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Public Bank's 46th Annual General Meeting Held on 19 March 2012

For Immediate Release

19 March 2012

Public Bank's 46th Annual General Meeting Held on 19 March 2012

In conjunction with Public Bank’s 46th Annual General Meeting held on 19 March 2012, the Founder and Chairman of Public Bank, Tan Sri Dato’ Sri  Dr. Teh Hong Piow is pleased to present a review of the Public Bank Group’s performance in 2011.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Tan Sri Teh commented, “If a shareholder of Public Bank had bought 1,000 shares in Public Bank when it was listed in 1967, and assuming the shareholder had subscribed for all rights issues to date and had not sold any of the Public Bank shares, he would now have 135,398 Public Bank shares worth RM1.84 million based on the current share price of RM13.60 per Public Bank (Local) share. In addition, he would have received a total gross dividend of RM776, 137. This translates into a total value of RM2.6 million representing a remarkable compounded annual rate of return of 20% for each of the 44 years since 1967.”

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

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

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

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

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

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

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

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

  • Best Bank in Malaysia by FinanceAsia (13th time)
  • Best Managed Company by FinanceAsia (5th time)
  • Best Asian Bank by FinanceAsia (3rd time)
  • Best Domestic Bank in Malaysia by The Asset (10th time)
  • Best Bank in Malaysia by Alpha Southeast Asia (4th time)
  • Best SME Bank in Malaysia by Alpha Southeast Asia (2nd time)
  • Best Banking Group in Malaysia by World Finance (3rd time)

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

Some of the other awards, which Public Mutual received in 2011, are: 

  • 2010 Asia Asset Management Awards for the Best House for Offshore Funds- Malaysia
  • Morningstar 2010 Fund Awards (Malaysia) for the Malaysian Ringgit Islamic Bond category for PB Islamic Bond Fund.
  • 4 awards at the Failaka Islamic Fund Awards 2010
  • The Asset Triple A Islamic Finance Awards 2011 for the Best Islamic Asset Management House (Retail)
  • Reader’s Digest Trusted Brand Platinum Award for Investment Fund Company category in Malaysia 2011 (2nd time)
  • The BrandLaureate Award 2010-2011 for the Best Brand in the Financial Services - Unit Trust Category (5th time)
 

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

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

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

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

Outlook

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

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

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

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Public Bank Group Achieved Net Profit Growth of 14.3% For 2011

For Immediate Release

30 January 2012

Public Bank Group Achieved Net Profit Growth of 14.3% For 2011

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

19 January 2012

"Lessons of Success - The Legacy of Tan Sri Dato' Sri Dr. Teh Hong Piow" book launched

Founder and Chairman of Public Bank, Tan Sri Dato' Sri Dr. Teh Hong Piow's record of leading Public Bank over four and half decades of growth and unbroken string of profitability and renowned exemplary corporate excellence has definitely earned him the right to talk about success.

And this phenomenal success has been compiled into a book entitled "Lessons of Success - The Legacy of Tan Sri Dato' Sri Dr. Teh Hong Piow" was launched today at Menara Public Bank, Kuala Lumpur.

Authored by Dr. Victor S.L. Tan of KL Strategic Change Consulting Group the book shares the secret recipes of success of Tan Sri Teh and how he has transformed a bank with only 32 staff in 1966 into one of the largest listed companies on Bursa Malaysia with a market capitalisation of over RM47 billion. It gives readers a chance to look at Tan Sri Teh's extraordinary career in detail and share the insights and lessons of success that Tan Sri Teh has personally practised in his 60 years in the banking industry.

According to Dr. Victor Tan, "The fruit of success is sweetest when one's achievements are recognised and appreciated by other people. Having staked a claim as Asia's Banking Grandmaster, Tan Sri Teh has won the highest recognition from kings, ministers and luminaries to the men and women of higher echelons and members of his corporate family right down to the man on the street. Under his sterling leadership, Public Bank has won over 300 awards while Tan Sri Teh himself has been bestowed with numerous personal-to-holder awards, uncountable accolades and recognition, both local and international, for his unparalleled achievements in banking as well as for his superb leadership prowess."

He said, "If any man has earned the right to talk about success, that man is Tan Sri Dato' Sri Dr. Teh Hong Piow. It is not just about achieving success, it is also about sustaining success. Tan Sri Teh's record of leading Public Bank over four and half decades of growth and unbroken string of profitability tells a story which readers can draw inspiration from."

This 434 page hard cover book is distributed by MPH Distributors Sdn. Bhd. and Popular Book Co. (M) Sdn Bhd and retails at RM50 per copy. All proceeds from the sale of the book will be donated to charitable organisations.

In 2007, Public Bank produced a book entitled "Teh Hong Piow: A Banking Thoroughbred" written by Datuk Paddy Bowie. The book managed to garner over RM1 million in sales and the entire proceed was donated to various charities which include the IJN Foundation, Malaysian Red Crescent Society, Seri Kembangan Old Folks Home, Malaysian Paralympic Council, Persatuan Karyawan Malaysia, Kuala Lumpur Performing Arts Centre, Rumah Charis and many more.
 
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Tan Sri Teh autographing the "Lesson of Success - The Legacy of Tan Sri Dato' Sri Dr. Teh Hong Piow" book for staff.

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Public Bank Offers 3 Special Packages - 'PB Golden Prosperity'

For Immediate Release

1 December 2011

Public Bank Offers 3 Special Packages - 'PB Golden Prosperity'

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

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

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

‘PB Golden Dragon Phoenix’ Package

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

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

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

‘PB GOLD for GOLD’ Package

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

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

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

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

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

'PB Prosperity Rates’ Package

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

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

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

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

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Tan Sri Teh Awarded The BrandLaureate Premier Brand Icon Leadership Award 2011

For Immediate Release

30 November 2011

Tan Sri Teh Awarded The BrandLaureate Premier Brand Icon Leadership Award 2011

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

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

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

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

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

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

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

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Dr. KK Johan (right) President of Asia Pacific Brands Foundation presenting The BrandLaureate Premier Icon Leadership Award 2011 to Tan Sri Teh.
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Public Bank Group Nine-Month Net Profit Up 18.4%

For Immediate Release

17 October 2011

Public Bank Group Nine-Month Net Profit Up 18.4%

Sustainable Strategies Drive Broad-based Growth Amidst Economic Uncertainties

 

- Profitability: Net profit growth of 18.4% and 26.7% net return on equity, driven by:

 

(i) Strong revenue growth of 9.6%

 

(ii) Continued disciplined cost management with low cost-to-income ratio of 30%; and

 

(iii) Superior asset quality with improvement in credit charges by 15%

 

- Market leadership: Sustained No. 1 position in domestic lending for residential mortgages, commercial property financing and passenger vehicles financing

 

- Growth: Above-industry growth in loans and deposits, driven by the Group’s PB Brand strong retail franchise

 

- Asset Quality: Below 1% gross impaired loans ratio, underpinned by prudent lending policies and strong risk management practices

 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Y.Bhg. Tan Sri Dato' Sri Dr. Teh Hong Piow
Chairman of Public Bank
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Budget 2012

For Immediate Release

7 October 2011

Budget 2012

We would like to congratulate the Honorable Prime Minister and Minister of Finance for the people-friendly budget.  Budget 2012 is well-crafted and has provided a string of initiatives, measures and incentives to benefit the Rakyat especially the lower to middle income segments.  This should help to ease the financial burden of the Rakyat amidst the rising cost of living environment which has been much anticipated.

In striking a balance between meeting the needs of the Rakyat and providing impetus for businesses and private sector to be the engine of growth, the Government has taken cognisance in recognising the economic sectors that are primarily driving the economic growth which include the services sector, in particular tourism, banking and financial services, as well as agriculture sector.  We welcome the various measures and incentives provided under Budget 2012 in helping to boost the contribution of these sectors to drive the overall economic growth.

On the GDP growth outlook, in view of heightened uncertainties in the global economy, a 5%-6% projection for 2012 is achievable. The growth is still a respectable performance, given that the Malaysian economy has strong economic fundamentals such as high savings, strong external position and healthy banking sector. Government’s measures to stimulate domestic economic activities, in particular the public and private investments, will continue to support growth.  The Government’s commitment to its fiscal discipline and prudence with the reducing budget deficit to 4.7% of GDP in 2012 from 5.4% in 2011 is commendable.

Budget 2012 has also provided various measures and incentives to Small- and  Medium-Enterprises (“SMEs”) which contribute 31% to the GDP of Malaysia.  Some of these measures and incentives include the RM2.0 billion shariah-compliant SME Financing Fund, SME Revitalisation Fund, SME Emergency Fund and the RM500 million shariah-compliant Commercialisation Innovation Fund.  The banking sector has always been playing its vital role in supporting and nurturing the growth of SMEs to be a significant contributor to our economy. We believe that these funds will further support the growth of SMEs towards this direction.     

On the banking and capital market sector, Budget 2012 further alluded the Government’s effort to promote the development of a more integrated and comprehensive financial services which include, amongst others, the development of the Kuala Lumpur International Financial District, the promotion of the Islamic bonds and treasury management services.

The upward revision of the 10% real property gains tax on disposal of properties held and disposed within two years is indeed complementing the earlier measure instituted by Bank Negara Malaysia in applying the lower loan-to-value ratio for third property financing. We believe that these measures will help to discourage real estate speculative activities.  

Budget 2012, as appropriately guided by its theme of “Welfare for the Rakyat, Well-Being of the Nation”, demonstrates the Government’s concern for the people’s welfare such as affordability of home ownership, improvement in disposable income and relief over the rising cost of living.  It also provides stimulus to further promote domestic private and public investments in growing national wealth, while ensuring human capital development, creativity and innovation are embraced in the nation’s path to growth.

Tan Sri Dato’ Sri Dr. Teh Hong Piow
Chairman

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Y.Bhg. Tan Sri Dato' Sri Dr. Teh Hong Piow
Chairman of Public Bank
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Public Bank Brings Raya Joy to Paediatric Patients

For Immediate Release

9 September 2011

Public Bank Brings Raya Joy to Paediatric Patients

In conjunction with the current Hari Raya Aidil Fitri festive season, Public Bank brought much joy and cheer to 220 children who were warded at the Paediatric Institute of the Kuala Lumpur General Hospital by distributing goodies hampers and duit Raya worth RM18,000.

The presentation was carried out at the Paediatric Institute on 8 September 2011 by the Senior General Manager of Public Affairs Division, Encik Razak Dali on behalf of the Bank’s Founder and Chairman, Tan Sri Dato’ Sri Dr. Teh Hong Piow.

En. Razak Dali said that the presentation from the Bank was a gesture to bring much needed cheer to the young patients who were unable to celebrate the festival with their families at home. It is also the Bank’s way in fulfilling its corporate social responsibility to society and the community it serves. 

It was heartfelt moments to see the young faces all lighted up upon receiving the goodies hampers and duit Raya.  Also present at the distribution ceremony was Dr. Norzila Mohamed Zainudin, Senior Consultant Paediatrician - Paediatrics Respiratory Physician and her team of dedicated nurses who had earlier gave an insightful information on the set-up of the Paediatric Institute and its mission to the public.

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En. Razak Dali presenting a goodie bag and duit Raya to a patient who has just undergone an operation accompanied by Dr. Norzila Mohamed Zainudin and Ms. Nancy Seng, Director of Marketing Communications, Public Bank
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Istismar Account-i

For Immediate Release

22 August 2011

Istismar Account-i

Public Islamic Bank is pleased to announce the launch of a new deposit investment product known as Istismar Account-i to all Muslim and non-Muslim individuals, businesses and organizations.

Istismar Account-i (IA-i) is structured under Shariah concept of Wakalah Bil Istithmar. It refers to an “investment agency” contract where the investor (the depositor) appoints the Bank (the agent) to undertake investment activities on behalf of the depositor for a fee.

The Bank acts in two capacities, i.e. as an agent in accepting deposits from the depositor who plans to invest and as an investment manager in carrying out Shariah compliant investment activities as agreed by the parties.  The Bank as an agent cannot guarantee the profit expected from the investment.

With the introduction of IA-i, the Bank is able to inform the Expected Profit Rate (EPR) at the point of placement, thus, allowing customers to know their expected rate of return on their investment. IA-i offers a competitive rate with flexible range of tenures. During the 3 month launch campaign, a special rate will be given to retail customers. The product is available at all 251 Public Bank/Public Islamic Bank branches throughout the country effective from 16 August 2011.

Public Islamic Bank is confident that the product will be well received as it appeals to both corporate and retail customers.  The launch of IA-i will enhance the competitiveness of the Bank’s deposit products.

Leveraging on its extensive branch network and strength in retail business, the Bank has remained focused on growing Islamic banking business and will continue to introduce more innovative products and services.

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Public Bank Achieves 20.3% Growth in Net Profit in First Half of 2011 and Declares 20% Interim Dividend

For Immediate Release

25 July 2011

Public Bank Achieves 20.3% Growth in Net Profit in First Half of 2011 and Declares 20% Interim Dividend

The Public Bank Group achieved another strong set of results in the first half of 2011 with a record half-year pre-tax profit of RM2.26 billion.

Tan Sri Dato’ Sri Dr. Teh Hong Piow, Chairman of Public Bank said, “The Public Bank Group’s track record of profitability remained strong, with net profit attributable to shareholders growing by 20.3% in the first half of 2011 and maintains the high net return on equity of 27.1% of the Group.”

Tan Sri Teh further added, “Domestic loan growth remained strong, achieving an annualised growth rate of 14.5% whilst gross impaired loan ratio declined to below 1%.”

In view of the Public Bank Group’s strong performance for the period, Tan Sri Teh announced that the Board of Directors has declared a first interim single-tier dividend of 20%, which will result in a total dividend payout of RM700 million.

Highlights of the Public Bank Group’s Performance in the First Half of 2011

  • Pre-tax profit of the Group increased by 18.7% to RM2.26 billion as compared to RM1.90 billion in the previous corresponding period.
  • Net profit attributable to shareholders grew by 20.3% to RM1.71 billion from RM1.42 billion in the previous corresponding period.
  • Annualised net return on equity stood at 27.1%.
  • Earnings per share of 48.8 sen was 20% higher as compared to 40.7 sen in the first half of 2010.
  • Cost to income ratio further improved to 30% and is significantly lower than the industry’s cost-to-income ratio of 46.7%.
  • Total assets increased to RM235 billion as at the end of June 2011.
  • Total loans and advances of the Group expanded by RM10.6 billion or an annualised growth rate of 13.6% to reach RM167.2 billion as at the end of June 2011, driven by strong lending growth in the domestic market at an annualised growth rate of 14.5%.
  • The Group’s total customer deposits increased at an annualised growth rate of 12.9% to reach RM188.3 billion as at the end of June 2011.  The Group’s domestic deposits grew at a stronger annualised growth rate of 14.8%.
  • The gross impaired loans ratio of the Group further improved to below 1% as at the end of June 2011, from 1.14% as at the beginning of the year, significantly lower than the banking industry’s gross impaired loans ratio of 3.0%.
  • The Group’s loan loss coverage increased further to 169.7% and continues to be the highest and most prudent in the Malaysian banking industry.
  • The Group’s Tier 1 capital ratio and risk-weighted capital ratio remain healthy at 9.7% and 13.2% respectively as at the end of June 2011, after accounting for the first interim dividend of 2011.

Highlights of the Public Bank Group’s Performance for the Second Quarter as compared to the First Quarter of 2011

  • Pre-tax profit grew by 5.9% to RM1.16 billion in the second quarter of 2011 as compared to the first quarter of 2011.
  • Net profit attributable to shareholders grew by 6.4% to RM880 million in the second quarter of 2011 as compared to the first quarter of 2011.

Continued Strong Profit Performance
“The strong profit performance of the Public Bank Group for the first half of 2011 was mainly attributed to the healthy growth in net interest and finance income, higher non-interest income coupled with lower credit charges,” said Tan Sri Teh.  

Tan Sri Teh further commented that, “Despite the competitive pressure on interest margins, the Group’s net interest and finance income improved by RM270 million or 10.4 % in the first half of 2011 as compared to the corresponding period of 2010 due to strong growth in loans and customer deposits as well as  the sustained strong asset quality.

Non-interest income of the Public Bank Group recorded a commendable growth of 12.7% as compared to the corresponding period in 2010, mainly driven by higher fee income from Public Mutual’s unit trust business as well as higher investment income.

The Public Bank Group’s loan impairment allowances decreased by 3% despite the strong loan growth in the first half of 2011. This was directly attributed to the continued improvement in asset quality as a result of the Group’s prudent credit policies and effective credit monitoring,  as evidenced by the Group’s low gross impaired loan ratio of below 1%.”

Strong Momentum in Loan Growth
The Public Bank Group sustained its strong loan growth momentum with a RM10.6 billion increase or an annualised growth rate of 13.6% in the first half of 2011. “In particular, domestic loans grew at a stronger annualised growth rate of 14.5%, leading to an increase in the Group’s domestic lending market share to 16.4%,” said Tan Sri Teh.

The lending activities of the Public Bank Group remained focused on the retail sector, with loans to mid-market commercial enterprises as well as loans for the financing of residential properties and purchase of passenger vehicles accounting for 85% of the total loan portfolio of the Group as at the end of June 2011. In particular, the Group’s residential properties financing grew at an impressive annualised rate of 16.7% in the first half of 2011.  

Tan Sri Teh added that, “Public Bank continued to sustain its market leadership position in domestic lending for residential mortgages, commercial property financing and passenger vehicles financing with market shares of 17.7%, 34.0% and 25.8% respectively.”

In the first half of 2011, the Public Bank Group’s domestic loan approvals for residential properties rose at an impressive rate of 17% as compared to the corresponding period in 2010. The Group continued its strong support of the Government’s effort to promote SME activities with the approval of RM5.7 billion of loans to domestic SMEs, accounting for more than 21% of the Group's total domestic loans approved of RM26.9 billion in the same period.

Sustained Strong Asset Quality
Tan Sri Teh highlighted that, “The Public Bank Group has not only maintained its top ranking in asset quality amongst its peers, but also further improved its gross impaired loans ratio from 1.14% as at the beginning of the year to below 1% as at the end of June 2011, significantly lower than the Malaysian banking industry’s gross impaired loan ratio of 3.0%.”

The strong asset quality of the Public Bank Group is due to, inter alia, its prudent lending policies and strong risk management practices, its affluent customer base, as well as the prompt and timely loan restructuring and recovery efforts undertaken by the Group.

The Public Bank Group's loan loss coverage ratio also continue to remain one of the highest at 169.7%, as compared to the banking industry's coverage ratio of 92.2% despite that more than 90% of the impaired loans outstanding are secured. In line with BNM’s Guidelines to maintain a minimum of 1.5% collective assessment, the increase in the Group’s loan loss coverage was a result of setting aside additional collective assessment allowance for strong loan growth while maintaining a stable level of impaired loan.

Healthy Growth of Domestic Customer Deposits
The customer deposits of the Public Bank Group grew at an annualised growth rate of 12.9% in the first half of 2011. In particular, domestic customer deposits grew at a stronger annualised growth rate of 14.8%.

“The Group’s domestic core customer deposits grew at an annualised growth rate of 13% in the first half of 2011, as compared to the domestic banking industry’s core customer deposits annualised growth of 8.5%,” said Tan Sri Teh. The strong domestic core deposit growth of the Group was mainly supported by steady inflows of deposits, particularly fixed deposits and savings deposits which grew at an annualised growth rate of 13.5% and 14.1% respectively in the first half of 2011, outperforming the Malaysian banking industry’s annualised 8% growth in both fixed deposits and savings deposits.

Expansion of Overseas Operations
The Public Bank Group’s overseas operations contributed 7% of the Group’s pre-tax profit for the first half of 2011. Cambodian Public Bank Plc (“Campu Bank”), a wholly-owned subsidiary of Public Bank reported a strong growth in pre-tax profit of 33% to USD13.4 million in the first half of 2011 as compared to USD10.1 million in the corresponding period in 2010. Campu Bank remains one of the largest banks in Cambodia by balance sheet size.

“The Public Bank Group remains committed to expanding its overseas operations, particularly the Group’s Hong Kong and Cambodian operations. The Group currently has a network of 83 branches in Hong Kong and 3 branches in Shenzhen in the People’s Republic of China, with further plans to open 3 new branches in Hong Kong by the end of 2011. In Cambodia, the Group has 21 branches, with another 6 branches targeted to be opened in the second half of 2011,” said Tan Sri Teh.

Growth in Fee-based Income
The Public Bank Group continued to develop its fee-based income from unit trust, bancassurance and wealth management products, in order to further enhance the Group’s profitability and return on equity.

Tan Sri Teh said, “The Group’s unit trust management business through our wholly-owned subsidiary, Public Mutual, continued to show commendable performance with a pre-tax profit growth of 24% in the first half of 2011, and maintained its market leadership position with RM44.4 billion of net assets under management, accounting for an overall market share of 44%.”

Public Mutual’s market share in the equity and Islamic unit trust fund sectors stood at 60% and 58% respectively. Net assets under management increased by 21.7% to RM44.4 billion as at the end of June 2011 as compared to RM36.5 billion a year ago. Public Mutual currently manages 86 funds with more than 100 billion units in circulation. Leveraging on the Public Bank Group’s large branch network and a strong unit trust consultant force, Public Mutual aims to further expand its customer base, which currently stands at over 2.5 million accounts.

2011 marks the fourth year of the Public Bank Group’s strategic alliance with the ING Group on bancassurance distribution. The Public Bank Group will continue with its efforts to further build the infrastructure to drive the expansion of the Group's bancassurance business to increase its fee-based commission income in the long run.

Tan Sri Teh added that, “Public Takaful Ehsan Berhad, the joint venture family takaful business between ING Management Holdings (Malaysia) Sdn Bhd and the Public Bank Group, which was launched on 5 April 2011, is also expected to contribute positively towards this end and further enhance the Group’s long-term fee-based revenue flows.”

Capital Position Remains Healthy
The Public Bank Group’s capital position remains healthy, with its Tier 1 capital ratio and risk-weighted capital ratio standing at 9.7% and 13.2% respectively as at the end of June 2011, after the payment of the first interim dividend of 2011. The Group is confident that it is well-positioned to meet the minimum requirements of Basel III, with its phased implementation coming into effect from 1 January 2013.

The Public Bank Group will continue to monitor further developments in relation to the Basel III requirements as well as additional regulatory capital requirements to be imposed by Bank Negara Malaysia. This will allow the Group to address the potential impact of such requirements by realigning existing capital management strategies from time to time.

“The Group remains committed to maintaining a healthy level of capital at all times to support the Group’s business growth strategies whilst maximising its shareholder value,” said Tan Sri Teh.

Prospects
The Malaysian economy is expected to grow by 5% to 6% in 2011. The outlook of the Malaysian banking sector, in which the Public Bank Group largely operates in, remains positive, supported by the strong economic fundamentals, robust domestic demand and the roll-out of the Economic Transformation Programme.

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

Tan Sri Teh remarked that, “The Public Bank Group’s performance for the first half of 2011 was satisfactory and in line with expectations. The Group will continue to expand its core banking and financing business with strong credit fundamentals and remain on course to meet its key business targets for 2011. Barring unforeseen circumstances, the Group is expected to maintain its earnings momentum and record satisfactory performance in the second half of 2011.”

Tan Sri Dato’ Sri Dr. Teh Hong Piow
Chairman

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