A+ A A-
Search From :
Between :
Public Bank Achieves A 24% Growth In Pre-Tax Profit To RM2.18 Billion In The First Nine Months Of 2007

For Immediate Release

16 October 2007

Public Bank Achieves A 24% Growth In Pre-Tax Profit To RM2.18 Billion In The First Nine Months Of 2007

I am pleased to announce that the Public Bank Group achieved a pre-tax profit of RM2.18 billion for the nine months ended 30 September 2007, a 24% increase compared to the corresponding period in 2006. The Group’s net profit attributable to shareholders rose by RM262 million or 20% to RM1.54 billion over the same period last year.

The improved profit performance of the Public Bank Group was contributed by strong topline growth in net interest income, net income from Islamic Banking operations and other operating income as well as lower loan loss allowances, partially offset by an increase in marketing and promotional expenses. 

The increase in net interest income and net income from Islamic Banking operations by RM288 million or 12% to RM2,723 million was driven by a sustained high rate of growth in both quality loans as well as customer deposits and continued improvement in asset quality. Other operating income increased by 41% to RM1.0 billion, mainly attributable to higher fee income from sales of trust units, higher unit trust fund management fees and commissions from stockbroking activities, as well as higher net gain from the sale of securities. Loan loss allowances decreased by RM51 million mainly due to higher recovery of non-performing loans.

Highlights of the Public Bank Group’s Performance

  • Pre-tax profit for the third quarter of 2007 increased by 6% to RM774 million as compared to the preceding quarter ended 30 June 2007, contributed by strong growth of 8% in operating profit as compared to second quarter of 2007.
  • Annualised net return on equity for the nine-month period ended 30 September 2007 improved further to 24.4% compared to 21.9% in 2006.
  • Earnings per share for the nine-month period ended 30 September 2007 improved to 46.0 sen compared to 38.7 sen in the previous corresponding period.
  • Productivity and efficiency improved further on a quarter-to-quarter basis as reflected by the lower cost to income ratio of 32.2% for third quarter of 2007 as compared to 34.0% in second quarter of 2007.
  • Public Bank Group’s total assets increased by 12% during the nine-month period to stand at RM165.62 billion as at the end of September 2007.
  • Total loans and advances increased to RM96.19 billion as at end of September 2007, representing an annualized growth rate of 19%. This is higher than the annualized growth rate of total loans and advances for the first half of 2007 of 17%.
  • Total customer deposits grew by RM18.86 billion to reach RM130.65 billion as at end of September 2007, representing an annualized growth rate of 22%.
  • Net non-performing loan ratio improved to below 1.4% as at the end of September 2007 compared to banking industry’s rate of 3.6% as at end of August 2007. Loan loss coverage stood at 112% which is the highest and most prudent in the Malaysian banking industry.
  • Risk-weighted capital ratio remains strong at 12.9% as at end of September 2007. This ratio was also well above the statutory minimum requirement of 8.0%.
  • Public Mutual’s total assets under management expanded by 52% from RM16.19 billion at the end of 2006 to reach RM24.54 billion as at end of September 2007. During the nine-month period to September 2007, the total sales of trust units reached a record high of RM8.39 billion, which was over 3 times that of the total sales of RM2.77 billion achieved in the previous corresponding period in 2006 and more than doubled the total sales of trust units in the whole year of 2006 of RM4.10 billion.

Sustained Strong Loan Growth and Increasing Market Share

The Public Bank Group expanded its lending business by 14% or RM11.82 billion in the first nine months of 2007, or an annualized growth rate of 19%. As a result of achieving higher than the industry loan growth rate, the Group’s domestic market share for loans and advances increased further to 13.7% as at end of September 2007 from 13.2% at the beginning of 2007. The Group’s market share of the Malaysian banking industry’s lending business has more than doubled from 6.4% in 2001 to 13.7% currently.

The lending activities of the Public Bank Group remained focused on the financing of small- and medium-sized enterprises (“SMEs”), residential properties and passenger vehicles. As at the end of September 2007, loans to these key sectors accounted for 70% of the Group’s total loan portfolio.

Sustained Strong Asset Quality

Public Bank continues to be ranked the best amongst all banks in Malaysia in terms of asset quality and loan loss coverage.

The Public Bank Group’s total gross non-performing loans (“NPL”) amount decreased by RM62 million or 4% from the beginning of 2007 to RM1.52 billion as at end of September 2007, despite a RM11.82 billion growth in the total loan base. Gross NPL improved to 1.6% as at end of September 2007 as compared to 1.9% as at end of 2006. Net NPL further improved to below 1.4% as compared to 1.6% as at end of 2006. During the nine-month period, the Group’s annualized credit charge-off rate improved to 0.22% as compared to 0.34% in 2006. The level of net new NPL formation had also declined as reflected by improvement in the ratio of the net new NPL to gross loans of 0.34% in the first nine months of 2007 as compared to 0.47% for the corresponding period in 2006.

Apart from the healthy net NPL ratio, the Public Bank Group also maintained a comfortable level of provisioning with a loan loss coverage ratio of 112%, significantly higher than the banking industry’s coverage of 69% as at end of August 2007. The Group’s general allowance of RM1.47 billion was sufficient to cover the entire net NPL amount of RM1.29 billion as at end of September 2007 despite that more than 90% of the NPLs are secured.

Healthy Growth in Customer Deposits

Total customer deposits of the Public Bank Group rose by 17% or RM18.86 billion to stand at RM130.65 billion as at end of September 2007. The Group’s wholesale deposits in the form of negotiable instruments of deposits and money market deposits expanded by 19% to RM38.0 billion during the nine-month period to 30 September 2007. The core customer deposits of the Group continued to register healthy growth, with lower cost savings deposits and current accounts as well as fixed deposits accounts growing by 8%, 17% and 18% respectively in the same period. The strong growth, which was supported by the Group’s established PUBLIC Brand name, high standards of customer service delivery and fast turnaround time at its extensive branch network, resulted in an increase in the Group’s market share of domestic deposits to 14.3% as at end of September 2007 compared to 14.2% as at end of December 2006.  

As a result of the strong deposit growth, the Group’s liquidity continued to improve with loan to deposit ratio standing at 72.3% as at end of September 2007 compared to 74.1% nine months earlier.

Expansion of Overseas Operation

The Public Bank Group’s commercial banking subsidiary in Hong Kong, Public Bank (Hong Kong) Limited, continued to register rapid expansion of its business, with loan and deposit growths of 47% and 38% respectively during the nine-month period to 30 September 2007. The strong loan and deposit growths are backed by major expansion in branch network and active promotion of the PUBLIC Brand in Hong Kong. Public Bank (Hong Kong) has 24 branches currently, an increase of 11 branches from 13 branches when it was acquired by the Public Bank Group on 30 May 2006.

The Public Bank Group’s wholly-owned subsidiary in Cambodia, Cambodian Public Bank Ltd (“CAMPU Bank”), also registered a very strong growth of 68% in its loans and advances in the nine-month period to 30 September 2007, during which CAMPU Bank opened 3 new branches, bringing the total branch network to 8 branches in Cambodia. On 30 August 2007, Public Bank’s insurance subsidiary in Cambodia, CampuBank Lonpac Insurance Plc, commenced operations in Phnom Penh offering the full suite of general insurance products such as fire and motor policies. CampuBank Lonpac, in which Public Bank has a 55% interest, is a joint venture with LPI Capital Bhd.

In the fourth quarter of 2007, the Public Bank Group plans to further expand its branch network overseas with the opening of 5 branches in Hong Kong, 1 branch in Shenzhen in the People’s Republic of China, 2 branches in Cambodia, 2 branches in Laos and 1 branch in Vietnam.

Strong Performance of Public Mutual’s Business

The Public Bank Group’s unit trust and fund management business carried on by its wholly-owned subsidiary, Public Mutual, continued to achieve outstanding results in the first nine months of 2007. Fifteen new unit trusts funds were launched during this period, bringing the total number of funds under management to 49. As at end of September 2007, net assets value (“NAV”) of funds under management stood at RM24.54 billion, of which 77% are equity linked funds. This represented an increase of RM8.35 billion or 52% in NAV of funds under management in the nine-month period to 30 September 2007, and a growth of RM10.20 billion or 71% over the past 12 months since September 2006.

The performance of the unit trust funds of Public Mutual has been strong over the past few years. Over a period of less than two years, Public Mutual has increased its market share of the private unit trust industry to 36.4% as at end of August 2007 from 27.6% at the beginning of 2006 and strengthened further its market leadership position.

Public Mutual increased its sales agency force by more than two-fold from 11,800 agents at the beginning of 2006 to over 24,600 agents currently, backed by the strong Public Bank Group’s branding and Public Mutual’s excellent fund management reputation and award-winning fund performances.

Total unit trust sales registered a record high of RM8.39 billion during the first nine months of 2007 which was more than doubled the total unit trust sales of RM4.10 billion for the full year of 2006. Public Mutual’s unit trust management fees and income on sale of trust units of RM196 million and RM133 million respectively, represented an increase of 57% and 214% respectively as compared to the corresponding period in 2006. 

Capital Position Remains Strong

As at 30 September 2007, the Group’s risk-weighted capital ratio remains strong at 12.9%, after payment of the final and special dividend for 2006 and the interim dividend for 2007. This was significantly above the statutory minimum requirement of 8.0%. The Group’s capital base stood at RM12.27 billion as at end of September 2007 as compared to RM12.03 billion as at the end of 2006.

Group Prospects

The strong economic conditions in Asia will continue to provide a supportive environment for growth in the region’s financial services industry. The Public Bank Group will continue to capitalize on its established PUBLIC Brand name and strong customer service delivery to increase its market share of the retail banking business. The Group will also continue to expand its overseas operations. The Group targets to increase its fee-based activities, particularly in fund management, bancassurance and other wealth management service, by launching new products to meet the diverse investment needs of the Group’s customers. In its pursuit of business expansion, the Group will uphold its strong corporate governance culture and practices to sustain the long-term performance of the Group and to safeguard the interests of all its stakeholders.

The Public Bank Group is not exposed to any sub-prime debt securities and has not been affected by the sub-prime event in the US. Barring unforeseen circumstances, the Group is expected to maintain its earnings momentum and to continue to record satisfactory performance for the rest of 2007.

Tan Sri Dato’ Sri Dr. Teh Hong Piow
Chairman

 
Press-231.gif

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

* * * * * * * *

Public Bank Achieves Record Pre-Tax Profit Of RM1.41 Billion In First Half Of 2007

For Immediate Release

17 July 2007

Public Bank Achieves Record Pre-Tax Profit Of RM1.41 Billion In First Half Of 2007

I am pleased to announce that the Public Bank Group achieved a 21% increase in pre-tax profit to RM1.41 billion for the first half of 2007. The Group’s net profit attributable to shareholders rose to RM1.0 billion, an increase of 18% over the same period last year. This is a significant milestone for the Public Bank Group as its net profit for the half year crossed the RM1 billion profit mark for the first time. Only three and half years ago, the Group’s net profit for the full year of 2003 stood at RM989 million. Meanwhile the Group’s operating revenue rose 33% to RM4.6 billion.

The strong profit performance of the Public Bank Group was attributable to sustained growth in net interest income, net income from Islamic Banking operations and other operating income as well as lower loan loss allowances, partially offset by an increase in other operating and promotional expenses. 

Net interest income and net income from Islamic Banking operations increased by 12% to RM1,771 million, on the back of the continued healthy expansion in both the Public Bank Group’s lending and deposit-taking businesses, as well as its strong asset quality. Other operating income expanded by RM175 million or 38% to RM639 million, mainly contributed by the strong performance of the Group’s unit trust management business through its wholly-owned subsidiary, Public Mutual, higher brokerage and commissions from stock-broking activities as well as higher net gain from the sale of securities. Loan loss allowances decreased by RM33 million mainly due to recovery of non-performing loans.

The Board of Directors is pleased to declare an interim dividend of 25% less 27% taxation, which will result in a payout totalling RM612 million. The Public Bank Group’s risk-weighted capital adequacy ratio remains strong at 13.7% after the payment of the interim dividend.

Highlights of the Public Bank Group’s Performance

  • On a quarter-on-quarter basis, net profit attributable to shareholders for the second quarter of 2007 increased by 10% to RM524 million as compared to the first quarter of 2007.

  • Annualised net return on equity for the first six months of 2007 was higher at 24.2% as compared to 21.9% in 2006.

  • Earnings per share increased by 16% to 29.8 sen compared to 25.6 sen for the previous corresponding six months period.

  • Total assets expanded by RM14.12 billion or 10% in the first half of 2007 to stand at RM161.91 billion as at the end of June 2007.

  • Total loans and advances grew by 8.5% in the first half of 2007, more than 2.5 times that of the loan growth recorded by the banking industry.

  • Net non-performing loan ratio improved to 1.5% as at the end of June 2007, with loan loss coverage standing at 105% which is the highest and most prudent in the Malaysian banking industry.

  • The Group’s wholly-owned unit trust management subsidiary, Public Mutual, increased its total unit trust funds under management by 36% to RM22.07 billion in the first six months of 2007, and commanded an improved market share of 36.1% as at the end of May 2007. Public Mutual’s total sales of trust units for the first six months of 2007 reached RM5.35 billion, which was about 3 times that of the sales of RM1.77 billion achieved in the previous corresponding period in 2006.

Continued Strong Loan Growth

In the first half of 2007, the Public Bank Group’s loans and advances grew by RM7.2 billion or 8.5% to reach RM91.6 billion as at the end of June 2007. As a result, the Group’s domestic market share for loans and advances rose to 13.8% as at the end of June 2007 from 13.2% six months earlier.

The Public Bank Group’s lending activities continued to be focused on the retail sector, in particular loans to small- and medium-sized enterprises (“SMEs”) and loans for the financing of residential properties and purchase of passenger vehicles. Together, these sectors accounted for 70% of the total loan portfolio of the Group as at the end of June 2007.

The Public Bank Group’s commercial banking subsidiary in Hong Kong, Public Bank (Hong Kong) Limited, registered a strong growth of 24% in its loans and advances in the first six months of 2007. Public Bank (Hong Kong) Limited opened 6 new branches in Hong Kong and 1 new branch in Shenzhen in the People’s Republic of China in the first half of 2007, bringing its network in Hong Kong and Greater China to 23 branches.

The Public Bank Group’s wholly-owned subsidiary in Cambodia, Cambodian Public Bank Ltd, had also expanded its branch network to a total of 7 branches and achieved a strong loan growth rate of 34% in the first six months of 2007.

The Public Bank Group plans to further expand its branch network overseas in the next six months, with the opening of 4 branches in Hong Kong, 3 branches in Cambodia and 2 branches in Laos.

Sustained Strong Asset Quality

Public Bank continues to be ranked the best amongst all banks in Malaysia in terms of asset quality and loan loss coverage.

The Public Bank Group’s gross non-performing loans (“NPL”) ratio improved to 1.7% as at the end of June 2007 compared to 1.9% as at the end of 2006 and its net NPL ratio improved from 1.6% to 1.5%. This is less than one third of the banking industry’s net NPL ratio of 4.3% in May 2007. The level of net new NPL formation had declined, as reflected by the ratio of net new NPL to gross loans of 0.27% in the current period compared to 0.44% for the preceding six months period. The total gross non-performing loan amount has declined to RM1.56 billion as compared to RM1.58 billion as at end of 2006 despite a RM7.2 billion growth in the loan base.

As at end of June 2007, the Group’s loan loss coverage ratio stood at 105%, significantly above the 65% coverage for the banking industry as at end of May 2007. The Group’s general allowance of RM1.41 billion was sufficient to cover the entire net non-performing loan amount of RM1.34 billion as at end of June 2007 despite that more than 90% of the NPLs are secured.

Healthy Growth in Customer Deposits

Total customer deposits of the Public Bank Group increased by RM11.4 billion or 10% to RM123.2 billion as at end of June 2007. Besides the strong growth of 10% in the wholesale deposit market in the first half of 2007, the core customer deposits of the Group continued to register healthy growth, with lower cost savings deposits and current accounts as well as fixed deposit accounts growing by 7%, 8% and 12% respectively in the same six months period. The strong deposits growth boosted the Group’s market share of domestic deposits to 14.3% as at end of June 2007 compared to 14.2% as at end of December 2006.

As the rate of growth of customer deposits had kept in pace with the growth in the Public Bank Group’s lending business, the Group maintained its strong liquidity position with its loan to deposit ratio standing at 73% as at the end of June 2007.

Strong Performance of Fund Management Business

The Public Bank Group’s unit trust and fund management business under its wholly-owned subsidiary, Public Mutual, continued to deliver outstanding results in the first half of 2007. Eleven new funds were launched during this period, bringing the total number of funds under management to 45. As at the end of June 2007, total net assets under management totalled RM22.07 billion, of which 77% were equity funds. This represented an increase of RM5.88 billion or 36% from net assets under management of RM16.19 billion at the end of December 2006, and a growth of RM8.69 billion or 65% over the past 12 months since the end of June 2006. Over a period of two and a half years, the net assets under management of Public Mutual had grown by 123% leading to an increased market share of 36.1% as at the end of May 2007 as compared to 26.3% as at the end of December 2004.

Public Mutual expanded its sales agency force by 22% in the first six months of 2007 to over 20,200 agents as at the end of June 2007.

Total unit trust sales surged to a record RM5.35 billion in the first six months of 2007 which surpassed the total sales of RM4.10 billion for the full year of 2006, and was about 10 times that of the sales of unit trust achieved 5 years ago in 2002. Public Mutual posted unit trust management fees and income on sale of trust units of RM120 million and RM86 million respectively, an increase of 50% and 271% respectively compared to the corresponding period in 2006.

Capital Position Remains Strong

The Public Bank Group’s risk-weighted capital ratio remains strong at 13.7% as at the end of June 2007, after the proposed interim dividend for 2007. This was above the industry’s risk-weighted capital ratio of 13.1% and the statutory minimum requirement of 8.0%.

Group Prospects

The Asian region continues to enjoy strong economic growth. Public Bank will maximize the growth opportunities presented by the favourable business environment in Malaysia as well as in Hong Kong and Indo-China to increase its market share of the retail banking business. The Group will also continue to expand its fee-based activities, particularly in fund management, bancassurance and other wealth management services. In its pursuit of business expansion, the Public Bank Group remains committed to its tradition of prudence and its belief in strong corporate governance to ensure a sustainable rate of growth for the Group.

Barring unforeseen circumstances, the Public Bank Group is expected to continue to record satisfactory performance in the second half of 2007.

Tan Sri Dato’ Sri Dr. Teh Hong Piow
Chairman

 
press-215.gif

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

* * * * * * * *

Public Bank Achieves 24% Increase In Profit For The First Quarter Of 2007

For Immediate Release

16 April 2007

Public Bank Achieves 24% Increase In Profit For The First Quarter Of 2007

I am pleased to announce that the Public Bank Group achieved a 24% growth in pre-tax profit for the first quarter of 2007 to reach RM675 million as compared to the corresponding quarter in 2006. The Group’s net profit attributable to shareholders rose to RM476 million, an increase of 23% over the same period last year.

The improved profit was attributable to the growth in net interest income, net income from Islamic Banking operations and other operating income as well as lower loan loss allowances, partially offset by an increase in other operating expenses. 

The Public Bank Group’s revenue rose by 31% to RM2.21 billion in the first quarter of 2007 as compared to the same period last year. Net interest income and net income from Islamic Banking operations expanded by 14% to RM868 million for the current quarter, on the back of the continued healthy expansion in both the Group’s lending and deposit-taking businesses, as well as its strong asset quality. Other operating income expanded by 53% to RM353 million, mainly contributed by higher income on sales of trust units, higher unit trust fund management fees, increase in brokerage and commissions from stockbroking activities as well as higher foreign exchange income. Loan loss allowances decreased by RM5.4 million despite higher general allowance of RM12.6 million arising from the healthy rate of loan growth in the first quarter of 2007.

The Public Bank Group’s overseas operations recorded a growth in pre-tax profit of 22% to RM85 million in the first quarter of 2007, arising from contribution by Public Bank (Hong Kong) Limited which was acquired in May 2006 as well as high loan growth, particularly in Hong Kong and Indo-China.

Highlights of the Public Bank Group’s Performance

  • Net profit attributable to shareholders increased by 7% as compared to the preceding quarter ended 31 December 2006 despite the first quarter of 2007 having 2 less calendar days as compared to the preceding quarter.
  • Annualised net return on equity improved further to 22.9% from 21.9% in 2006.
  • Earnings per share increased by 20% to 14.2 sen in the first quarter of 2007 as compared to 11.8 sen in the corresponding quarter of 2006.
  • Total assets expanded by RM9.52 billion or 6% to stand at RM157.31 billion as at the end of March 2007.
  • Total loans and advances grew by 4.4% to reach RM88.10 billion as at the end of March 2007.
  • Net non-performing loan ratio remained below 1.6% as at the end of March 2007, with loan loss coverage standing at 102% which is the highest and most prudent in the Malaysian banking industry.
  • Public Mutual’s total assets under management increased by 14% to reach RM18.46 billion as at 31 March 2007, while total sales of trust units reached a record high of RM2.22 billion in the first quarter of 2007.

Continued Strong Loan Growth

The Public Bank Group’s loans and advances increased by RM3.73 billion or 4.4% in the first quarter of 2007 to stand at RM88.10 billion at the end of March 2007, increasing its market share to 13.6% as compared to 13.2% at the end of 2006.

The Public Bank Group’s lending activities continued to be focused on the retail sector, with consumer loans for the financing of residential properties and transport vehicles as well as commercial lending to small- and medium-sized enterprises (“SMEs”) accounting for 70% of the Group’s total loan portfolio as at the end of March 2007.

Public Bank (Hong Kong) Limited, the Public Bank Group’s commercial banking subsidiary in Hong Kong registered a strong 13% growth in its loans and advances in the first quarter of 2007. Public Bank (Hong Kong) Limited continued to add to its branch network by opening a further 2 branches in Hong Kong, bringing its network in Hong Kong and Greater China to 19 branches.

Sustained Strong Asset Quality

The Public Bank Group’s gross non-performing loans (“NPL”) ratio improved further to 1.8% as at the end of March 2007 as compared to 1.9% as at the end of 2006, whilst its net NPL ratio remained below 1.6% and was less than one-third of the banking industry’s net NPL ratio of 4.7% as at the end of February 2007. The level of net new NPL formation had declined, as reflected by the ratio of net new NPL to gross loans of 0.15% in the current quarter as compared to 0.25% in the preceding quarter ended 31 December 2006.

The Public Bank Group also maintained a high level of provisioning with its loan loss coverage ratio standing at 102% as at the end of March 2007. The Group’s high loan loss coverage ratio was significantly above the 60% coverage for the banking industry at the end of February 2007. At the end of March 2007, the Group’s general allowance was sufficient to cover the Group’s net NPLs despite that more than 90% of the NPLs are secured.

The consistently strong asset quality of the Public Bank Group is a reflection of its prudent lending practices and proactive credit risk management. Public Bank continues to be ranked the best amongst all banks in Malaysia in terms of asset quality as well as loan loss coverage.

Healthy Growth in Customer Deposits

The Public Bank Group’s customer deposits increased by 4.3% to stand at RM116.60 billion as at the end of March 2007, which was mainly supported by the growth in its core customer deposits funding base. Both demand and savings deposits expanded by 5.4% while fixed deposits grew by 5.1% in the first three months of 2007. The Group’s wholesale deposits, in the form of negotiable instruments of deposits, also expanded by RM664 million in the same period.

With the healthy growth in customer deposits, the Public Bank Group’s liquidity remained high with loan to deposit ratio standing at 74.2% as at the end of March 2007.

Fund Management

The Public Bank Group’s unit trust and fund management business continued to record strong performance in the first quarter of 2007. The five new funds launched during the first quarter achieved sales of RM1.28 billion. Total unit trust sales increased by 181% to a record RM2.22 billion for the first three months of 2007 as compared to RM0.79 billion for the corresponding quarter of 2006. Public Mutual posted income on sale of trust units and unit trust management fees of RM105 million and RM55 million respectively, an increase of 190% and 42% compared to the corresponding period in 2006. Total net asset value of unit trusts under management grew significantly to stand at RM18.46 billion as at the end of March 2007, reflecting a 14% growth during the first quarter from RM16.19 billion as at the end of December 2006 and a 43% growth for the past 12 months from RM12.88 billion as at the end of March 2006.

The significant increase in sales volume of the unit trust business had resulted in a corresponding increase in other operating expenses due to unit trust sales commission incurred. Consequently, the Public Bank Group’s cost to income ratio increased to 36.9% in the first quarter of 2007 as compared to 34.8% in 2006. The Group’s cost to income ratio of 36.9% was lower than the industry’s cost to income ratio of 44.0%.

Capital Position Remains Strong

The Public Bank Group’s capital base stood at RM12.09 billion as at the end of March 2007 and its risk-weighted capital ratio remained strong at 13.9%, after the payment of final and special dividend for 2006. This was above the industry ratio of 13.4% as well as the statutory minimum requirement of 8%.

Group Prospects

The banking industry is expected to remain sound in 2007 on the back of healthy and stable growth of the Malaysian economy. However, the operating environment will be very challenging due to the progressive liberalisation of the industry and the high level of liquidity in the banking system.

To sustain its profitability growth in this challenging environment, the Public Bank Group will strive to further increase its domestic market share in consumer financing and retail commercial lending to SMEs as well as its deposit-taking business by leveraging on its wide branch network, strong PB Brand and superior service quality, and continue to expand its overseas operations. The Group will also expand its fee-based activities, particularly in fund management, bancassurance and other wealth management products. In pursuit of its growth strategy and to enhance stakeholder value, the Public Bank Group will continue to be innovative, alert and vigilant; and will remain prudent, maintain strong corporate governance and implement sound risk management policies. Barring unforeseen circumstances, the Public Bank Group is expected to continue to record satisfactory performance for the rest of 2007.

Tan Sri Dato’ Sri Dr. Teh Hong Piow
Chairman

 
1st-quarter-2007-thp-pix.gif

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

* * * * * * * *

Public Bank Posts Record Profit Of RM2.42 Billion And Pays Total Dividend Of 60 Sen For 2006

For Immediate Release

22 January 2007

Public Bank Posts Record Profit Of RM2.42 Billion And Pays Total Dividend Of 60 Sen For 2006

I am pleased to announce that the Public Bank Group posted another year of record profits in 2006 with pre-tax profit increasing by 17% to reach RM2.42 billion. The Group’s net profit attributable to shareholders rose by RM268 million or 18% to RM1.73 billion whilst net return on equity was higher at 21.9% compared to 19.1% in 2005.

The higher profit was contributed by growth in net interest income and net income from Islamic Banking operations as well as higher other operating income, partially offset by an increase in other operating expenses and higher loan loss allowances.

The Group’s revenue grew by 34% to RM7.84 billion in 2006. Net interest income and net income from Islamic Banking operations expanded by 16% to RM3.30 billion in 2006, driven by the continued strong growth in both the lending and deposit-taking businesses, as well as the strong asset quality, of the Group. Other operating income grew by 21% or RM189 million, mainly from higher gains on sales of trust units due to the launch of eight new trust funds in 2006, increase in unit trust fund management fees from higher net asset value of unit trust funds under management, higher foreign exchange income as well as higher fees and transaction income from retail banking operations.

The increase in loan loss allowances by RM84 million included an increase in general allowances of RM44 million set aside due to higher loan growth achieved and RM14 million additional specific allowances made due to the adoption of a more stringent provisioning policy on non-performing loans which are less than 6 months in arrears.

In view of the Public Bank Group’s strong performance, the Board of Directors is proposing a final dividend of 30 sen and a special dividend of 10 sen, totaling 40 sen less 27% taxation. Together with the interim dividend of 20 sen less 28% taxation, which was paid in October 2006, the dividend paid and payable for 2006 amounts to 60 sen per Public Bank share or RM1.45 billion in total. The Group’s and the Bank’s risk-weighted capital ratio remain strong, at 14.6% and 14.0% respectively, after the payment of the proposed final and special dividends.


Highlights of the Public Bank Group’s Performance in 2006

  • Earnings per share jumped by 17% to 52.1 sen from 44.5 sen in 2005.

  • Productivity and efficiency improved further as reflected by the lower cost to income ratio of 34.8% compared to 35.5% in 2005 and the improved cost to average assets ratio of 1.2% compared to 1.3% in 2005.

  • Total assets expanded by 32% in 2006 to stand at RM147.8 billion, which was more than three times that of the Group’s asset size of RM45.3 billion at the end of 2000.

  • Public Bank Group achieved an organic loan growth rate of 17.5% in 2006, excluding the effects of the acquisition of Public Bank (Hong Kong) Limited (formerly known as Asia Commercial Bank Limited) (“PB(HK)”). This led to an expanded loan market share of 13.2% as compared to 12.0% at the end of 2005.

  • Net non-performing loan ratio improved to 1.6% as at the end of December 2006 as compared to 1.7% at the end of 2005, with loan loss coverage standing at almost 100% which is the highest and most prudent in the region.

  • Total customer deposits grew by 33% to stand at RM111.8 billion as at the end of 2006.

Enhancement of Capital Efficiency

Public Bank issued USD200 million Innovative Tier-I Hybrid Capital in the international capital market in August 2006 and RM1.2 billion Innovative Tier-I Hybrid Capital in the Malaysian bond market in December 2006.

The two issues of Innovative Tier-I Hybrid Capital Securities in 2006, together with the gearing up of the Group’s core capital with Tier 2 subordinated debt and the share buy backs carried out by Public Bank in 2004 and 2005 have resulted in a more efficient capital structure, significantly lower weighted cost of capital and improved return on equity. The net return on equity of the Public Bank Group has risen from 12.1% in 2002 to 21.9% in 2006.

The Public Bank Group’s capital base stood at RM13.0 billion at the end of 2006 as compared to RM11.8 billion at the end of 2005. The Group’s risk-weighted capital ratio of 14.6% as at 31 December 2006, after taking into account of the proposed final and special dividend for 2006, was well above the statutory minimum requirement of 8%.

Improved Shareholder Value and High Dividend Payments

The Public Bank Group’s strong profit performance is reflected in Public Bank’s share price. Public Bank (Local) share price and Public Bank (Foreign) share price rose from RM6.55 and RM6.40 respectively at the start of 2006 to RM7.75 and RM7.85 respectively at the end of 2006. Public Bank’s market capitalisation has increased by 21% from RM22.23 billion to RM26.94 billion during the same period. Public Bank maintained its position as the largest non-government-linked company in Malaysia by market capitalisation.

The Public Bank Group continued to pursue a high dividend payout policy as an integral part of the Group’s initiatives to improve its capital efficiency. Its dividend payout ratio for 2006 remained high at 84%.

Strong Growth in Retail Loans

The Public Bank Group’s loans and advances increased by RM16.3 billion or 24% to stand at RM84.4 billion at the end of 2006, including RM4.3 billion arising from the acquisition of PB(HK). The Group’s lending activities continued to be focused on the retail sector, with consumer loans for the financing of residential properties and transport vehicles as well as commercial lending to SMEs accounting for 71% of the Group’s total loan portfolio at the end of 2006.

The strong loan growth has led to loans for residential properties growing by 28% to RM23.0 billion at the end of 2006. Meanwhile, loans for the purchase of transport vehicles increased by 18% to RM23.3 billion and loans to SMEs expanded by 17% to RM17.7 billion at the end of 2006.

Further Improvement in Asset Quality

The Public Bank Group has sustained its strong asset quality even as the Group achieved strong lending growth averaging 20% per year over the last 6 years. The Group’s gross non-performing loans (“NPL”) and net NPL ratios stood at 1.9% and 1.6% respectively at the end of 2006 compared to 2.1% and 1.7% respectively at the end of 2005. The Group’s net NPL ratio of 1.6% is less than one-third of the banking industry’s net NPL ratio of 4.9% as at the end of November 2006.

The Public Bank Group also maintained a high level of provisioning with its ratio of general allowance to net loans of 1.6% and its loan loss coverage ratio of 100% as at the end of 2006 as compared to 58% coverage for the banking industry at the end of November 2006. At the end of 2006, the Group’s general allowance was almost sufficient to cover the Group’s NPLs despite that more than 90% of the NPLs are secured.

Public Bank continues to be ranked the best amongst all banks in Malaysia in terms of asset quality as well as loan loss coverage.

Accelerated Growth in Customer Deposits

The Public Bank Group continued to expand its core deposit funding as well as its wholesale deposit-taking business in the issuance of negotiable instruments of deposits. The Group’s customer deposits increased by 33% to stand at RM111.8 billion at the end of 2006.

Excluding the deposits arising from the acquisition of PB(HK), the Group’s customer deposits grew by RM21.4 billion or 25%, which was about two times that of the growth recorded by the banking industry. The growth was contributed significantly by the increase in the issue of negotiable instruments of deposits of RM12.8 billion or 69%. Demand deposits, fixed deposits and savings deposits grew by 15%, 13% and 10% respectively.

With the strong growth in customer deposits, the Group’s market share of customer deposits increased to 13.4% at the end of 2006 from 12.0% at the end of 2005. The Group’s liquidity has also improved with loans to deposits ratio standing at 74.1% as at the end of 2006 as compared to 79.4% as at the end of 2005.

Indo China and PB(HK) Operations

The Group’s operations in Indo China performed well, registering loan growth of 89% whilst pre-tax profit increased by 50% in 2006. Cambodian Public Bank Limited, Public Bank’s wholly-owned subsidiary in Cambodia, was the main contributor to the strong performance.

The pre-tax profit of PB(HK), which was acquired in May 2006, improved by 71% in 2006, supported by its annualised loan growth of 17% since the date of acquisition.

Group Prospects

The Malaysian economy is expected to remain resilient in 2007, boosted by economic activities with the rollout of the 9th Malaysia Plan. While the positive economic conditions will provide a supportive environment for the banking industry, the intense competition in the banking sector coupled with the liberalisation of the industry and the addition of the three newly established Islamic banks, will continue to put more pressure on interest margins.

To sustain its profitability growth in this challenging environment, the Public Bank Group will continue to pursue its strategy of high organic loan and deposit growth, improved cost efficiency and maintaining strong asset quality. Barring unforeseen circumstances, the Public Bank Group is expected to continue to record satisfactory performance in 2007.

Tan Sri Dato’ Sri Dr. Teh Hong Piow
Chairman

 
* * * * * * * *
tan-sri-press-127.gif

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

* * * * * * * *

Public Bank Posts Record Profit Of RM2.42 Billion And Pays Total Dividend Of 60 Sen For 2006

For Immediate Release

22 January 2007

Public Bank Posts Record Profit Of RM2.42 Billion And Pays Total Dividend Of 60 Sen For 2006

I am pleased to announce that the Public Bank Group posted another year of record profits in 2006 with pre-tax profit increasing by 17% to reach RM2.42 billion. The Group’s net profit attributable to shareholders rose by RM268 million or 18% to RM1.73 billion whilst net return on equity was higher at 21.9% compared to 19.1% in 2005.

The higher profit was contributed by growth in net interest income and net income from Islamic Banking operations as well as higher other operating income, partially offset by an increase in other operating expenses and higher loan loss allowances.

The Group’s revenue grew by 34% to RM7.84 billion in 2006. Net interest income and net income from Islamic Banking operations expanded by 16% to RM3.30 billion in 2006, driven by the continued strong growth in both the lending and deposit-taking businesses, as well as the strong asset quality, of the Group. Other operating income grew by 21% or RM189 million, mainly from higher gains on sales of trust units due to the launch of eight new trust funds in 2006, increase in unit trust fund management fees from higher net asset value of unit trust funds under management, higher foreign exchange income as well as higher fees and transaction income from retail banking operations.

The increase in loan loss allowances by RM84 million included an increase in general allowances of RM44 million set aside due to higher loan growth achieved and RM14 million additional specific allowances made due to the adoption of a more stringent provisioning policy on non-performing loans which are less than 6 months in arrears.

In view of the Public Bank Group’s strong performance, the Board of Directors is proposing a final dividend of 30 sen and a special dividend of 10 sen, totaling 40 sen less 27% taxation. Together with the interim dividend of 20 sen less 28% taxation, which was paid in October 2006, the dividend paid and payable for 2006 amounts to 60 sen per Public Bank share or RM1.45 billion in total. The Group’s and the Bank’s risk-weighted capital ratio remain strong, at 14.6% and 14.0% respectively, after the payment of the proposed final and special dividends.


Highlights of the Public Bank Group’s Performance in 2006

  • Earnings per share jumped by 17% to 52.1 sen from 44.5 sen in 2005.

  • Productivity and efficiency improved further as reflected by the lower cost to income ratio of 34.8% compared to 35.5% in 2005 and the improved cost to average assets ratio of 1.2% compared to 1.3% in 2005.

  • Total assets expanded by 32% in 2006 to stand at RM147.8 billion, which was more than three times that of the Group’s asset size of RM45.3 billion at the end of 2000.

  • Public Bank Group achieved an organic loan growth rate of 17.5% in 2006, excluding the effects of the acquisition of Public Bank (Hong Kong) Limited (formerly known as Asia Commercial Bank Limited) (“PB(HK)”). This led to an expanded loan market share of 13.2% as compared to 12.0% at the end of 2005.

  • Net non-performing loan ratio improved to 1.6% as at the end of December 2006 as compared to 1.7% at the end of 2005, with loan loss coverage standing at almost 100% which is the highest and most prudent in the region.

  • Total customer deposits grew by 33% to stand at RM111.8 billion as at the end of 2006.


Enhancement of Capital Efficiency

Public Bank issued USD200 million Innovative Tier-I Hybrid Capital in the international capital market in August 2006 and RM1.2 billion Innovative Tier-I Hybrid Capital in the Malaysian bond market in December 2006.

The two issues of Innovative Tier-I Hybrid Capital Securities in 2006, together with the gearing up of the Group’s core capital with Tier 2 subordinated debt and the share buy backs carried out by Public Bank in 2004 and 2005 have resulted in a more efficient capital structure, significantly lower weighted cost of capital and improved return on equity. The net return on equity of the Public Bank Group has risen from 12.1% in 2002 to 21.9% in 2006.

The Public Bank Group’s capital base stood at RM13.0 billion at the end of 2006 as compared to RM11.8 billion at the end of 2005. The Group’s risk-weighted capital ratio of 14.6% as at 31 December 2006, after taking into account of the proposed final and special dividend for 2006, was well above the statutory minimum requirement of 8%.

Improved Shareholder Value and High Dividend Payments

The Public Bank Group’s strong profit performance is reflected in Public Bank’s share price. Public Bank (Local) share price and Public Bank (Foreign) share price rose from RM6.55 and RM6.40 respectively at the start of 2006 to RM7.75 and RM7.85 respectively at the end of 2006. Public Bank’s market capitalisation has increased by 21% from RM22.23 billion to RM26.94 billion during the same period. Public Bank maintained its position as the largest non-government-linked company in Malaysia by market capitalisation.

The Public Bank Group continued to pursue a high dividend payout policy as an integral part of the Group’s initiatives to improve its capital efficiency. Its dividend payout ratio for 2006 remained high at 84%.

Strong Growth in Retail Loans

The Public Bank Group’s loans and advances increased by RM16.3 billion or 24% to stand at RM84.4 billion at the end of 2006, including RM4.3 billion arising from the acquisition of PB(HK). The Group’s lending activities continued to be focused on the retail sector, with consumer loans for the financing of residential properties and transport vehicles as well as commercial lending to SMEs accounting for 71% of the Group’s total loan portfolio at the end of 2006.

The strong loan growth has led to loans for residential properties growing by 28% to RM23.0 billion at the end of 2006. Meanwhile, loans for the purchase of transport vehicles increased by 18% to RM23.3 billion and loans to SMEs expanded by 17% to RM17.7 billion at the end of 2006.

Further Improvement in Asset Quality

The Public Bank Group has sustained its strong asset quality even as the Group achieved strong lending growth averaging 20% per year over the last 6 years. The Group’s gross non-performing loans (“NPL”) and net NPL ratios stood at 1.9% and 1.6% respectively at the end of 2006 compared to 2.1% and 1.7% respectively at the end of 2005. The Group’s net NPL ratio of 1.6% is less than one-third of the banking industry’s net NPL ratio of 4.9% as at the end of November 2006.

The Public Bank Group also maintained a high level of provisioning with its ratio of general allowance to net loans of 1.6% and its loan loss coverage ratio of 100% as at the end of 2006 as compared to 58% coverage for the banking industry at the end of November 2006. At the end of 2006, the Group’s general allowance was almost sufficient to cover the Group’s NPLs despite that more than 90% of the NPLs are secured.

Public Bank continues to be ranked the best amongst all banks in Malaysia in terms of asset quality as well as loan loss coverage.

Accelerated Growth in Customer Deposits

The Public Bank Group continued to expand its core deposit funding as well as its wholesale deposit-taking business in the issuance of negotiable instruments of deposits. The Group’s customer deposits increased by 33% to stand at RM111.8 billion at the end of 2006.

Excluding the deposits arising from the acquisition of PB(HK), the Group’s customer deposits grew by RM21.4 billion or 25%, which was about two times that of the growth recorded by the banking industry. The growth was contributed significantly by the increase in the issue of negotiable instruments of deposits of RM12.8 billion or 69%. Demand deposits, fixed deposits and savings deposits grew by 15%, 13% and 10% respectively.

With the strong growth in customer deposits, the Group’s market share of customer deposits increased to 13.4% at the end of 2006 from 12.0% at the end of 2005. The Group’s liquidity has also improved with loans to deposits ratio standing at 74.1% as at the end of 2006 as compared to 79.4% as at the end of 2005.

Indo China and PB(HK) Operations

The Group’s operations in Indo China performed well, registering loan growth of 89% whilst pre-tax profit increased by 50% in 2006. Cambodian Public Bank Limited, Public Bank’s wholly-owned subsidiary in Cambodia, was the main contributor to the strong performance.

The pre-tax profit of PB(HK), which was acquired in May 2006, improved by 71% in 2006, supported by its annualised loan growth of 17% since the date of acquisition.

Group Prospects

The Malaysian economy is expected to remain resilient in 2007, boosted by economic activities with the rollout of the 9th Malaysia Plan. While the positive economic conditions will provide a supportive environment for the banking industry, the intense competition in the banking sector coupled with the liberalisation of the industry and the addition of the three newly established Islamic banks, will continue to put more pressure on interest margins.

To sustain its profitability growth in this challenging environment, the Public Bank Group will continue to pursue its strategy of high organic loan and deposit growth, improved cost efficiency and maintaining strong asset quality. Barring unforeseen circumstances, the Public Bank Group is expected to continue to record satisfactory performance in 2007.


Tan Sri Dato’ Sri Dr. Teh Hong Piow
Chairman

* * * * * * * *

Y.Bhg. Tan Sri Dato' Sri Dr. Teh Hong Piow
Chairman, Public Bank
* * * * * * * *
Public Bank Achieves 20% Net Profit Growth For The Nine Months Of 2006

For Immediate Release

17 October 2006

Public Bank Achieves 20% Net Profit Growth For The Nine Months Of 2006

I am pleased to announce that the Public Bank Group achieved a pre-tax profit of RM1.75 billion for the nine months ended 30 September 2006, an increase of 17% compared to the corresponding period in 2005. The Group’s net profit attributable to shareholders rose by RM213 million or 20% to RM1.27 billion over the same period last year.

The higher profit was mainly attributable to the increase in net interest income and net income from Islamic Banking operations as well as higher other operating income, partially offset by the increase in other operating expenses and higher loan loss allowances. 

The Group’s net interest income and net financing income from Islamic Banking operations grew by RM333 million or 16% compared to the previous corresponding period, on the back of continued strong loan and deposit growth, coupled with a further improvement in asset quality. Other operating income increased by RM122 million or 18%, mainly contributed by higher gains on sales of trust units due to launch of new trust funds, increase in management fees from higher net asset value of unit trust funds under management and higher fees and transaction income from retail banking operations.

The higher loan loss allowances during the period by RM65 million as compared to the previous corresponding period was mainly due to higher general allowance on loans as a result of higher loan growth achieved. In addition, the Group adopted more stringent provisioning for its non-performing loans in the quarter ended 30 September 2006 by making a 20% specific allowance on non-performing loans which are 3 to less than 6 months-in-arrears. Previously, specific allowance was only made when a non-performing loan was in arrears for 6 months and above. This had resulted in an additional specific allowance of RM12 million being recognised in the third quarter.

Financial Highlights of the Public Bank Group

  • Earnings per share improved by 19% to 38.4 sen for the nine months ended 30 September 2006 from 32.3 sen in the previous corresponding period.
  • Annualised net return on equity was higher at 21.1% compared to 19.2% in 2005.
  • Net income for the nine months period ended 30 September 2006 increased by RM456 million or 16% while other operating expenses increased only by RM132 million or 13% compared to the same period in 2005 as a result of continued improvement in efficiency and productivity. This is reflected by the improved cost to income ratio of 35.7% compared to 36.8% in 2005.
  • Public Bank Group’s total assets expanded by 26% to stand at RM140.9 billion as at the end of September 2006.
  • Public Bank Group’s total loans increased by RM13.5 billion or 20% to reach RM81.6 billion as at the end of September 2006. Excluding the loans arising from the acquisition of Public Bank (Hong Kong) Limited (formerly known as Asia Commercial Bank Limited) (“PB(HK)”) of RM4.3 billion, the Group achieved an annualised loan growth of 18%, which was about 2.5 times that of the loan growth rate recorded by the banking industry.
  • Net non-performing loan ratio improved to below 1.6% in September 2006 as compared to 1.7% in December 2005, and was significantly lower than the banking industry’s ratio of 5.3% as at the end of August 2006.

Continued Strong Growth in Retail Loans

The Public Bank Group’s domestic loans and advances increased by RM8.9 billion or at an annualised growth rate of 18% to stand at RM74.9 billion at the end of September 2006, increasing its market share to 12.9% compared to 12.0% at the end of 2005. The Group’s lending activities continued to be focused on the retail sector, with consumer loans for the financing of residential properties and transport vehicles as well as commercial lending to SMEs accounting for 71% of the Group’s total loan portfolio as at the end of September 2006.

The strong domestic loans growth rate coupled with the loans growth from foreign operations following the acquisition of PB(HK) in May 2006 has led to loans for residential properties growing by 24% to RM22.2 billion as at end of September 2006. Meanwhile, loans for the purchase of transport vehicles increased by 14% to RM22.6 billion.

Further Improvement in Asset Quality

The Public Bank Group’s gross non-performing loans (“NPL”) and net NPL ratios further improved to below 1.9% and 1.6% respectively as at the end of September 2006 from 2.1% and 1.7% respectively as at the end of December 2005. The level of new NPL formation remained low, with the ratio of net new NPL to gross loans maintained at 0.2% in the third quarter and the preceding quarter. The consistently low NPL ratios of the Group reflect the Group’s prudent lending policies and practices which were complemented by effective risk management and proactive credit recovery process.

The Group also maintained a high level of provisioning with a loan loss coverage ratio of 100% as at the end of September 2006. This was higher than the Group’s ratio of 92% as at the end of December 2005 and was significantly above the 56% coverage for the banking industry at the end of August 2006. The increase in the Group’s loan loss coverage ratio was primarily due to additional general allowance set aside while maintaining a stable level of NPL. As at the end of September 2006, the Group’s general allowance was almost sufficient to cover the entire NPL despite that more than 95% of the NPL were secured.

Accelerated Growth in Customer Deposits

The Public Bank Group has been pursuing aggressive growth in both its core customer deposits as well as wholesale deposits in the form of negotiable instruments of deposits. In the first nine months of 2006, the Group expanded its customer deposits by 28% to stand at RM107.5 billion at the end of September 2006.

Excluding the deposits arising from the acquisition of PB(HK), the Group’s annualised deposit growth rate was 27%, which was more than 2.5 times that of the industry growth rate. The growth was mainly contributed by the increase of 55% in negotiable instruments of deposits while demand deposits, fixed deposits and saving deposits grew by 12%, 12%, and 5% respectively.

The Group’s market share of domestic customer deposits increased to 13.5% as at the end of September 2006 from 12.0% at the end of 2005. The increased market share of deposits is a reflection of the Group’s high customer service delivery standard and strong credit and financial standing.

The higher deposit growth has further improved the Group’s liquidity, as reflected by the loans to deposits ratio of 74.5% as at the end of September 2006 as compared to 79.4% as at the end of 2005.

Capital Position Further Improved

Public Bank’s issuance of USD200 million Innovative Tier-I Hybrid Capital in August 2006 has further strengthened the core capital position of Public Bank and the Group’s capital efficiency. Public Bank’s Innovative Tier-I Hybrid Capital was voted the “Deal of the Month” by FinanceAsia in September 2006.

The Group’s capital base and risk-weighted capital ratio (“RWCR”) improved to RM10.7 billion and 13.2% respectively as at 30 September 2006 as compared to RM9.9 billion and 12.7% respectively as at June 2006. The Group’s RWCR of 13.2% is well above the statutory minimum requirement of 8%.

Group Prospects

The Malaysian economy is expected to maintain its growth momentum for the rest of 2006. Other positive indicators include the tapering off in inflationary pressure and the low unemployment rate.

The Public Bank Group expects further improvement in its market share of loans, deposits and unit trusts, especially in the consumer and SME markets through its extensive branch delivery infrastructure and superior customer service. Barring unforeseen circumstances, the Public Bank Group is expected to continue to record satisfactory performance for the last quarter of 2006.

Tan Sri Dato' Sri Dr. Teh Hong Piow
Chairman

* * * * * * * *

Y.Bhg. Tan Sri Dato' Sri Dr. Teh Hong Piow
Chairman, Public Bank
* * * * * * * *
Public Bank Achieves 20% Net Profit Growth For The Nine Months Of 2006

For Immediate Release

17 October 2006

Public Bank Achieves 20% Net Profit Growth For The Nine Months Of 2006

I am pleased to announce that the Public Bank Group achieved a pre-tax profit of RM1.75 billion for the nine months ended 30 September 2006, an increase of 17% compared to the corresponding period in 2005. The Group’s net profit attributable to shareholders rose by RM213 million or 20% to RM1.27 billion over the same period last year.

The higher profit was mainly attributable to the increase in net interest income and net income from Islamic Banking operations as well as higher other operating income, partially offset by the increase in other operating expenses and higher loan loss allowances. 

The Group’s net interest income and net financing income from Islamic Banking operations grew by RM333 million or 16% compared to the previous corresponding period, on the back of continued strong loan and deposit growth, coupled with a further improvement in asset quality. Other operating income increased by RM122 million or 18%, mainly contributed by higher gains on sales of trust units due to launch of new trust funds, increase in management fees from higher net asset value of unit trust funds under management and higher fees and transaction income from retail banking operations.

The higher loan loss allowances during the period by RM65 million as compared to the previous corresponding period was mainly due to higher general allowance on loans as a result of higher loan growth achieved. In addition, the Group adopted more stringent provisioning for its non-performing loans in the quarter ended 30 September 2006 by making a 20% specific allowance on non-performing loans which are 3 to less than 6 months-in-arrears. Previously, specific allowance was only made when a non-performing loan was in arrears for 6 months and above. This had resulted in an additional specific allowance of RM12 million being recognised in the third quarter.

Financial Highlights of the Public Bank Group

  • Earnings per share improved by 19% to 38.4 sen for the nine months ended 30 September 2006 from 32.3 sen in the previous corresponding period.
  • Annualised net return on equity was higher at 21.1% compared to 19.2% in 2005.
  • Net income for the nine months period ended 30 September 2006 increased by RM456 million or 16% while other operating expenses increased only by RM132 million or 13% compared to the same period in 2005 as a result of continued improvement in efficiency and productivity. This is reflected by the improved cost to income ratio of 35.7% compared to 36.8% in 2005.
  • Public Bank Group’s total assets expanded by 26% to stand at RM140.9 billion as at the end of September 2006.
  • Public Bank Group’s total loans increased by RM13.5 billion or 20% to reach RM81.6 billion as at the end of September 2006. Excluding the loans arising from the acquisition of Public Bank (Hong Kong) Limited (formerly known as Asia Commercial Bank Limited) (“PB(HK)”) of RM4.3 billion, the Group achieved an annualised loan growth of 18%, which was about 2.5 times that of the loan growth rate recorded by the banking industry.
  • Net non-performing loan ratio improved to below 1.6% in September 2006 as compared to 1.7% in December 2005, and was significantly lower than the banking industry’s ratio of 5.3% as at the end of August 2006.

Continued Strong Growth in Retail Loans

The Public Bank Group’s domestic loans and advances increased by RM8.9 billion or at an annualised growth rate of 18% to stand at RM74.9 billion at the end of September 2006, increasing its market share to 12.9% compared to 12.0% at the end of 2005. The Group’s lending activities continued to be focused on the retail sector, with consumer loans for the financing of residential properties and transport vehicles as well as commercial lending to SMEs accounting for 71% of the Group’s total loan portfolio as at the end of September 2006.

The strong domestic loans growth rate coupled with the loans growth from foreign operations following the acquisition of PB(HK) in May 2006 has led to loans for residential properties growing by 24% to RM22.2 billion as at end of September 2006. Meanwhile, loans for the purchase of transport vehicles increased by 14% to RM22.6 billion.

Further Improvement in Asset Quality

The Public Bank Group’s gross non-performing loans (“NPL”) and net NPL ratios further improved to below 1.9% and 1.6% respectively as at the end of September 2006 from 2.1% and 1.7% respectively as at the end of December 2005. The level of new NPL formation remained low, with the ratio of net new NPL to gross loans maintained at 0.2% in the third quarter and the preceding quarter. The consistently low NPL ratios of the Group reflect the Group’s prudent lending policies and practices which were complemented by effective risk management and proactive credit recovery process.

The Group also maintained a high level of provisioning with a loan loss coverage ratio of 100% as at the end of September 2006. This was higher than the Group’s ratio of 92% as at the end of December 2005 and was significantly above the 56% coverage for the banking industry at the end of August 2006. The increase in the Group’s loan loss coverage ratio was primarily due to additional general allowance set aside while maintaining a stable level of NPL. As at the end of September 2006, the Group’s general allowance was almost sufficient to cover the entire NPL despite that more than 95% of the NPL were secured.

Accelerated Growth in Customer Deposits

The Public Bank Group has been pursuing aggressive growth in both its core customer deposits as well as wholesale deposits in the form of negotiable instruments of deposits. In the first nine months of 2006, the Group expanded its customer deposits by 28% to stand at RM107.5 billion at the end of September 2006.

Excluding the deposits arising from the acquisition of PB(HK), the Group’s annualised deposit growth rate was 27%, which was more than 2.5 times that of the industry growth rate. The growth was mainly contributed by the increase of 55% in negotiable instruments of deposits while demand deposits, fixed deposits and saving deposits grew by 12%, 12%, and 5% respectively.

The Group’s market share of domestic customer deposits increased to 13.5% as at the end of September 2006 from 12.0% at the end of 2005. The increased market share of deposits is a reflection of the Group’s high customer service delivery standard and strong credit and financial standing.

The higher deposit growth has further improved the Group’s liquidity, as reflected by the loans to deposits ratio of 74.5% as at the end of September 2006 as compared to 79.4% as at the end of 2005.

Capital Position Further Improved

Public Bank’s issuance of USD200 million Innovative Tier-I Hybrid Capital in August 2006 has further strengthened the core capital position of Public Bank and the Group’s capital efficiency. Public Bank’s Innovative Tier-I Hybrid Capital was voted the “Deal of the Month” by FinanceAsia in September 2006.

The Group’s capital base and risk-weighted capital ratio (“RWCR”) improved to RM10.7 billion and 13.2% respectively as at 30 September 2006 as compared to RM9.9 billion and 12.7% respectively as at June 2006. The Group’s RWCR of 13.2% is well above the statutory minimum requirement of 8%.

Group Prospects

The Malaysian economy is expected to maintain its growth momentum for the rest of 2006. Other positive indicators include the tapering off in inflationary pressure and the low unemployment rate.

The Public Bank Group expects further improvement in its market share of loans, deposits and unit trusts, especially in the consumer and SME markets through its extensive branch delivery infrastructure and superior customer service. Barring unforeseen circumstances, the Public Bank Group is expected to continue to record satisfactory performance for the last quarter of 2006.

Tan Sri Dato' Sri Dr. Teh Hong Piow
Chairman

 
* * * * * * * *
Press-release-186.gif

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

* * * * * * * *

Public Bank Records RM1.15 Billion Pre-Tax Profit In First Half Of 2006 And Declares An Interim Dividend Of 20%

For Immediate Release

20 July 2006

Public Bank Records RM1.15 Billion Pre-Tax Profit In First Half Of 2006 And Declares An Interim Dividend Of 20%

I am pleased to announce that the Public Bank Group achieved a pre-tax profit of RM1.15 billion for the first six months of 2006, an increase of 15% compared to the corresponding period in 2005. The Group’s profit attributable to shareholders rose by RM128 million or 18% to RM839 million over the same period last year. The improved profit was mainly contributed by the increase in net interest income, net income from Islamic Banking operations as well as higher other operating income, partially offset by the increase in other operating expenses and higher general allowance on loans.

The Group’s net interest income and net income from Islamic Banking operations rose by RM208 million or 15% compared to the previous corresponding period. This was driven by continued strong growth in both quality loans and deposits, as well as further improvement in asset quality. Other operating income increased by RM85 million or 20%, mainly attributable to higher gains on sales of trust units, increase in management fees from higher net asset value of unit trust funds under management and higher fees and transaction income from retail banking operations.

The increase of 9.5% equity interest in Public Financial Holdings Limited (formerly known as JCG Holdings Limited) (“PFHL”) during the period, as a result of the underwriting and subscription of PFHL’s rights issue had also contributed favourably to the Group’s result.

The Board of Directors is pleased to declare an interim dividend of 20% less 28% taxation, which will result in a payout totalling RM477 million. The Group’s risk-weighted capital adequacy ratio would continue to remain strong at 12.7% after the payment of the interim dividend.

Financial Highlights of the Public Bank Group

  • For the second quarter of 2006, net profit attributable to shareholders increased by 17% to RM453 million compared to the first quarter of 2006. Consequently, earnings per share improved to 13.7 sen in the second quarter of 2006 compared to 11.7 sen in the preceding quarter.
  • Net profit attributable to shareholders for the first half of 2006 increased by 18% to RM839 million compared to the same period in 2005, leading to an improved earnings per share of 25.4 sen in 2006 compared to 21.7 sen in the previous corresponding period.
  • Annualised net return on equity was higher at 21.6% compared to 19.2% in 2005.
  • Efficiency continued to rise with the cost to income ratio improving to 35.8% from 36.7% in 2005.
  • Public Bank Group’s total assets expanded by 21% to stand at RM134.6 billion as at the end of June 2006.
  • Public Bank Group’s total loans increased by RM10.1 billion or 15% to reach RM78.2 billion as at the end of June 2006, of which RM4.3 billion arose from the acquisition of Public Bank (Hong Kong) Limited (formerly known as Asia Commercial Bank Limited) (“PB(HK)”).
  • Excluding loans from PB(HK), the Group’s total loans grew by 8.6% for the first half of 2006, almost 2.5 times that of the loan growth rate recorded by the banking industry.
  • Net non-performing loan ratio improved to 1.6% in June 2006 as compared to 1.7% in December 2005, and was significantly lower than the banking industry’s ratio of 5.6% as at the end of May 2006.

Continued Strong Growth in Retail Loans

The Public Bank Group’s domestic loans and advances increased by 8.4% or RM5.5 billion to stand at RM70.7 billion at the end of June 2006, increasing its market share to 12.6% compared to 12.0% at the end of 2005. The Group’s lending activities continued to be focused on the retail sector, with consumer loans for the financing of residential properties and transport vehicles as well as commercial lending to SMEs accounting for 71% of the Group’s total loan portfolio as at the end of June 2006.

The strong growth of domestic loans coupled with the acquisition of PB(HK) led to loans for residential properties growing by 18% to RM21.2 billion in first six months of 2006. Meanwhile, loans for the purchase of transport vehicles increased by 8% to RM21.4 billion.

Further Improvement in Asset Quality

The Public Bank Group’s gross non-performing loans (“NPL”) and net NPL ratios as at the end of June 2006 had improved to 1.9% and 1.6% respectively from 2.1% and 1.7% respectively as at the end of December 2005. The level of new NPL formation remained relatively stable, as reflected by the ratio of net new NPL to gross loans of 0.3% in the first half of 2006 compared to 0.4% for the preceding six months period. The consistently low NPL ratios of the Group reflect the Group’s prudent lending policies and practices which were complemented by strong credit management and proactive credit recovery process.

The Group’s loan loss coverage ratio continued to increase to 98% as at the end of June 2006 from 92% as at the end of December 2005 with additional general allowance set aside while the level of NPL remained relatively unchanged. The Group’s loan loss coverage ratio was also significantly above the 54% coverage for the banking industry at the end of May 2006.

Higher Growth in Customer Deposits

Excluding customer deposits of PB(HK), the Group’s total deposits from customers grew by 12% for the first half of 2006, compared to the 3.5% growth recorded by the banking industry for the first five months of 2006. The Group’s liquidity improved with the strong deposit growth, with loans to deposits ratio standing at 76% as at the end of June 2006 as compared to 79% as at the end of 2005.

Improved Net Interest Income

The Public Bank Group’s net interest income improved by 8% in the current quarter compared to the preceding quarter on the back of improved interest margins. The Group’s average lending rate increased from 6.03% in the first three months of 2006 to 6.40% in the second quarter of 2006 while average deposit rate increased marginally from 2.29% to 2.34% in the respective periods. In addition, the net interest margin on wholesale deposits on-lent to the interbank market increased from 0.13% in the first quarter of 2006 to 0.18% in the current quarter.

Capital Position Remains Strong

The Public Bank Group’s capital base stood at RM10.4 billion as at 30 June 2006 compared to RM11.6 billion at the end of 2005. With the consolidation of PB(HK), the Group’s risk-weighted capital ratio still remained strong at 12.7% as at 30 June 2006, after the payment of the interim dividend, and is well above the statutory minimum requirement of 8%.

Expansion in Hong Kong and Greater China

The acquisition of Asia Commercial Bank Limited by Public Financial Holdings Limited, a 73.5% subsidiary of Public Bank, was completed on 30 May 2006. Asia Commercial Bank Limited changed its name to Public Bank (Hong Kong) Limited on 30 June 2006. The acquisition of Public Bank (Hong Kong) Limited provides the Public Bank Group with the opportunity for an immediate expansion of its banking business in Hong Kong, as well as an entry to the banking business in Greater China.

Group Prospects

The Malaysian economy is expected to maintain its growth momentum in 2006 despite the increasing challenges of high oil prices, wide global imbalances and high global interest rates. Public Bank Group will continue to build on the momentum of its strong loans growth, whilst maintaining strong asset quality by keeping to the Group’s uncompromising prudent credit standards and practices. Barring unforeseen circumstances, the Public Bank Group is expected to continue to record satisfactory performance for 2006.

Tan Sri Dato' Sri Dr. Teh Hong Piow
Chairman

* * * * * * * *

Y.Bhg. Tan Sri Dato' Sri Dr. Teh Hong Piow
Chairman, Public Bank
* * * * * * * *
Public Bank Achieves 13% Increase In Pre-Tax Profit To RM544 Million In First Quarter 2006

For Immediate Release

18 April 2006

Public Bank Achieves 13% Increase In Pre-Tax Profit To RM544 Million In First Quarter 2006

I am pleased to announce that the Public Bank Group posted a pre-tax profit of RM544 million for the first three months of 2006, an increase of 13% compared to the corresponding period in 2005. The Group’s net profit attributable to shareholders rose to RM387 million, an increase of RM41 million or 12% over the same period last year. The higher profit was contributed by growth in net interest income, net income from Islamic Banking business and higher other operating income.

The Public Bank Group’s net interest income grew by 12% to RM672 million compared to the same period last year due to continued strong loans growth and sustained strong asset quality.

Net income from Islamic Banking business rose 9% to RM105 million from the corresponding period in 2005 on the back of strong deposit and financing growth.

Other operating income posted a 16% growth compared to the corresponding period in 2005 to reach RM230 million, mainly due to higher foreign exchange gains, higher fees and transaction income from retail banking operations.

The Group’s commercial bank, Public Bank, registered a 25% increase in pre-tax profit compared to the first three months of 2005, and accounted for 80% of the Group’s pre-tax profit.

Key Highlights of the Public Bank Group’s Results

  • Earnings per share improved 10% to 11.7 sen from 10.6 sen in the previous corresponding period.
  • Total assets increased by 6% and was close to RM120 billion as at the end of March 2006.
  • Loans grew by 17.6% on an annualised basis, compared to the banking industry’s annualised growth rate of 6.6%.
  • Total deposits from customers, including repos, grew by 7.8% compared to the end of December 2005 to RM95 billion. Despite the Group’s higher loans growth compared to the industry’s loans growth, the Group was able to maintain high liquidity with a loans to deposits ratio of 73% as at the end of March 2006.
  • Annualised net return on equity improved further to 21.7% from 21.4% in 2005.
  • Risk-weighted capital ratio remained strong at 15.4% as compared to the banking industry’s ratio of 13.4% as at the end of February 2006.
  • Cost to income ratio improved to 36.5% from 36.7% in 2005 and compared favourably to the banking industry’s ratio of 42.7% in 2005.
  • Net non-performing loan ratio remained below 1.7% recorded at the end of December 2005. This was less than one-third of the banking industry’s ratio of 5.9% as at the end of February 2006.
  • Credit losses for every RM1 of loans decreased to 0.31% from 0.35% in 2005.

Continued Robust Loans Growth

In the first 3 months of 2006, the Public Bank Group’s loans and advances grew by RM3 billion or 4.4% to stand at RM71 billion as at the end of March 2006. As a result, the Group’s market share for loans and advances improved to 12.4% from 12.0 % in December 2005. The Group’s lending business continued to be directed at the retail sector, in particular loans for the financing of residential mortgages, purchase of passenger vehicles, and SMEs. Together, these sectors accounted for 73% of the total loan portfolio as at the end of March 2006.

Loans for residential mortgages expanded by 5.9%, while loans for the purchase of passenger vehicles and SMEs grew by 2.7% and 6.4% respectively in the first 3 months of 2006. The Group was able to sustain its growth momentum despite the intense competition in the retail credit and SME lending market due to Public Bank’s strong brand name, wide range of innovative and competitively priced products and services, and efficient extensive service delivery network.

Sustained Asset Quality

The Public Bank Group’s gross non-performing loans (“NPL”) and net NPL ratios as at the end of March 2006 were well-sustained from the position as at the end of December 2005. The NPL ratios on loans for residential mortgages and purchase of passenger vehicles remained generally stable as compared to the end of December 2005.

The Group’s low NPL ratios is a reflection of its continued prudent lending policies and practices complemented by strong credit management and proactive recovery processes. This is evident when compared to the past 5 years with the Group’s NPL dropping by 20% to RM1.4 billion despite a significant increase in the loan base to almost 3 times that of 5 years ago.

The Group maintained a high level of provisioning with its ratio of general allowance to net loans of 1.6% and a loan loss coverage of 98% at the end of March 2006 as compared to 55% coverage as at the end of 2001. The Group’s loan loss coverage was almost double the 51% coverage for the banking industry at the end of February 2006.

Strong Capital Position Sustained

The Public Bank Group’s capital base stood at RM10.9 billion as at 31 March 2006. The Group’s risk-weighted capital ratio of 15.4% was almost two times the minimum requirement of 8% and higher than the banking system’s risk-weighted capital ratio of 13.4% as at the end of February 2006.

Marching into 2006, the Public Bank Group expects the banking industry to be more challenging and competitive in an increasingly liberalised environment. The Group will continue to build on its strong loans growth momentum, and is well positioned to meet the challenges with its profitability track record, strong branding, superior asset quality and prudent credit management. Barring unforeseen circumstances, the Public Bank Group is expected to continue to record satisfactory performance for the rest of 2006.

* * * * * * * *

Y.Bhg. Tan Sri Dato' Sri Dr. Teh Hong Piow
Chairman, Public Bank
* * * * * * * *
Public Bank Posts Best Ever Results With Profit Of RM2.05 Billion

For Immediate Release

23 January 2006

Public Bank Posts Best Ever Results With Profit Of RM2.05 Billion

I am pleased to announce that Public Bank Group posted a record pre-tax profit of RM2.05 billion for 2005, which for the first time surpassed the RM2 billion mark. The results represented an 11% improvement compared to RM1.85 billion in 2004, despite an additional RM92 million set aside for general allowance in tandem with the Group’s continuing robust loan growth. Meanwhile, net profit attributable to shareholders improved by 14% to RM1.45 billion.

Despite the pressure on lending margins, the Group’s net interest income and net Islamic Banking financing income expanded by 7% to RM2.89 billion in 2005, underpinned by strong loan growth and further improvement in asset quality. Other operating income grew by 24% to RM918 million mainly as a result of higher sales of trust units due to the strong interest in the Group’s seven new unit trust funds launched, increase in fees from higher net asset value of unit trust funds under management, and higher fees and transaction income from retail banking operations. Other operating income accounted for 24% of total income compared to 22% in 2004. Meanwhile, the increase in other operating expenses was capped at 7%.

The Public Bank Group’s overseas operations, based primarily in Hong Kong, achieved a 25% improvement in pre-tax profit on the back of stronger loan growth, lower loan loss provisioning and overheads. Public Bank’s domestic operations registered an 8% increase in pre-tax profit, and accounted for 85% of the Group’s profit before taxation.

In view of the Public Bank Group’s improved performance, the Board of Directors is proposing a final dividend of 20 sen and a special dividend of 15 sen, totalling 35 sen less 28% taxation. Together with the interim dividend of 20 sen less 28% taxation, which was paid in August 2005, the total dividend paid and payable for 2005 totalled 55 sen or would amount to RM1.30 billion. The Group’s and Bank’s risk-weighted capital ratio remain strong, at 15.9% and 13.6% respectively, after payment of the proposed dividend.

Financial Highlights of the Public Bank Group
  • Earnings per share improved by 12% to 44.2 sen from 39.5 sen in 2004.
  • Net return on equity improved to 21.4% compared to 18.2% in 2004
  • Productivity continued to rise with the cost income ratio improving to 36.7% from 37.9% in 2004.
  • Total assets surpassed the RM100 billion mark to stand at a record RM111.6 billion, which was two and a half times the Group’s asset size of RM45.3 billion at the end of 2000.
  • Return on assets stood at 2% as at end of 2005.
  • Loans grew by 20% to RM68.1 billion in 2005 compared to the 8% increase recorded by the banking industry for the first eleven months of 2005.
  • Net non-performing loan ratio improved to 1.7% in December 2005 as compared to 2.1% a year ago, and was 72% lower than the banking industry’s ratio of 6.0% as at November 2005.
  • Demand deposits grew by 10% and savings deposits increased by 9%.
Improving Earnings and Dividends

The Public Bank Group has continued to deliver a rising trend in profitability over the years. The Group’s net profit has doubled in the past 5 years from RM720 million in 2001 to RM1.45 billion in 2005, whilst earnings per share rose by 69% from 26.2 sen per share to 44.2 sen per share over the same period. Net return on equity has also improved from 12.8% in 2002 to 21.4% in 2005. The Group’s strong profit performance is positively reflected in Public Bank’s share price. At the end of 2005, Public Bank’s market capitalisation stood at RM22.23 billion compared to RM7.04 billion at the end of 2000. In terms of ranking by market capitalisation, Public Bank has leaped from 10th position in 2000 to 5th in 2005, making it the largest non-government-linked company in Malaysia.
Public Bank’s dividend payout has also been on an uptrend, with a dividend payout ratio of 90% for 2005 compared to an average of 44% for the 3 years from 2001 to 2003. Public Bank’s dividends in respect of 2004, which included the payment of 2 special dividends, was even higher at RM2.12 billion and was 167% of the Group’s net profit for the year. The liberal dividend payout policy in the last two years is an integral part of the Group’s initiatives to improve its capital efficiency.

Continued Strong Growth in Retail Loans

In 2005, the Group’s loans and advances increased by 20% or RM11.2 billion to stand at RM68.1 billion at the end of 2005. With loan growth rates close to or in excess of 20% annually since 2001, the Group has become the second largest lender in Malaysia with 12% market share of the lending business at the end of 2005, more than double the 5% market share in 2001. The Group’s lending activities continued to be focused on the retail sector, with consumer loans for the financing of residential properties and vehicle hire purchase as well as commercial lending to SMEs accounting for 72% of the Group’s total loan portfolio and 76% of total new loans approved of RM27 billion in 2005.
Loans for residential mortagages grew by 27% to RM17.8 billion in December 2005. Meanwhile loans for the purchase of transport vehicles increased by 18% to RM16.7 billion, and loans to SMEs expanded by 13% to RM14.8 billion at the end of 2005.

Further Improvement in Asset Quality

The non-performing loans (“NPL”) of the Public Bank Group has charted an improving trend for the past 5 years, both in terms of the NPL ratios as well as the absolute amount of NPLs, despite the doubling of the Group’s loan size over the same period. The Group’s gross NPL of RM1,406 million as at the end of 2005 was RM104 million or 7% lower compared to December 2004. As a result, the Group’s gross and net NPL ratios, based on a 3-month classification, improved to 2.1% and 1.7% respectively, from 2.7% and 2.1% respectively at the end of December 2004. The Group’s net NPL ratio of 1.7% is less than one-third of the banking industry’s net NPL ratio of 6.0% as at November 2005.

The Group also maintained a high level of provisioning with its ratio of general allowance to net loans standing at 1.6% and its loan loss coverage ratio of 92% at the end of 2005 as compared to 52% for the banking industry at the end of November 2005.

Public Bank continues to be ranked the best amongst all banks in Malaysia in terms of asset quality as well as loan loss coverage.

Strong Growth in Lower-Cost Customer Deposits

The Public Bank Group continued to build a long-term core deposit funding base to mitigate the squeeze in net interest margins. Customer deposits expanded by RM11.9 billion to stand at RM84.1 billion in December 2005. The Group’s market share of domestic customer deposits stood at 12% in December 2005 compared to 7% five years ago.

The Group’s savings deposits grew by 9% while current accounts and fixed deposits both recorded 10% growth in 2005, significantly outpacing the industry’s growth rates for these deposits of 1%, 5% and 4% respectively for the first 11 months of 2005. Deposits from individuals made up 71% of the Public Bank Group’s core demand, savings and fixed deposits, providing the Group with a stable deposit base.

Capital Position Remains Strong

The Public Bank Group further geared up on its strong core capital position with a second issue of Subordinated Notes amounting to USD400 million in June 2005. This issue was named the Best Bank Bond for 2005 in The Asset Triple A Regional Awards for Best Deals.

The Group’s capital base stood at RM11.6 billion as at 31 December 2005 compared to RM10.1 billion at the end of 2004. The Group’s risk-weighted capital ratio of 15.9% as at 31 December 2005 was about twice the statutory minimum requirement of 8% and well above the banking system’s risk-weighted capital ratio of 13.8% at the end of November 2005.

Group Prospects

The Malaysian economy is expected to maintain its growth momentum in 2006, with GDP growth forecast of 5.5%, driven by private domestic demand. Domestic interest rates are expected to rise in 2006, which will provide some respite to the financial industry’s declining interest margins. The Public Bank Group’s strong lower-cost deposit structure will provide it with the capacity to remain competitive in the lending business. Rising interest rates will also be positive for interest margins as loans reprice faster than deposits in the rising interest rate environment.

The year 2006 will also see significant changes in the financials for companies in Malaysia with the implementation of new and revised Malaysian Financial Reporting Standards (“FRS”) from 1 January 2006. Although the implementation of the new and revised FRS will generally lead to greater volatility in profitability, however, the Public Bank Group expects the implementation of the FRS to have a positive impact on its bottom line.

In the challenging environment ahead, the Public Bank Group will continue to pursue its strategy of high organic loan growth and improved cost efficiency, whilst maintaining strong asset quality by keeping to the Group’s uncompromising prudent credit standards and practices. Public Bank will continue to enhance returns to shareholders through operational and capital efficiency, and maintain a liberal dividend payout ratio. Barring unforeseen circumstances, the Public Bank Group is expected to continue to record satisfactory performance for 2006.
* * * * *