Public Bank Bhd · MYX:PBBANK
Public Bank Bhd — 23rd CLSA Investors' Forum 2016
33 slides from Public Bank Bhd's conference presentation, September 2016
Slide 1: Investor Presentation
Since 1966 Investor Presentation 23rd CLSA Investors’ Forum Hong Kong 19-23 September 2016
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’s prudent management with integrity over the years has placed the Group on a solid footing to ride through challenges. In 2016, the Group will sharpen its focus in the pursuit of stable and sustainable growth in the core banking a
Slide 5: Contents
Contents Introduction to Group Share Price & #6 Public Bank #10 #27 Market Performance Group Capitalisation #30 Summary #31 Appendix 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) • A retail bank with domestic operations contributing over 90% of the Group’s assets and profits Total Assets Pre-ta
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 Public Bank Public Bank Public Bank Ban
Slide 8: PBB's Business Growth Strategies
PBB’s Business Growth Strategies Strategic Focus: Organic growth in focus areas Business Strategic Approach Consumer lending to focus on purchases of residential and non-residential properties and Core Focus Lending passenger vehicles Business Continue to penetrate mid-market SME financing in en
Slide 9: Expansion in Business Delivery Channel
Expansion in Business Delivery Channel Jun-16 2015 2010 Malaysian Operations Public Bank - Domestic 257 257 249 - Overseas 7 7 4 Public Islamic Bank 2 2 1 Public Mutual 29 29 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 • 49 years of unbroken profitability • Healthy profit growth in past 5 years RM’mil y-o-y growth (%) 2011~ 2012^ 2013 2014 2015 1H 2016 2012 2013 2014 2015 1H 2016** Pre-tax profit 4,878 5,047 5,310 5,814 6,491 3,203 3.5 5.2 9.5 11.6 6.1 Net profit 3,684 3,827 4,065 4,51
Slide 11: Above-industry Return on Equity (ROE)
Above-industry Return on Equity (ROE) 30.4^ 28.1 24.7 22.1 20.2 17.5 15.6 15.2 12.4 13.2 2012 2013 2014 2015 Q2 2016 Pre-tax PBB ROE (%) Pre-tax Industry ROE (%) ^ Restated with retrospective application of MFRS 119 11 Investor Presentation
Slide 12: Key Highlights: Income Statement and Financial Indicators
Key Highlights Pre-tax profit Net Profit attr. Earnings per Income Statement to shareholders share 6.1% 5.0% 5.1% RM3,203m RM2,486m 64.4sen 1H2015:RM3,020m 1H2015:RM2,368m 1H2015:61.3sen Total assets Loan - Group Loan - Domestic Deposit - Group Deposit - Balance Sheet Domestic 8.8%* 7.3%* 8.3%* 6.9%
Slide 13: Segmental Profit – Retail Centric
Segmental Profit – Retail Centric Retail operations Fund management Treasury operations Corporate lending (Individuals + SMEs) RM’mil 52.7% 8.4% 9.4% 7.5% 1H 2016 1,687.1 268.2 301.7 240.8 1H 2015 1,664.5 276.0 243.1 206.7 Change 1.4% -2.8% 24.1% 16.5% Hire purchase Overseas operations Investment ba
Slide 14: Net Interest Margin
Net Interest Margin 2.36 2.36 2.37 2.32 2.28 2.20 2.29 2.20 2.15 2.11 2.16 2.19 2.20 2.17 Net Interest and Finance Income Net Interest Margin (%) 1,911 RM’mil 1,750 1,618 1,589 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2013 2014 2015 2016 14 Investor Presentation
Slide 15: Non-Interest Income Composition & Growth
Non-Interest Income Composition & Growth RM’mil Non-interest Income Contribution 1,071.2 1,083.8 380.1 378.0 34.9% Unit trust income 31.9% Fee & commission income 330.6 345.4 17.8% Foreign exchange income 5.4% Investment income 150.7 192.9 3.8% Stockbroking income 122.8 59.1 6.2% Others 47.9 40.8 39
Slide 16: Efficient Operating Overheads
Efficient Operating Overheads Operating Costs Composition RM’mil 1H 2016 1H 2015 Changes Personnel costs 1,119.5 1,027.6 8.9% Establishment costs 289.3 255.3 13.4% Marketing expenses 59.1 54.4 8.4% Administration expenses 123.4 87.7 40.7% Total 1,591.3 1,425.0 11.7% Industry 1H 2016 2015 Average Gro
Slide 17: Consistently Above-Industry Loan Growth
Consistently Above-Industry Loan Growth Loan Growth vs Industry Gross Loans and Domestic Loan Market Share 17.4% 17.9% % 16.7% 16.9% 17.1% 283.5 RM’bil 273.4 245.0 262.2 251.8 221.2 228.3 197.8 206.6 12.5% 12.0% 10.8% 11.6% 8.3%* 184.5 11.3% 11.8% 10.5% 10.3% 7.3%* 10.4% 10.6% 9.3% 7.9% 2.8%* 2012 2
Slide 18: Healthy Gross Loan Growth
Healthy Gross Loan Growth Gross Loan Composition by Segment Composition 62.2% 17.7% 12.4% 5.3% 1.4% 1.0% 4.4% 0.1% 8.9% 8.2% 4.9% 77.7% RM’bil 168.9 176.4 50.1 50.2 32.3 35.2 16.5 15.1 4.1 3.9 2.7 1.5 Retail operations Hire purchase Corporate lending Hong Kong Cambodia Others Dec-15 Jun-16 Gross Loa
Slide 19: 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 20: Upholding Strong Asset Quality
Upholding Strong Asset Quality High loan loss coverage Of which: Residential properties financing 126.0% 122.4% 120.8% ++ 118.5% 116.3% RM’mil 0.6% 0.5% 0.5% 505 445 458 2012 2013 2014 2015 1H 2016 2014 2015 1H 2016 Loan loss coverage Transport vehicle financing ++ Higher loan loss coverage ratio of
Slide 21: Upholding Strong Asset Quality
Upholding Strong Asset Quality Loan Impairment Allowances (including collective allowances) 0.15% 0.17% 0.11% 0.10% 0.06% RM’mil 351.3 279.2 259.0 146.2 137.4 2012 2013 2014 2015 1H 2016 Loan impairment allowances Credit cost ratio 21 Investor Presentation
Slide 22: Healthy Deposit Growth in Support of Liquidity
Healthy Deposit Growth in Support of Liquidity Deposit Growth vs Industry Deposits – Outstanding Balance and Market Share % 17.2% 16.6% 15.7% 15.9% 15.2% 245.2 250.6 RM’bil 216.7 201.3 177.0 13.0% 11.6% 10.2% 8.9% 7.4%* 59.7 55.9 60.8 47.8 49.5 12.3% 11.5% 9.9% 7.5% 6.9%* 8.4% 8.5% 7.6% 1.8% 0.6%* 2
Slide 23: Healthy Core Deposit Growth
Healthy Core Deposit Growth Domestic Current Deposit Source of Core Deposit 250.6 7.3% RM’bil 245.2 2.5% 4.7% 0.0%* 216.7 2.1% -0.3% 43.0 43.2 2014 2015 Jun-16 201.3 41.4 30.5 177.0 30.0 Domestic Savings Deposit 38.2 32.6 27.7 25.8 23.7 4.3% 6.0% 9.7% * 7.3% * 2.4% 0.5% 176.9 2014 2015 Jun-16 172.2
Slide 24: Unit Trust & Bancassurance
Unit Trust & Bancassurance Net Asset Value of Funds Under Management Bancassurance Business – Annualised New Premium 48.8% 49.5% 49.5% 48.9% 49.6%** RM’bil 67.7 64.8 62.5 63.0 RM’mil 54.6 12.1 14.4 14.9 18.3 189.3 18.1 177.5 11.5 17.2 143.2 124.9 111.4 29.8 3.8 52.7 53.3 8.7 44.2 48.1 160.3 177.8 36
Slide 25: Healthy Capital Position
Healthy Capital Position PBB Group Basel III transitional phase in Dec-15 Jun-16 Jan-16 Jan-17 Jan-18 Jan-19 COMMON EQUITY 10.9% 11.1% TIER I 6.375% 7.0% 5.125% 5.75% CAPITAL 12.0% 12.0% TIER I 7.25% 7.875% 8.5% 6.625% CAPITAL 15.5% 15.4% TOTAL 8.625% 9.25% 9.875% 10.5% CAPITAL Note: The Basel III c
Slide 26: Targets & Achievements
Targets & Achievements The Public Bank Group’s achievement vs key performance targets are as follows: Key Performance Benchmarks 2016 Targets Achievement Net Return on Equity >15% 16.2% Total Capital Ratio >13% 15.4% Gross Impaired Loan Ratio <1% 0.5% Cost to Income Ratio <33% 32.3% Loan Growth – Do
Slide 27: Share Price & Market Capitalisation
Share Price & Market Capitalisation Share Price & Market Capitalisation 19.40 19.76 18.30 18.52 16.28 76.71 Market Capitalisation 71.04 71.90 24 August 2016 (RM’bil) 68.67 RM’bil PBB 76.7 57.52 MBB 80.0 CIMB 40.9 HLB 28.5 RHB 20.0 AMMB 13.2 2012 2013 2014 2015 Aug-16 Market Capitalisation (RM'bil) S
Slide 28: 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) 2000 1800 20.00 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 shares
Slide 29: 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 2011 +77.3% +10.2% Long term - since 1967 +1,528.3% +19.1% lis
Slide 30: 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 31: Appendix
Appendix RM’mil 2012^ 2013 2014 2015 1H 2016 Operating profit 5,329 5,655 6,067 6,631 3,337 Profitability Profit before tax 5,047 5,310 5,814 6,491 3,203 Net profit 3,827 4,065 4,519 5,062 2,486 Earnings per share (sen) 109.3 116.1 123.7 131.1 64.4 Shareholder Net assets per share (RM) 5.15 5.83 7.2
Slide 32: Appendix (cont'd)
Appendix (cont’d) % 2012^ 2013 2014 2015 1H 2016 Industry Net interest margin on yielding assets 2.51 2.36 2.24 2.16 2.19 N/A Profitability Net return on equity+ 24.1 22.4 19.9 17.8 16.2 N/A Ratios Pre-tax return on average assets 1.9 1.8 1.8 1.8 1.7 1.3 Cost to income ratio 31.2 30.7 30.0 30.5 32.3
Slide 33: Investor Relations Contact
Investor Relations Contact Ms Chang Siew Yen Head Office Chief Operating Officer +(603) 2176 7460 Menara Public Bank changsiewyen@publicbank.com.my 146, Jalan Ampang 50450 Kuala Lumpur Ms Yik Sook Ling Malaysia Chief Financial Officer +(603) 2177 3310 Tel: 603-2176 6000 yiksookling@publicbank.com.my