Public Bank Bhd · MYX:PBBANK
Public Bank Bhd — DB Access Asia Conference 2014
41 slides from Public Bank Bhd's conference presentation, May 2014
Slide 1: Investor Presentation – DB Access Asia Conference 2014
Investor Presentation DB Access Asia Conference 2014 Singapore 19 – 23 May 2014 www.publicbank.com.my/corporate
Slide 2: Disclaimer
Disclaimer The materials and information in the presentations and other documents are a summary only, do not purport to contain all of the material information regarding Public Bank and are qualified in their entirety by reference to our public disclosure. You may not rely on these materials as prov
Slide 3: Quick Facts
Quick Facts Top-tier bank in Malaysia Most award-winning bank in Malaysia* Highly experienced management Unbroken profit track record since incorporation in 1966 Strong financial ratings & corporate governance Valuable PB Brand & retail franchise * Certified by the Malaysia Book of Recor
Slide 4: Quick Facts: Our Strategies Remain Unchanged
Quick Facts Our Strategies remain unchanged “The Public Bank Group will continue to focus on its key strength in core retail banking and financing business whilst maintaining its prudent credit policies, and further improve on its cost efficiency. The Group will continue to uphold its strong asset q
Slide 5: Agenda
Investor Presentation Page INTRODUCTION TO PUBLIC BANK GROUP 6-9 GROUP PERFORMANCE 10 - 33 MARKET CAPITALISATION AND ANALYSTS’ POLL 34 - 37 SUMMARY 38 APPENDIX 39 - 40 5 Investor Presentation
Slide 6: Introduction to Public Bank Group
Introduction to Public Bank Group • Commenced operations in 1966 with one branch • Listed in April 1967 on Bursa Malaysia Securities Berhad (then known as Kuala Lumpur Stock Exchange) • Geographical Contribution Total Assets Pre-tax Profit 90% 90% 91% 92% 93% 93% 93% 91% 93% 92% 94% 94% 93% 93% 10%
Slide 7: Overview of PBB Group
Overview of PBB Group PBB Group is a full financial services group providing a wide range of services in Malaysia and in five countries/locations Hong Kong Cambodia Vietnam Laos & China Malaysia Sri Lanka Public Bank (Hldg Co) Public Bank (HK) Cambodian Public VID Public Bank Public Bank Public Bank
Slide 8: Growth Strategy and Retail Business Focus
Growth Strategy and Retail Business Focus Growth Strategy: Sustainable organic growth Retail Business Focus • Lending Consumer Financing: home mortgages, vehicle financing, credit cards, personal financing Lending to SMEs: working capital, purchase of business premises, trade finance • Deposits
Slide 9: Expansion in Business Delivery Channel
Expansion in Business Delivery Channel Mar-14 2013 2009 Malaysian Operations Public Bank - Domestic 257 257 248 - Overseas 6 6 5 Public Islamic Bank 2 1 - Public Mutual 28 28 26 Public Investment Bank 1 1 1 Hong Kong & China Operations Public Finance 42 42 42 Public Bank (HK) - Hong Kong 32 32 30 -
Slide 10: Unbroken Profit Track Record
Unbroken Profit Track Record • 47 years of unbroken profitability • Healthy profit growth in past 5 years RM’mil y-o-y growth (%) 2008* 2009 2010 2011~ 2012^ 2013 1Q2014 2009 2010 2011 2012 2013 1Q2014** Pre-tax profit 3,179 3,321 4,086 4,878 5,047 5,310 1,327 4.5 23.0 19.4 3.5 5.2 4.5 Net profit 2,
Slide 11: Steady Profit Growth
Steady Profit Growth Profits and EPS 29.0 27.6 26.6^ 25.2~ 19.7 ^ ~ 1,327.1 RM’mil 1,231.4^ 1,270.0 1,173.1~ 968.3 1,016.9 922.6 884.1~ 930.2 ^ 685.3 Q1 2010 Q1 2011 Q1 2012 Q1 2013 Q1 2014 Pre-tax profit Net profit attributable to shareholders EPS (sen) ~ Restated with retrospective application of
Slide 12: Above-industry Return on Equity (ROE)
Above-industry Return on Equity (ROE) 34.3 33.8~ 32.1 30.4^ 28.1 25.7 1.6x of industry’s 17.4 17.5 ROE 16.6 15.6 15.6 14.0 2009 2010 2011 2012 2013 Q1 2014 Pre-tax PBB ROE Pre-tax Industry ROE # Excluding one-off goodwill income from ING ~ Restated with retrospective application of MFRS 139 ^ Restat
Slide 13: Key Highlights
Key Highlights Pre-tax Net profit Earnings per Total Net return on profit attributable to share assets equity shareholders RM1,327m RM1,017m 29.0sen RM312.5b 20.5% (+4.5%) (+5.0%) (+5.1%) (+8.9%)* Q1 2013: RM1,270m Q1 2013: RM968m Q1 2013: 27.6sen Dec 2013: RM305.7b Dec 2013: 22.4% Loan - Loan - Dep
Slide 14: Key Highlights
Key Highlights Cost to Gross Loan loss income ratio impaired coverage loans ratio 31.8% 0.7% 119.1% Dec 2013: 30.7% Dec 2013: 0.7% Dec 2013: 118.5% Common Tier I capital Total capital equity Tier I ratio ratio capital ratio 8.5% 10.1% 13.3% Dec 2013: 8.8%π Dec 2013: 10.5%π Dec 2013: 13.8%π π After d
Slide 15: Segmental Profit – Retail Centric
Segmental Profit – Retail Centric Retail operations Hire purchase Fund management Treasury operations RM’mil Retail and HP operations 58.7% 10.4% 8.5% 7.5% contributed >2/3 of the Q1 2014 779.6 137.3 112.8 99.3 Group’s pre- tax profit Q1 2013 779.6 134.7 96.3 84.2 Change - 2.0% 17.1% 17.9% Corporate
Slide 16: Net Interest Margin – Continued to be under pressure
Net Interest Margin – Continued to be under pressure 2.61 2.70 2.68 2.62 2.55 2.53 2.52 2.43 2.36 2.36 2.37 2.32 2.28 Net interest margin continued to be under Net Interest and Finance Income Net Interest Margin (%) pressure as a result of 1,599 intense market RM’mil 1,548 competition 1,472 1,395 Q1
Slide 17: Non-Interest Income Composition & Growth
Non-Interest Income Composition & Growth Non-interest Income Contribution 423.2 455.0 Forex/ RM’mil Revaluation gain 129.8 131.6 Others 13.4% Investment 3.9% income 11.8% 155.8 172.5 Stockbroking income 4.1% 17.6 18.6 43.1 53.9 Fee income Unit Trust 28.9% 58.1 60.7 income 37.9% 18.8 17.7 Q1 2013 Q1
Slide 18: Efficient Operating Overheads
Efficient Operating Overheads Operating Costs Composition RM’mil Q1 2014 Q1 2013 Changes Personnel Costs 464.3 444.0 4.6% Marketing Establishment Expenses Establishment Costs 120.9 113.0 7.0% Costs 4.6% 18.4% Administration Marketing Expenses 30.1 37.3 19.3% Expenses 6.2% Administration Expenses 40.
Slide 19: Consistently Above-Industry Loan Growth
Consistently Above-Industry Loan Growth Loan Growth vs Industry Gross Loans and Domestic Loan Market Share % RM’bil 16.9% 17.0% 16.7% 15.6 14.1 16.3% 16.4% 226.6 13.8 13.6 221.2 12.5 12.0 13.5 11.8 12.7 11.3 197.8 212.2 10.7* 206.6 10.4 10.6 9.8* 177.7 184.5 6.9* 156.5 164.1 143.8 2010 2011 2012 201
Slide 20: Gross Loan Composition by Segment
Gross Loan Composition by Segment Retail operations Hire purchase Corporate lending RM’bil 62.5% 19.5% 11.5% Loan growth continues to be supported through the Mar-14 141.7 44.1 26.0 Group’s retail and hire Dec-13 137.5 43.2 25.6 purchase segments Change 3.0% 2.2% 1.6% Hong Kong Cambodia Others ϒ 5.1
Slide 21: Retail Operations
Retail Operations Gross loan & financing in Domestic Operations Retail operations • Steady growth trend in residential properties financing & commercial properties financing • Remained market leader in the residential properties financing & commercial properties financing 62.5% 33.9% 33.7% 33.8% 33.
Slide 22: Hire Purchase
Hire Purchase Hire purchase HP Financing in Domestic Operations 27.0% 26.5% 19.5% 26.4% 25.9% 25.5% RM’bil • Remained market leader in the domestic passenger vehicle financing 43.2 44.1 40.4 • Consistent growth trend 37.1 in hire purchase 33.6 financing 2010 2011 2012 2013 Mar-14 Gross HP financing
Slide 23: Sustaining Strong Asset Quality
Sustaining Strong Asset Quality • Focus on lower risk customer segments − Traditional urban/ suburban mortgages − Passenger vehicle hire purchase − Middle market business enterprises • Sound credit appraisal and approval process • Strong credit risk culture • Proactive loan restructuring and resched
Slide 24: Upholding Strong Asset Quality
Upholding Strong Asset Quality Quarterly Loan Impairment Allowances (including collective allowances) 0.19% 0.17% 0.16% 0.15% 0.15% RM’mil 103.3 90.3 81.4 84.8 76.3 41.7 34.2 39.2 33.8 35.2 61.6 56.1 51.0 42.2 41.1 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Domestic Overseas Credit cost ratio 24 Invest
Slide 25: Gross Impaired Loan
Gross Impaired Loan High loan loss coverage Of which: Residential properties financing 126.0% 113.8%~ 118.5% 119.1% 0.7% 0.7% 0.7% 94.2%~ RM’mil 527 527 420 2010 2011 2012 2013 Q1 2014 2012 2013 Q1 2014 Loan loss coverage Passenger vehicle financing ~ Restated with retrospective application of MFRS
Slide 26: Healthy Deposit Growth in Support of Liquidity
Healthy Deposit Growth in Support of Liquidity Deposit Growth vs Industry Deposits – Outstanding Balance and Market Share % 14.7 14.2* 14.3 13.0 15.6% 16.0% 11.6 12.8* 14.8% 14.9% 15.2% 13.3 12.3 201.3 209.0 11.5 RM’bil 177.0 8.5 8.4 157.3 7.3 143.6 4.3 4.4 3.5 42.9 47.8 49.5 49.8 32.8 2010 2011 201
Slide 27: Strong Core Deposit Growth
Strong Core Deposit Growth Domestic Current Deposit Source of Core Deposit 35.1% 15.6% 14.0% 17.0% 18.0% 5.0%* 17.4% 13.2% 12.1% 12.8% 11.3% λ 16.3% 16.6% -1.3% 16.1% 2010 2011 2012 2013 Mar-14 39.0 RM’bil 38.2 Domestic Savings Deposit 32.6 27.0 25.8 17.1%* 28.8 10.4% 25.5 23.7 8.2% * 8.3% 15.8% 21.
Slide 28: Unit Trust & Bancassurance
Unit Trust & Bancassurance Net Asset Value of Funds under management Bancassurance Business – Annualised Premium Equivalent 43.5% 44.3% 40.8% 41.2% 40.8% RM’bil 62.5 62.6 RM’mil 54.6 18.3 17.6 44.7 121.1 40.6 18.1 113.4 13.3 97.3 96.1 10.3 44.2 45.0 36.5 30.3 31.4 27.2 29.8 30.0 20.1 3.8 3.6 2010 20
Slide 29: Ensuring Healthy Capital Position
Ensuring Healthy Capital Position Group Bank RM’bil Mar-14 Dec-13π Mar-14 Dec-13π Common Equity Tier I Capital 17.5 17.5 16.4 17.2 Tier I Capital 20.6 21.0 19.5 20.8 Total Capital 27.1 27.5 22.2 22.5 Risk-weighted Assets 204.6 199.7 171.4 167.4 Common Equity Tier I Capital Ratio 8.5% 8.8% 9.6% 10.3%
Slide 30: Maintenance of Regulatory Reserves
Maintenance of Regulatory Reserves The regulatory reserves requirement by Bank Negara Malaysia (“BNM”) and impacts towards the Group are as follows: • To maintain, in aggregate, collective impairment provisions and regulatory reserves of no less than 1.2% of total outstanding loans/financing net of
Slide 31: Proactive Capital Management Initiative
Proactive Capital Management Initiative PBB Group Basel III transitional phase in Mar-14 # Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 COMMON EQUITY 8.5% TIER I 5.75% 6.375% 7.0% 4.0% 4.5% 5.125% CAPITAL TIER I 10.1% CAPITAL 7.25% 7.875% 8.5% 5.5% 6.0% 6.625% TOTAL 13.3% CAPITAL 9.25% 9.875% 10.5% 8.0
Slide 32: Targets & Achievements
Targets & Achievements The Public Bank Group’s achievement vs key performance targets are as follows: Key Performance Benchmarks 2014 Targets Achievement Net Return on Equity >20% 20.5% Total Capital Ratio >12% 13.3% Gross Impaired Loan Ratio <1% 0.7% Cost to Income Ratio <32% 31.8% Loan Growth – Do
Slide 33: Our Business Growth Strategies
Our Business Growth Strategies Continue in Achieving Organic Growth While Sustaining Our Premier Status in the Local Banking Industry • Consumer lending to focus on purchases of properties and passenger vehicles Lending • Penetrate mid-market SMEs & micro enterprises in encouraged sectors Business •
Slide 34: Share Price & Market Capitalisation
Share Price & Market Capitalisation Share Price & Market Capitalisation 19.40 20.14 16.28 30 Apr 2014 Market Capitalisation 13.38 71.13 (RM’bil) 13.02 68.67 PBB 71.1 57.52 RM’bil MBB 87.8 45.96 47.07 CIMB 62.6 HLB 26.3 AMMB 21.6 RHB 21.1 2010 2011 2012 2013 Apr-14 Market Capitalisation (RM'bil) Shar
Slide 35: Market Capitalisation and Analysts' Poll
Market Capitalisation and Analysts’ Poll Resilient share price performance Kuala Lumpur Composite Index Public Bank (Local) Public Bank (Foreign) FBM KLCI Share price (RM) 2000 20.00 1800 1600 1400 15.00 1200 1000 * 16 April 2014 10.00 800 600 5.00 400 200 0 0.00 * PBB Foreign shares and PBB Local s
Slide 36: Market Capitalisation and Analysts' Poll
Market Capitalisation and Analysts’ Poll • Superior investment returns Illustration on investment returns Total returns Shares acquired (capital appreciation^ + Compounded annual since dividends) rate of return Medium term - 5 years 1 January 2009 +159.5% +21.0% Long term - since listing 1967 +7,162
Slide 37: Market Capitalisation and Analysts' Poll
Market Capitalisation and Analysts’ Poll • Average daily volume/ value traded: Average Daily Volume Average Daily Value (million) (RM’million) 2013 3.7 63.2 YTD 30 Apr 2014 5.5 106.8 • Poll of analysts Buy/ Hold/ Sell recommendations on PBB Shares as at 9 May 2014 Buy Hold Sell No. of Analysts PBB 5
Slide 38: Summary
Summary • Profitable retail franchise − Domestic and Indo-China markets − Growing market share − Affluent and quality retail customer base for lending and wealth management business • Unbroken profit track record and sustained strong asset quality • Strong brand • Proactive capital management • Larg
Slide 39: Appendix
Appendix RM’mil 2009 2010~ 2011~^ 2012^ 2013 Q1 2014 Operating profit 4,015 4,738 5,200 5,329 5,655 1,408 Profitability Profit before tax 3,321 4,086 4,878 5,047 5,310 1,327 Net profit 2,517 3,048 3,684 3,827 4,065 1,017 Earnings per share (sen) 73.3 87.2 105.2 109.3 116.1 29.0 Net assets per share
Slide 40: Appendix (cont'd)
Appendix (cont’d) % 2009 2010~ 2011~^ 2012^ 2013 Q1 2014 Industry Net interest margin on yielding assets 2.4 2.7 2.7 2.5 2.4 2.3 N/A Profitability Net return on equity+ 26.1 27.1 26.8 24.1 22.4 20.5 N/A Ratios Pre-tax return on average assets 1.6 1.8 2.0 1.9 1.8 1.7 1.5 Cost to income ratio 32.6 30.
Slide 41: Investor Relations Contact
Investor Relations Contact Ms Chang Siew Yen Chief Operating Officer +(603) 2176 7460 changsiewyen@publicbank.com.my Mr Ng Seiw Kuan Director, Corporate Planning and Strategy +(603) 2177 3170 ngseiwkuan@publicbank.com.my Ms Yik Sook Ling Chief Financial Officer +(603) 2177 3310 yiksookling@publicban