Public Bank Bhd · MYX:PBBANK
Public Bank Bhd — 22nd CLSA Investors' Forum 2015
36 slides from Public Bank Bhd's conference presentation, Sep 14, 2015
Slide 1: Investor Presentation
Investor Presentation 22nd CLSA Investors’ Forum Hong Kong 14-18 September 2015 www.publicbankgroup.com
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: Sustainable Organic Growth Momentum
Quick Facts Sustainable Organic Growth Momentum “The Public Bank Group will continue its organic growth strategies of growing its core business of consumer financing. Based on the steady expansion of the economy, stable employment prospect and ongoing demand for residential properties, the Group is
Slide 5: Contents
Contents Introduction to Share Price and Public Bank Market Appendix Group Capitalisation slide # 6 10 30 33 34 Group Summary Performance 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 RM’bil RM’bil 363.6 345.7 5.81 305.7 5.31 274.8 5.05 250.8 4
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: PBB's Business Growth Strategies
PBB’s 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 9: Expansion in Business Delivery Channel
Expansion in Business Delivery Channel Jun-15 2014 2010 Malaysian Operations Public Bank - Domestic 257 257 249 - Overseas 7 7 4 Public Islamic Bank 2 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 • 48 years of unbroken profitability • Healthy profit growth in past 5 years RM’mil y-o-y growth (%) 2010 2011~ 2012^ 2013 2014 1H 2015 2011 2012 2013 2014 1H 2015** Pre-tax profit 4,086 4,878 5,047 5,310 5,814 3,020 19.4 3.5 5.2 9.5 12.1 Net profit 3,048 3,684 3,827 4,0
Slide 11: Above-industry Return on Equity (ROE)
Above-industry Return on Equity (ROE) 33.8~ 30.4^ 28.1 24.7 21.2 17.4 17.5 15.6 15.2 12.7 2011 2012 2013 2014 Q2 2015 Pre-tax PBB ROE (%) Pre-tax Industry ROE (%) ~ Restated with retrospective application of MFRS 139 ^ Restated with retrospective application of MFRS 119 11 Investor Presentation
Slide 12: Key Highlights
Key Highlights Pre-tax profit Net profit Earnings per Total assets Net return on attributable to share equity shareholders RM 3,020m RM2,368m 61.3sen RM 363.6b 17.2% 1H2014:RM2,695m 1H2014:RM2,073m 1H2014:59.2sen Dec2014:RM345.7b Dec2014:19.9% 12.1% 14.2% 3.5% 10.4%* 2.7% Loan - Loan - Deposit - Dep
Slide 13: Key Highlights
Key Highlights Cost to income Gross impaired Loan loss ratio loans ratio coverage++ 31.1% 0.5% 129.2% Dec2014:30.0% Dec2014:0.6% Dec2014:122.4% Common equity Tier I capital Total capital Tier I capital ratioπ ratioπ ratioπ 10.7% 11.9% 15.4% Dec2014:10.8% Dec2014:12.2% Dec2014:15.8% π After deducting
Slide 14: Segmental Profit – Retail Centric
Segmental Profit – Retail Centric Retail operations Fund management Treasury operations Corporate lending (Individuals + SMEs) RM’mil 55.1% 9.1% 8.1% 6.8% 1H 2015 1,664.5 276.0 243.1 206.7 1H 2014 1,593.8 236.8 198.8 181.4 Change 4.4% 16.5% 22.3% 13.9% Hire purchase Overseas operations Investment ba
Slide 15: Net Interest Margin
Net Interest Margin 2.53 2.52 2.43 2.36 2.36 2.37 2.32 2.28 2.20 2.29 2.20 2.15 2.11 Net Interest and Finance Income Net Interest Margin (%) 1,750 RM’mil 1,618 1,589 1,505 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2012 2013 2014 2015 15 Investor Presentation
Slide 16: Non-Interest Income Composition & Growth
Non-Interest Income Composition & Growth Non-interest Income Contribution RM’mil 1,071.2 15.3% 929.2 380.1 35.5% Unit Trust income 349.8 30.9% Fee & commission income 14.1% Foreign exchange income 330.6 11.4% Investment income 277.1 4.5% Stockbroking income 150.7 124.9 3.6% Others 100.4 122.8 42.8 4
Slide 17: Efficient Operating Overheads
Efficient Operating Overheads RM’mil 1H 2015 1H 2014 Changes Operating Costs Composition Personnel costs 1,027.6 947.6 8.4% Establishment costs 255.3 243.0 5.0% Marketing Expenses 54.4 59.5 8.5% Administration Expenses 87.7 71.8 22.2% Total 1,425.0 1,321.9 7.8% Industry 1H 2015 2014 Average Gross lo
Slide 18: Consistently Above-Industry Loan Growth
Consistently Above-Industry Loan Growth Loan Growth vs Industry Gross Loans and Domestic Loan Market Share % 16.7% 16.9% 17.1% 17.4% 16.4% 258.8 RM’bil 245.0 221.2 240.3 228.3 197.8 206.6 177.7 184.5 14.1% 12.5% 12.0% 10.8% 11.2%* 164.1 13.6% 11.3% 11.8% 10.5% 10.5%* 13.5% 10.4% 10.6% 9.3% 7.2%* 201
Slide 19: Gross Loan Composition by Segment
Gross Loan Composition by Segment Composition 62.4% 18.7% 11.6% 5.5% 1.3% 0.5% 5.4% 4.0% 6.2% 10.2% 11.1% 13.4% 258.8 RM’bil 245.0 Dec-14 Retail Hire Corporate Hong Kong Cambodia Others Jun-15 Gross loans operations purchase lending Gross loans Jun-15 161.5 48.3 30.0 14.3 3.3 1.4 Dec-14 153.2 46.4 2
Slide 20: Gross Loan & Financing in Domestic Operations
Gross Loan & Financing in Domestic Operations 19.6% 19.3% 19.2% 33.7% 33.7% 33.5% 33.8% 18.1% 19.1% 32.9% Of which, financing to Domestic SMEs RM’bil 75.4 79.5 67.5 64.1 58.0 59.7 56.8 48.8 52.3 52.4 44.4 43.8 36.3 36.5 29.6 Residential properties Commercial properties SME 28.8% 26.5% 28.0% 25.9% 26
Slide 21: 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 22: Upholding Strong Asset Quality
Upholding Strong Asset Quality High loan loss coverage Of which: Residential properties financing 126.0% 129.2% ++ 118.5% 122.4% 113.8% ~ 0.7% 0.6% RM’mil 0.5% 527 505 459 2011 2012 2013 2014 1H 2015 2013 2014 1H 2015 Loan loss coverage Transport vehicle financing ~ Restated with retrospective appli
Slide 23: Upholding Strong Asset Quality
Upholding Strong Asset Quality Quarterly Loan Impairment Allowances (including collective allowances) 0.15% 0.11% 0.10% 0.12% 0.10% 0.08% RM’mil 84.8 75.7 33.8 64.7 62.9 60.9 27.2 13.7 46.6 29.0 28.3 6.3 51.0 51.0 48.5 40.3 33.9 32.6 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Domestic Overseas
Slide 24: Healthy Deposit Growth in Support of Liquidity
Healthy Deposit Growth in Support of Liquidity Deposit Growth vs Industry Deposits – Outstanding Balance and Market Share % 15.9% 16.3% 15.2% 15.7% 14.9% 233.0 216.7 RM’bil 201.3 177.0 157.3 14.7% 13.0% 11.6% 10.2% 13.6%* 59.7 62.2 42.9 47.8 49.5 14.3% 12.3% 11.5% 9.9% 11.9%* 13.3% 8.4% 8.5% 7.6% 5.
Slide 25: Strong Core Deposit Growth
Strong Core Deposit Growth Domestic Current Deposit Source of Core Deposit 15.6% 17.0% 14.0% 7.3% 8.5%* RM’bil 233.0 13.2% 12.1% 12.8% 4.7% 1.8%* 216.7 201.3 42.1 2011 2012 2013 2014 Jun-15 41.4 177.0 38.2 29.1 Domestic Savings Deposit 157.3 32.6 27.7 25.8 28.8 10.4% 23.7 8.2% 8.3% 7.3%* 21.9 4.3% 1
Slide 26: Unit Trust & Bancassurance
Unit Trust & Bancassurance Net Asset Value of Funds under management Bancassurance Business – Annualised New Premium 44.3% 40.8% 41.2% 39.4% 38.4% 64.7 RM’bil 62.5 63.0 RM’mil 54.6 14.7 14.9 177.5 18.3 44.7 17.2 18.1 143.2 124.9 13.3 116.2 29.8 3.8 98.9 20.1 48.1 50.0 160.3 26.0 44.2 36.5 113.4 121.
Slide 27: Strong Capital Position
Strong Capital Position Groupπ Bankπ RM’bil Jun-15 Dec-14 Jun-15 Dec-14 Common Equity Tier I Capital 24.6 23.6 22.1 21.9 Tier I Capital 27.4 26.7 24.8 25.1 Total Capital 35.5 34.6 29.3 28.6 Risk-weighted Assets 230.2 218.7 189.3 182.4 Common Equity Tier I Capital Ratio 10.7% 10.8% 11.7% 12.0% Tier I
Slide 28: Proactive Capital Management Initiative
Proactive Capital Management Initiative PBB Group Basel III transitional phase in Jun-15 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 COMMON EQUITY TIER I 10.7% 5.125% 5.75% 6.375% 7.0% CAPITAL 4.5% TIER I 11.9% CAPITAL 7.25% 7.875% 8.5% 6.0% 6.625% TOTAL 15.4% CAPITAL 10.5% 8.0% 8.625% 9.25% 9.875% Note: The
Slide 29: Targets & Achievements
Targets & Achievements The Public Bank Group’s achievement vs key performance targets are as follows: Key Performance Benchmarks 2015 Targets Achievement Net Return on Equityᵝ >16% 17.2% Total Capital Ratio >13% 15.4% Gross Impaired Loan Ratio <1% 0.5% Cost to Income Ratio <32% 31.1% Loan Growth – D
Slide 30: Share Price & Market Capitalisation
Share Price & Market Capitalisation Share Price & Market Capitalisation 19.40 18.30 17.94 16.28 Market Capitalisation 13.38 71.04 69.65 19 August 2015 (RM’bil) 68.67 PBB 69.7 RM’bil 57.52 MBB 80.7 47.07 CIMB 42.5 HLB 24.0 RHB 16.9 AMMB 14.9 2011 2012 2013 2014 Aug-15 Market Capitalisation (RM'bil) S
Slide 31: Share Price & Market Capitalisation
Share Price & Market Capitalisation Resilient share price performance Kuala Lumpur Composite Index Public Bank (Local) Public Bank (Foreign) FBM KLCI Share price (RM) 2100 1900 20.00 1700 1500 15.00 1300 1100 * 16 April 2014 900 10.00 700 500 5.00 300 100 -100 0.00 * PBB Foreign shares and PBB Local
Slide 32: Share Price & Market Capitalisation
Share Price & Market Capitalisation • 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 2010 +104.9% +14.0% Long term - since listing 1967 +1,479.0% +
Slide 33: 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 34: Appendix
Appendix RM’mil 2011~^ 2012^ 2013 2014 1H 2015 Operating profit 5,200 5,329 5,655 6,067 3,153 Profitability Profit before tax 4,878 5,047 5,310 5,814 3,020 Net profit 3,684 3,827 4,065 4,519 2,368 Earnings per share (sen) 105.2 109.3 116.1 123.7 61.3 Shareholder Net assets per share (RM) 4.52 5.15 5
Slide 35: Appendix (cont'd)
Appendix (cont’d) % 2011~^ 2012^ 2013 2014 1H 2015 Industry Net interest margin on yielding assets 2.65 2.51 2.36 2.24 2.13 N/A Profitability Net return on equity+ 26.8 24.1 22.4 19.9 17.2 N/A Ratios Pre-tax return on average assets 2.0 1.9 1.8 1.8 1.7 1.5 Cost to income ratio 29.8 31.2 30.7 30.0 31
Slide 36: Investor Relations Contact
Investor Relations Contact Ms Chang Siew Yen Chief Operating Officer +(603) 2176 7460 changsiewyen@publicbank.com.my Ms Yik Sook Ling Chief Financial Officer +(603) 2177 3310 yiksookling@publicbank.com.my Mr Ng Seiw Kuan Director, Corporate Planning and Strategy +(603) 2177 3170 ngseiwkuan@publicban