the end of 2011 supported by strong domestic customer deposit growth of 14.7%. ”

Tan Sri Teh added, “In view of Public Bank’s strong profit performance in 2011, a second interim single tier dividend of 28 sen was paid on 27 February 2012. Together with the first interim single tier dividend of 20 sen paid in August 2011, the total dividend for 2011 was 48 sen.”  The total dividend paid for 2011 amounted to RM1.68 billion and represented a total payout of 48% of the Group’s net profit for 2011.

Steady momentum in domestic loan growth
The lending activities of the Public Bank Group remained focused on the retail sector which accounted for 85% of the total loan portfolio of the Group, comprising mainly loans to mid-market commercial enterprises as well as loans for the financing of residential properties and the purchase of passenger vehicles. Tan Sri Teh highlighted, “Public Bank continued to sustain its market leadership position in domestic lending for residential mortgages, commercial property financing and passenger vehicles financing with market shares of 18.1%, 33.0% and 25.9% respectively. The Group’s residential properties and passenger vehicles financing expanded by 17.5% and 9.5% respectively in 2011.”

Tan Sri Teh further added, “Public Bank continued to strongly support the Government’s efforts in promoting small- and medium-sized enterprises (“SMEs”) activities particularly for working capital and investment financing. Loans for working capital financing expanded strongly by 24.0%. In 2011, the Group approved loans to domestic SMEs amounting to RM12.39 billion, an increase of 15% as compared to 2010, which accounted for 26% of the Group’s new domestic retail loans approved.”

Sustained strong asset quality
 “The Public Bank Group’s asset quality and loan loss coverage remained the best in the banking industry with the lowest gross impaired loans ratio and highest loan loss coverage amongst domestic banking groups. The Group’s gross impaired loan ratio further improved from 1.1% as at the beginning of the year to 0.9% as at the end of 2011, one-third that of the Malaysian banking industry’s gross impaired loan ratio of 2.7%,” said Tan Sri Teh. The strong asset quality of the Group is a result of a combination of preventive and proactive measures taken such as its prudent lending policies and strong risk management practices as well as the prompt and timely loan recovery efforts undertaken.

“The Public Bank Group’s loan loss coverage ratio increased from 144% in 2010 to 189% in 2011, significantly higher than the coverage ratio for the banking system of less than 100%,” Tan Sri Teh further added. In line with BNM’s guidelines to maintain a minimum of 1.5% collective assessment, the Group’s high loan loss coverage was a result of setting aside additional collective assessment allowance for the Group’s strong loan growth whilst the level of impaired loans remained stable.

Healthy growth of domestic customer deposits
Tan Sri Teh said, “The Public Bank Group’s funding position remained robust supported by the strong PB Brand franchise and the Group’s large domestic depositor base of over 4.5 million customers. Domestic customer deposits expanded at a healthy rate of 14.7% whilst domestic core customer deposits grew by 10.9%”  The healthy growth of the domestic core customer deposits was mainly due to steady inflows of demand deposits, fixed deposits and saving deposits which grew by 13.2%, 10.4% and 10.4% respectively.

The Group’s net loan to deposit ratio remained stable and healthy at 87.2% as at the end of 2011.

International operations
The Public Bank Group’s overseas operation contributed 6.4% to the Group’s overall pre-tax profit in 2011 as compared to a 7.6% contribution in 2010. The marginally lower contribution was mainly due to the negative effect of foreign exchange differences. Excluding the impact of the foreign exchange differences, Cambodian Public Bank, a wholly-owned subsidiary of Public Bank showed commendable performance with a pre-tax profit growth of 54% to USD29.0 million as compared to USD18.8 million in 2010.

The Public Bank Group remains committed to expand its overseas operations, particularly in Hong Kong and Indo-China as the Group takes a long-term view of the future potential market reach and opportunities in the region. The Group currently has a network of 83 branches in Hong Kong and 3 branches in Shenzhen in the People’s Republic of China. Cambodian Public Bank Plc expanded its branch network in 2011 to 23, with additional branches targeted to be opened in 2012.

Growing fee-based income
The Public Bank Group continued to develop its fee-based income from unit trusts, bancassurance and wealth management products, in order to further enhance the Group’s profitability and return on equity. Non-interest income of the Group grew by 7.2% compared to 2010, mainly due to higher banking transactional income and income from Public Mutual’s unit trust business as well as higher investment income.

Tan Sri Teh explained, “Public Mutual, the Group’s wholly-owned unit trust fund management subsidiary, registered a 17.5% increase in pre-tax profit and continued to maintain its market leadership position. Ten new unit trust funds were launched during the year, bringing the total number of funds managed to 91. Total net asset value of funds under management stood at RM44.8 billion as at the end of 2011. Public Mutual’s overall market share remained high at 44% whilst the market share of equity funds and Islamic funds stood at 60% and 58% respectively.”

2011 marked the fourth year of the strategic bancassurance alliance between the Public Bank Group and the ING Group. The PB-ING bancassurance business alliance moved up to 1st place in the third quarter of 2011, from 2nd place in the first quarter of 2011 based on the volume of new business generated in each quarter by bancassurance providers in Malaysia.

ING PUBLIC Takaful Ehsan Berhad, the joint venture family takaful business between ING Management Holdings (Malaysia) Sdn Bhd and the Public Bank Group is also expected to contribute positively to the Group’s bancassurance business and further enhance the Group’s long-term fee-based revenue.

Capital management
The Public Bank Group’s capital position remained healthy, with its Tier 1 capital ratio and risk-weighted capital ratio improving to 10.1% and 15.3% respectively as at the end of 2011, after taking account of the payment of the 2nd interim dividend, as compared to 10.0% and 13.7% respectively as at the end of 2010. The issuance of RM3 billion subordinated notes under the existing Subordinated Medium Term Note Programme contributed to the improvement in the risk-weighted capital ratio of the Group during the year.

Based on the latest guidelines on the implementation of Basel III capital regime issued by Bank Negara Malaysia, the Public Bank Group is well-positioned to meet the minimum requirements of Basel III, with the phased implementation of Basel III coming into effect on 1 January 2013. Tan Sri Teh further added, “In meeting the requirements of the regulatory capital regime reforms, the Group will continue to effectively manage its capital structure and maintain maximum financial flexibility to pursue strategic objectives whilst maximising shareholder value.”

Largest non government-linked listed company by market capitalisation
“Public Bank’s market capitalisation has increased by 78% from RM26.9 billion as at the end of 2006 to RM48.0 billion today, and remains the largest non-government-linked company listed on Bursa Malaysia by market capitalisation,” Tan Sri Teh highlighted.

Superior returns to shareholders
As a blue-chip stock, the Public Bank Group’s ability to deliver superior returns to shareholders, both over the medium-term and the long-term, demonstrates the creation of shareholders value.

Tan Sri Teh commented, “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 now have 135,398 Public Bank shares worth RM1.84 million based on the current share price of RM13.60 per Public Bank (Local) share. In addition, he would have received a total gross dividend of RM776, 137. This translates into a total value of RM2.6 million representing a remarkable compounded annual rate of return of 20% for each of the 44 years since 1967.”

“Over the medium-term of 5 years from 2007 to 2011, an investor would have enjoyed a total return of 118% or an annual rate of return of 19% over the 5 year period,” said Tan Sri Teh.

Outstanding KPIs
Tan Sri Teh remarked that, “Public Bank remained the clear leader in terms of return on equity, cost efficiency and asset quality as compared to the other 5 largest banking groups in Malaysia. The Group’s net return on equity of 26.8% is the highest amongst the 5 largest domestic banking groups and is well above the average net return on equity of 15.7%.”

The Group’s cost to income ratio of 29.8% is the lowest in the industry, significantly lower than the average of 48.3% reported by the other 5 largest Malaysian banking groups. The Group’s asset quality remained the best in the industry with the lowest gross impaired loans ratio of 0.9% and highest loan loss coverage of 189%. When benchmarked against leading regional banks, Public Bank also ranks top in terms of cost efficiency and return on equity.”

Tan Sri Teh commented, “Over the medium term, the Group aims to sustain its net return on equity of more than 26%, cost to income ratio of below 30% whilst maintaining a low gross impaired loans ratio of below 1%.”

Corporate responsibility
“The Public Bank Group, in fulfilling its corporate responsibility, seeks to conduct its business activities responsibly, ethically and prudently whilst engaging the community and caring for the environment in which it operates,” said Tan Sri Teh. These include creating long-term value for the Group’s customers, employees, shareholders and the community it serves.

Public Bank provided financial assistance to the Institute Jantung Negara Foundation for the setup of a dormitory to house families of needy patients undergoing treatment and continued to support Universiti Tunku Abdul Rahman in its research studies in the field of banking and finance.

Tan Sri Teh explained, “In support of the economic growth of the country, Public Bank has been actively channelling low cost funds under various funds initiated by the Malaysian Government and Bank Negara Malaysia to assist SMEs and micro enterprises. With its strong and rising profitability, the Public Bank Group is also a major contributor to the fiscal revenue of the country with total tax payments of RM3.72 billion since 2007.”

An award winning bank
Tan Sri Teh highlighted that, “A total of 53 awards and recognition of excellence were conferred on Public Bank in 2011.”  The Group continued to be accorded best bank or best managed company awards by various international organisations and publications in 2011, which include:

Tan Sri Teh further added, “For the ninth consecutive year, Public Mutual again emerged as the biggest recipient of The Edge-Lipper Malaysia Fund Awards with a total of 8 awards won in 2012.”

Corporate governance
Tan Sri Teh said, “Public Bank’s publicly recognised record of excellence in corporate governance continued to be validated in 2011 by several corporate governance awards and recognition by international publications and surveys.”

Tan Sri Teh further added, “In recognition of Public Bank’s top performance on the Malaysian Corporate Governance Index 2011, the Bank was awarded the Top Overall Award, Best Conduct of AGM Award, the Distinction Award and the Industry Excellence Award for the Finance Sector by the Minority Shareholder Watchdog Group”

Public Bank was also awarded the Malaysian Business-CIMA Enterprise Governance Awards 2011 by Malaysian Business as the Overall Winner for the fourth consecutive year as well as Best Returns to Shareholders Award and the Corporate Social Responsibility Award.
 
Public Bank was awarded the Corporate Governance Asia’s 1st Asian Excellence Recognition Awards 2011 for Best Corporate Social Responsibility, Best Investor Relations by a Malaysian company and the Corporate Governance Asia Recognition Award 2011.

Public Bank was also ranked top for Best Corporate Governance and Best Corporate Social Responsibility in FinanceAsia’s Asia’s Best Managed Companies 2011 Poll, as well as ranked top 3 in the Alpha Southeast Asia’s Institutional Investor Corporate Awards 2011 for Strongest Adherence to Corporate Governance and Most Organised Investor Relations.

Outlook

Tan Sri Teh commented, “The Public Bank Group will continue to focus on its core retail banking and financing business whilst maintaining its prudent credit policies, and further improve on its cost efficiency by enhancing productivity. In the light of the uncertainties in the global economy, the Group remains, more than ever, committed to its tradition of prudence and belief in strong corporate governance.  While it is clearly a time to be cautious, the Group is also aware of the importance of balancing challenges with the need to continue to invest in creating long-term value for shareholders. The Group will continue to leverage on its wide branch network, superior PB Brand and service standards. The Group’s solid performance in 2011 reaffirms the continued soundness of its proven business strategies and the Group is confident that it is well placed to grasp opportunities when they arise.

The outlook of the Malaysian banking sector, in which the Group largely operates, continues to be stable and supportive of growth. Barring unforeseen circumstances, the Group is expected to maintain its earnings momentum and continue to record satisfactory performance in 2012.”

* * * * * * * *


Y.Bhg. Tan Sri Dato' Sri Dr. Teh Hong Piow
Chairman of Public Bank

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Chairman's Review
The Founder and Chairman of Public Bank, Tan Sri Dato’ Sri Dr. Teh Hong Piow said, “The Public Bank Group delivered yet another strong set of results in 2011 with record net profit of RM3.48 billion, representing a 14.3% improvement as compared to 2010. Pre-tax profit increased by 12.8% to RM4.61 billion.

With a clear lead of having the highest net return on equity of 26.8% amongst the Malaysian banking groups, the Group continues to maintain its top ranking in asset quality and cost efficiency in the banking industry with notably lower gross impaired loan ratio of 0.9% and cost-to-income ratio of below 30%”

Tan Sri Teh remarked that, “The Public Bank Group’s sound financial results for 2011 are a validation of the Group’s effective organic growth strategies and sustainable business model. We have benefited from our disciplined execution of our growth strategies whilst preserving prudent risk management practices to ensure sustainable and stable returns.

Our balance sheet growth indicators remained healthy. Gross loans as at the end of 2011 stood at RM177.7 billion, representing a growth of 13.5% as compared to a year ago. Domestic loan book grew at a faster pace of 14.1%. Customer deposits grew by 13.3% to reach RM200.4 billion as at the end of 2011, while domestic customer deposits grew at a stronger rate of 14.7%.

We are confident that with our healthy loans pipeline coupled with our strong liquidity position and PB Brand franchise, we will continue to strengthen our core revenue streams.”

Tan Sri Teh added, “In view of the Public Bank Group’s strong performance for the year, we are pleased to announce that the Board of Directors has declared a second interim single-tier dividend of 28 sen. Together with the first interim single-tier dividend of 20 sen which was paid in August 2011, the total dividend for 2011 is 48 sen.” The total dividend paid and payable for 2011 amounts to RM1.68 billion and represents a total payout of 48% of the Group’s net profit for 2011. The Board of Directors does not propose any final dividend for 2011.

Growth & Profitability Intact
The lending activities of the Public Bank Group remained focused on the retail sector which accounted for 85% of the total loan portfolio of the Group, mainly comprising loans to mid-market commercial enterprises as well as loans for the financing of residential properties and purchase of passenger vehicles. Domestic retail pre-tax profit grew by RM365 million or 12.3% year-on-year, due to increase in net interest income and lower credit charges.

Tan Sri Teh highlighted that, “Public Bank continued to sustain its market leadership position in domestic lending for residential mortgages, commercial property financing and passenger vehicles financing with market shares of 18.1%, 33.0% and 25.8% respectively. The Group’s residential properties grew by 17.5% during the year, compared to the industry’s annualised growth of 13.1%.”

Tan Sri Teh added, “The Group remained supportive in promoting small- and medium-sized enterprise activities particularly for working capital and investment financing. In particular, loans for working capital financing expanded strongly by 24.0%.”

“The Public Bank Group’s funding position remained robust supported by its strong retail franchise and large domestic depositor base of over 4.5 million customers. Domestic customer deposits grew by 14.7%, compared to the domestic banking industry’s growth of 11.8%,” said Tan Sri Teh. The strong domestic deposit growth was mainly attributed to steady inflows of fixed deposits and savings deposits which grew by 10.4% and 10.4% respectively, outperforming the Malaysian banking industry’s growth of 9.8% and 7.9% respectively.

Growth in Fee-based Income
Non-interest income of the Public Bank Group grew by 7.2% compared to 2010, mainly driven by higher banking transactional income and income from Public Mutual’s unit trust business as well as higher investment income.

Tan Sri Teh explained, “The Group’s unit trust management business through its wholly-owned subsidiary, Public Mutual, continued to show commendable performance with a pre-tax profit growth of 17.5% in 2011, and maintained its pole position in private unit trust business with RM44.8 billion of net assets under management, accounting for an overall market share of 44% as at the end of December 2011, and with market shares in the equity and Islamic unit trust fund sectors of 60% and 58% respectively.”

Continued Disciplined Cost Management
Tan Sri Teh further commented, “The Public Bank Group continues to drive cost efficiency initiatives to further improve productivity with cost-to-income ratio of below 30%. Compared to the banking industry’s average cost-to-income ratio of 46.7%, the Group remained the most cost-efficient bank in Malaysia.” Operating expenses increased at a slower pace of 5.2%, as compared to the total income growth of 8.3%. Increase in operating expenses was mainly attributed to increase in personnel costs which was in line with the investment in human resources and larger headcount to support business expansion.

Lending with Uncompromised Asset Quality
“The Public Bank Group has not only maintained its top ranking in asset quality amongst its peers, but also further improved its gross impaired loans ratio from 1.1% as at the beginning of the year to 0.9% as at the end of 2011, significantly lower than the Malaysian banking industry’s gross impaired loan ratio of 2.7%,” said Tan Sri Teh. The strong asset quality of the Group is due to, inter alia, its prudent lending policies and strong risk management practices, its affluent customer base, as well as the prompt and timely loan recovery efforts undertaken.

Tan Sri Teh further added, “The Public Bank Group's loan loss coverage ratio continued to remain one of the highest at 189%, compared to the banking industry's coverage ratio of 96% notwithstanding that more than 90% of the Group’s impaired loans outstanding are secured.” In line with BNM’s Guidelines to maintain a minimum of 1.5% collective assessment, the Group’s high loan loss coverage was a result of setting aside additional collective assessment allowance for strong loan growth while the level of impaired loans remained stable. New impaired loans formation for the year improved to 0.34% from 0.51% in 2010. As a result, the Group’s loan impairment allowances improved by 10% as compared to 2010, despite setting aside 1.5% collective assessment for loan growth.

Expansion of Overseas Operations
The Public Bank Group’s overseas operations contributed 6.5% of the Group’s overall pre-tax profit compared to 7.6% contribution in 2010 due to the negative effect of foreign exchange differences. Excluding the impact of the foreign exchange differences, Cambodian Public Bank Plc, a wholly-owned subsidiary of Public Bank, reported a strong growth in pre-tax profit of 55% to USD29.0 million compared to USD18.8 million in 2010.

Capital Position Remains Healthy
The Public Bank Group’s capital position remained healthy, with its Tier 1 capital ratio and risk-weighted capital ratio improved to 10.1% and 15.3% respectively as at the end of 2011, after deducting second interim dividend, as compared to 10.0% and 13.7% respectively as at the beginning of the year. The improvement in the risk-weighted capital ratio of the Group during the year was mainly due to the issuance of RM3 billion subordinated notes under the existing subordinated Medium Term Note programme in August 2011.

Based on Bank Negara Malaysia’s latest circular on the Basel III implementation, the Public Bank Group is confident that it is well-positioned to meet the minimum requirements of Basel III, with its phased implementation coming into effect from 1 January 2013. Tan Sri Teh commented, “The Group will continue to be proactive in maintaining a healthy level of capital at all times to support the Group’s business growth strategies whilst maximising its shareholder value.”

Group’s Prospect
Tan Sri Teh remarked that, “Our strategies remain unchanged. The Public Bank Group will continue to focus on its core retail banking and financing business whilst maintaining its prudent credit policies, and further improve on its cost efficiency. The Group expects its strong asset quality to be sustained, and will continue to leverage on the strong PB Brand franchise and its wide and efficient branch network to deliver balance sheet and revenue growth. The Group remains steadfast in its commitment to upholding strong corporate governance and implementation of sound risk management policies to support long-term growth.

With the expectations that global uncertainties and volatility will persist over the medium term, we remain vigilant and focused in balancing growth with sustainable returns. On the service delivery front, we will continue to uphold our superior customer service and delivery excellence.

The outlook of the Malaysian banking sector, in which the Group largely operates in, continues to be stable and supportive of growth. Barring unforeseen circumstances, the Group is expected to maintain its earnings momentum and continue to record satisfactory performance in 2012.”

* * * * * * * *


Y.Bhg. Tan Sri Dato' Sri Dr. Teh Hong Piow
Chairman of Public Bank
* * * * * * * *

In conjunction with the coming 2012 New Year and the auspicious year of the Dragon in the Chinese Lunar New Year 2012, Public Bank is pleased to announce the launch of “PB Golden Prosperity” Campaign to reward our loyal customers.

The “PB Golden Prosperity” Campaign consists of 3 packages namely ‘PB Golden Dragon Phoenix’, ‘PB GOLD for GOLD’ and ‘PB Prosperity Rates’. The three packages are concurrently launched to provide attractive choices to our Unit Trust, Gold Investment Account and Fixed Deposit customers.

The duration of this campaign is 4 months starting from 1 December 2011 to 31 March 2012. 

‘PB Golden Dragon Phoenix’ Package

The ‘PB Golden Dragon Phoenix’ Package is open to all new and existing Public Bank customers aged 18 years old and above.

For ‘Golden Plan 1’, customers will get a 24K gold-plated Dragon or Phoenix with minimum investment of RM23,000 in Unit Trust with the opening of a new Deposit Account or Gold Investment Account (GIA). With a higher investment of RM38,000 in Unit Trust and the opening of a new Deposit Account or GIA, customers can get a pair of 24K gold-plated Dragon and Phoenix under ‘Golden Plan 2’. The gifts are limited editions.

This package is suitable for customers who are looking for a wide range of investment products in achieving their financial goals especially those who are preparing for their children’s education or planning for their retirement needs. The objective of this package is to assist customers stretch their Ringgit with financial planning while rewarding them with limited edition 24K gold-plated gift(s) of good fortune.

‘PB GOLD for GOLD’ Package

“PB GOLD for GOLD” is the second package offered by the Bank to promote the Bank’s Gold Investment Account (GIA) following the success of the first campaign, ‘PB GO for GOLD’ which was launched on 18 January 2011.

The ‘PB GO for GOLD’ Campaign received encouraging response from our customers. During the 3-month campaign period, the average number of new GIA accounts opened per month had increased by more than 70%, whilst the monthly average in gold sales had increased by more than 40%.

‘PB GOLD for GOLD’ Package aims to reward our customers by offering 1 gram of free gold that will be credited into the customers’ GIA for every 200 grams of gold purchased during the campaign period from 1 December 2011 to 31 March 2012. The free units of gold will be given to the customers based on the cumulative gold purchases made during the campaign period.    

Gold has remained a popular investment tool as a hedge against inflation. It is also an effective way to diversify customer’s investment portfolio and safeguard wealth.

In addition, the package also aims to encourage customers to practise the ‘Dollar Cost Averaging’ principle of investing a regular sum of money in gold over a period of time regardless of market timing or level of gold prices.

'PB Prosperity Rates’ Package

The third offer is the “PB Prosperity Rates” FD package which offers high step-up FD interest rates of up to 3.98% p.a. to individual customers. To participate in the package, customers are required to place a minimum of RM30,000 new funds into their PLUS FD account. There is no cap on the maximum amount to be placed under the package. The FD tenures available are 3-month, 6-month, 9-month and 12-month.

The “PB Prosperity Rates” Package aims to increase the Bank’s deposit base and to attract new customers. The package is suitable for customers who are risk-adverse and who aim to earn regular interest income. For investors who have excess funds pending investment, they may tap on this package as a temporary platform to park their excess funds to earn high interest.   

Riding on the festive mood of the coming 2012 New Year and the auspicious Chinese New Year 2012, just select the package of your choice and reap the rewards as your money works for you!

To find out more about the “PB Golden Prosperity” Campaign, customers can visit their nearest Public Bank branch, call free phone at 1-800-22-9999 during working hours or log on to Public Bank’s website at www.pbebank.com. Terms and conditions apply.

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The Asia Pacific Brands Foundation (APBF), a world leading branding foundation has awarded Tan Sri Dato’ Sri Dr. Teh Hong Piow, Founder and Chairman of Public Bank with “The BrandLaureate Premier Brand Icon Leadership”. Dr. KK Johan, President of The Asia Pacific Brands Foundation presented the award to Tan Sri Dato’ Sri Dr. Teh Hong Piow at a ceremony held at Menara Public Bank on Thursday, 24 November 2011.

On awarding the “The BrandLaureate Premier Brand Icon Leadership” to Tan Sri Teh   Dr. KK Johan said, “The award was initiated in recognition of great men and women who are the faces and key drivers behind their brands.”

“They are leaders of great substance, not just about who they are but what they are, the Icons who define leadership, set standards and shape history.” he said.

Dr. KK Johan in his citation statement said, “The ‘Premier Brand Icon Leadership’ is about a leader who impacts and influences the lives of others, it is about leadership that inspires, leadership that sees and act differently. I am speaking of none other than Tan Sri Dato’ Sri Dr. Teh Hong Piow, Founder and Chairman of Public Bank.”

He continued, “Tan Sri Dato’ Sri Dr. Teh Hong Piow whose visionary ideas, astute business sense, spirit and leadership qualities are the hallmark of Public Bank success.  The ‘BrandLaureate Premier Brand Icon Leadership’ is the highest level of brand leadership award, the ultimate honour for the best.  Tan Sri Teh you are the best that can happen to this country.”

Tan Sri Teh is happy with the award and commented, “To be given this honour gives me a sense of satisfaction as this recognition makes all my years in the banking industry very rewarding. I dedicate this achievement to all the shareholders and stakeholders whose loyalty and support to the Public Bank name have made us a renown name in this region.”

Tan Sri Teh has also been the past recipient of  The BrandLaureate – Tun Dr. Mahathir Mohamad  Man of the Year 2010-2011 by Asia Pacific Brands Foundation, Asia’s Best CEO (Investor Relations)  in the 1st Asian Excellence Recognition Awards 2011 by Corporate Governance Asia,  Asian Corporate Director Recognition Award 2011 by Corporate Governance Asia,  The Asset’s  “Asia’s Banking Grandmaster” and “Asia’s Banker of High Distinction” and other  prestigious awards such as “Best CEO in Malaysia”, “Asian Banker Par Excellence”, “Lifetime Achievement Award” and “One of Asia’s Most Influential 1996-2006” and “Best CEO in Malaysia”; all of which acclaim his exceptional foresight and astute leadership.

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Dr. KK Johan (right) President of Asia Pacific Brands Foundation presenting The BrandLaureate Premier Icon Leadership Award 2011 to Tan Sri Teh.
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Sustainable Strategies Drive Broad-based Growth Amidst Economic Uncertainties

The Public Bank Group delivers yet another strong set of results in the first nine months of 2011 with record net profit of RM2.6 billion, which is 18.4% higher compared to the corresponding period in 2010. Pre-tax profit grew by 16.6% to RM3.4 billion over the same period.

Chairman’s Review
The Chairman of Public Bank, Tan Sri Dato’ Sri Dr. Teh Hong Piow said, “The Public Bank Group’s sound financial results are a validation of the Group’s effective organic growth strategies and sustainable business model. The Group continues to retain a clear lead with the highest net return on equity of 26.7% amongst the Malaysian banking groups. At the same time, we continue to sustain top ranking in asset quality and cost efficiency amongst the peers. We have benefited from our disciplined execution of our growth strategies whilst preserving prudent risk management practices to ensure sustainable and stable returns.

We are encouraged by the steady performance in our core businesses, with both our net interest income and fee income registering growth despite the weaker economic sentiments particularly over the past 2 quarters. Despite the competitive pressure on interest margin, the Group’s net interest and finance income improved by 9.7% in the first nine months of 2011, and fee income grew by 9.1% over the same period.

Our balance sheet growth indicators remained healthy. Gross loans book stood at RM172.7 billion, which grew by 13.8% on an annualised basis. Domestic loan growth remained strong with an annualised growth rate of 14.1%. Over the same period, total customer deposits grew by an annualised rate of 12.7% to RM193.7 billion, while domestic customer deposits grew at a stronger annualised growth rate of 13.8%. We are confident that with our healthy loans pipeline and coupled with our strong PB Brand franchise, we will continue to strengthen our core revenue streams.”

Growth & Profitability Intact
The lending activities of the Public Bank Group remained focused on the retail sector, with loans to mid-market commercial enterprises as well as loans for the financing of residential properties and purchase of passenger vehicles accounting for 85% of the total loan portfolio of the Group as at the end of September 2011. Domestic retail pre-tax profit grew by RM335 million or 15.9% year-on-year, with a notable 11.9% increase in net interest income and lower credit charges.

Tan Sri Teh highlighted that, “Public Bank continued to sustain its market leadership position in domestic lending for residential mortgages, commercial property financing and passenger vehicles financing with market shares of 18.0%, 33.7% and 25.7% respectively. In particular, the Group’s residential properties and passenger vehicles financing grew at impressive annualised rates of 17.7% and 9.7% respectively during the 9-month period, compared to lower industry growths of 12.5% and 6.7% respectively.” The Group remained supportive in promoting small- and medium-sized enterprise (“SME”) activities particularly for working capital and investment financing. Loans to the SME sector for the 9-month period grew strongly by an annualised rate of 15.6%.

“The Public Bank Group’s funding position remained robust supported by its strong retail franchise and large domestic depositor base of over 4.5 million customers. Domestic customer deposits grew at an annualised growth rate of 13.8%, compared to the domestic banking industry’s annualised growth of 9.8%,” said Tan Sri Teh. The strong domestic deposit growth was mainly attributed to steady inflows of fixed deposits and savings deposits which grew at annualised growth rates of 12.2% and 11.9% respectively, outperforming the Malaysian banking industry’s annualised 9.5% growth in fixed deposits and annualised 9.1% growth in savings deposits.

Growth in Fee-based Income
Non-interest income of the Public Bank Group recorded a commendable growth of 9.1% compared to the corresponding period in 2010, mainly driven by higher banking transactional income and income from Public Mutual’s unit trust business as well as higher investment income.

Tan Sri Teh explained, “The Group’s unit trust management business through its wholly-owned subsidiary, Public Mutual, continued to show commendable performance with a pre-tax profit growth of 22.3% in the nine months of 2011, and maintained its pole position in private unit trust business with RM41.3 billion of net assets under management, accounting for an overall market share of 43% as at the end of August 2011, and with market shares in the equity and Islamic unit trust fund sectors of 60% and 55% respectively.”

Continued Disciplined Cost Management
Tan Sri Teh further commented, “The Public Bank Group continues to drive cost efficiency initiatives to further improve productivity with cost-to-income ratio of 30%. Compared to the banking industry’s average cost-to-income ratio of 46.7%, the Group remained the most cost-efficient bank in Malaysia.” Operating expenses increased marginally by 4.6%, less than half the pace of the much higher income growth of 9.6%. Increase in personnel costs was in line with the investment in human resources and larger headcount to support business expansion.

Lending with Uncompromised Asset Quality
“The Public Bank Group has not only maintained its top ranking in asset quality amongst its peers, but also further improved its gross impaired loans ratio from 1.14% as at the beginning of the year to below 1% as at the end of September 2011, significantly lower than the Malaysian banking industry’s gross impaired loan ratio of 2.8%,” said Tan Sri Teh. The strong asset quality of the Group is due to, inter alia, its prudent lending policies and strong risk management practices, its affluent customer base, as well as the prompt and timely loan recovery efforts undertaken.

The Public Bank Group's loan loss coverage ratio continued to remain one of the highest at 178.1%, compared to the banking industry's coverage ratio of 96.3% notwithstanding that more than 90% of the Group’s impaired loans outstanding are secured. In line with BNM’s Guidelines to maintain a minimum of 1.5% collective assessment, the increase in the Group’s loan loss coverage was a result of setting aside additional collective assessment allowance for strong loan growth while maintaining a stable level of impaired loan. New impaired loans formation for the first nine months of 2011 improved to an annualised 0.33% from 0.51% in 2010. As a result, the Group’s loan impairment allowances improved by 15% during the nine months ended 30 September 2011 compared to the previous corresponding period, despite setting aside 1.5% collective assessment for loan growth.

Expansion of Overseas Operations
For the first nine months of 2011, the Public Bank Group’s overseas operations contributed 6.5% of the Group’s overall pre-tax profit compared to 7.6% contribution in 2010 due to the negative effect of foreign exchange differences. Excluding the impact of the foreign exchange differences, overseas profit grew by 11.8% compared to the corresponding period in 2010, led by improvement in asset quality and operational efficiency. Over the same period, Cambodian Public Bank Plc (“Campu Bank”), a wholly-owned subsidiary of Public Bank reported a strong growth in pre-tax profit of 90% to USD20.6 million compared to USD10.8 million in the last corresponding period.

Capital Position Remains Healthy
Tan Sri Teh emphasised that, “The Public Bank Group’s capital position remains healthy, with its Tier 1 capital ratio and risk-weighted capital ratio standing at 9.5% and 14.9% respectively as at the end of September 2011 compared to 10.0% and 13.7% respectively as at the beginning of the year.” The improvement in the risk-weighted capital ratio of the Group during the current period was due to the issuance of RM3 billion subordinated notes under the existing subordinated Medium Term Note programme in August 2011.

The Public Bank Group will continue to monitor further developments in relation to the Basel III requirements and any additional regulatory capital requirements to be imposed by Bank Negara Malaysia. This will allow the Group to address the potential impact of such requirements by realigning existing capital management strategies from time to time. The Group remains committed to maintaining a healthy level of capital at all times to support the Group’s business growth strategies whilst maximising its shareholder value.

Chairman’s View on Group’s Prospect
Tan Sri Teh remarked that, “Our strategies remain unchanged. The Public Bank Group will continue to focus on its core retail banking and financing business whilst maintaining its prudent credit policies, and further improve on its cost efficiency. The Group expects its strong asset quality to be sustained, and will continue to leverage on the strong PB Brand franchise and its wide and efficient branch network to deliver balance sheet and revenue growth. The Group remains steadfast in its commitment to upholding strong corporate governance and implementation of sound risk management policies to support long-term growth.

With the expectations that global uncertainties and volatility will persist over the medium term, we remain vigilant and focused in balancing growth with sustainable returns. Taking cognisance that economic growth pace will moderate further, we will focus on reinforcing our business performance through prudent and effective balance sheet management to sustain our profitability. On the service delivery front, we will continue to uphold our superior customer service and delivery excellence.

The outlook of the Malaysian banking sector, in which the Group largely operates in, continues to be stable and supportive of growth. We continue to see the Group’s business performance to be in line with expectations and on track in meeting the key business targets for 2011.”

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Y.Bhg. Tan Sri Dato' Sri Dr. Teh Hong Piow
Chairman of Public Bank
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