Public Bank’s 52nd Annual General Meeting Held On 23 April 2018
In conjunction with Public Bank’s 52
nd Annual General Meeting held on 23 April 2018, 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 2017.
Performance Review
Tan Sri Teh said,
“The Public Bank Group achieved yet another profit milestone in 2017 with profit before tax of RM7.12 billion, crossing the RM7 billion mark for the first time. This represents a 8.6% growth as compared to RM6.55 billion in 2016. Net profit attributable to shareholders grew by 5.1% to RM5.47 billion in 2017. As a result, earnings per share increased to 141.7 sen in 2017.”
Tan Sri Teh added,
“The favourable performance of the Public Bank Group in 2017 was attributed to the healthy loans and deposits growth, coupled with the strong asset quality and sustained cost efficiency. As a result, the Group maintained its leading position amongst domestic commercial banking groups in Malaysia with the highest net return on equity of 15.8%, most efficient cost to income ratio of 31.9% and best asset quality with the lowest gross impaired loans ratio of 0.5%.”
Tan Sri Teh further added,
“In view of the Group’s favourable performance in 2017, a second interim dividend of 34 sen was paid on 23 March 2018. Together with the first interim dividend of 27 sen paid in August 2017, the shareholders would have received a total dividend of 61 sen per share for 2017.” The total dividends paid for 2017 was RM2.36 billion, representing a payout of 43.1% of the Group’s net profit for 2017.
Steady Growth in Loans and Customer Deposits
The Public Bank Group’s loans growth was mainly attributed to the lending growth in its retail consumer and commercial banking segment, comprising financing for the purchase of residential properties and extension of credits to small and medium enterprises.
Tan Sri Teh highlighted that,
“The Public Bank Group’s loans and deposits increased by 3.6% and 3.0% respectively in 2017. Domestic loans increased at a faster pace of 4.6%, higher than the domestic industry’s growth rate of 4.1%. Meanwhile, domestic customer deposits expanded by 3.6%.”
Tan Sri Teh further added,
“Public Bank remained the market leader in the financing of residential properties, commercial properties and passenger vehicles with market shares of 19.6%, 35.5% and 28.5% respectively. In terms of deposits, the Group’s strong retail franchise and large domestic depositor base of over six million customers underpin the Group’s customer deposits growth.”
With the steady inflows of customer deposits, the Group remained well funded with a healthy gross loans to fund and equity ratio of 80.7% as at the end of 2017.
Sustained Strong Asset Quality
Tan Sri Teh said,
“The Public Bank Group continues to rank No. 1 in terms of asset quality amongst Malaysian banking groups with the lowest gross impaired loans ratio of 0.5% as at the end of 2017, significantly better than the banking industry’s gross impaired loans ratio of 1.5%.”
As at the end of 2017, the Group's loan loss coverage ratio stood at 95.5% which was higher and more prudent than the banking industry’s loan loss coverage ratio of 82.9%. With the inclusion of regulatory reserves, the loan loss coverage ratio of the Group would be significantly higher at 256.5%.
International Operations
The Public Bank Group’s overseas operations posted a 10.8% growth in pre-tax profit to RM687.8 million in 2017, contributing 9.7% to the Group’s pre-tax profit in 2017. The Group’s overseas operations remained focused in the Hong Kong and Indo-China market, where the Group has established its footprint for more than 20 years.
Since the transformation of Public Bank Vietnam Limited (“PBVN”) from a joint venture bank to a 100% foreign-owned bank in Vietnam in April 2016, the Group has further expanded its business in Vietnam by opening six new branches in 2017. To date, PBVN has 13 branches and is planning to open more branches in 2018.
Higher Contribution from Non-Interest Income
Non-interest income remained a significant source of revenue complementing the Group’s net interest income. In 2017, the Group’s non-interest income increased at a commendable rate of 11.3%. This was mainly contributed by higher income from its unit trust businesses, higher investment income as well as increased contribution from its stock broking and bancassurance business. Tan Sri Teh commented,
“The Group will continue to place emphasis on growing its fee-based revenue through product innovation and cross-selling initiatives.”
Tan Sri Teh said,
“The Group’s unit trust management business undertaken by its wholly-owned subsidiary, Public Mutual Berhad (“Public Mutual”), continued to contribute positively to the non-interest income growth of the Group. Public Mutual reported an impressive pre-tax profit growth of 15.4% to RM660.9 million in 2017 and remained the market leader with an overall retail market share of 40.9% in the private unit trust business. In 2017, Public Mutual’s total assets under management increased by 15.9% to RM81.44 billion with 141 funds under its management as at the end of 2017.”
Healthy Capital 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 standing at 12.2%, 13.0% and 16.0% respectively as at the end of 2017, after deducting second interim dividend.
Tan Sri Teh commented that,
“Public Bank will continue to proactively manage its capital to ensure that the Group’s capital position remains healthy to support the Group’s business growth strategies whilst optimising its shareholders’ return.”
Superior Returns to Shareholders
The Public Bank Group is committed to deliver consistent returns to its shareholders and enhancing the long term value of its shareholders’ investment.
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 RM3.5 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 RM4.8 million, representing a remarkable compounded annual rate of return of 19% for each of the 50 years since 1967.”
Recognition of Banking Excellence
Over the years, Public Bank has won more than 500 awards in recognition of its banking excellence under the astute leadership of its Founder and Chairman, Tan Sri Dato’ Sri Dr. Teh Hong Piow, as well as its strong corporate governance. These awards were conferred by reputable domestic and international publications as well as independent organisations. In 2017 alone, Public Bank garnered a total of 35 awards. Some of the notable awards received include:
- Best Bank in Malaysia 2017 by Global Finance
- Best Bank in Malaysia 2017 by Alpha Southeast Asia
- Best Domestic Bank in Malaysia 2017 by The Asset
- Domestic Retail Bank of the Year in Malaysia 2017 by Asian Banking & Finance
- The Strongest Bank by Balance Sheet in Malaysia 2017 by The Asian Banker
- Best Bank for SMEs Award 2017 by Asiamoney
- 7th Asian Excellence Recognition Awards 2017 for Best Investor Relations Company for Malaysia and Best Environmental Responsibility for Malaysia by Corporate Governance Asia
- The Asset Platinum Award 2017 for Excellence in Environmental, Social and Corporate Governance by The Asset
- The BrandLaureate Best Performing Public Listed Company - Banking Award 2016-2017 by Asia Pacific Brands Foundation
- The BrandLaureate Industry Champion Brand Icon Leadership Award for Banking 2017 by Asia Pacific Brands Foundation
- The Edge Billion Ringgit Club Corporate Awards 2017: Gold Awards for Highest Return on Equity Over Three Years and Highest Growth in Profit After Tax Over Three Years in Finance Sector with RM10 Billion and Above Market Capitalisation by The Edge Billion Ringgit Club
- The Edge Billion Ringgit Club Corporate Awards 2017: Silver Awards for Highest Return on Equity Over Three Years and Highest Growth in Profit After Tax Over Three Years for Super Big Cap Companies Above RM40 Billion Market Capitalisation by The Edge Billion Ringgit Club
Outlook
On the strategic directions and outlook for the Public Bank Group, Tan Sri Teh commented that,
“The Group is confident that its strong fundamentals will enable it to stay resilient and flexible as well as seize opportunities when they arise. Against the backdrop of an increasingly more challenging and complex operating environment, the Group’s key priorities are to accelerate business and digital innovation as well as pursue operational efficiency. The Group’s business model building on its organic growth strategy in the retail banking business, coupled with its prudent credit policies as well as strong risk management practices, will remain the Group’s key strengths to sustain continued business and profitability growth.”