Public Bank Bhd · MYX:PBBANK
Public Bank Bhd — Macquarie ASEAN Conference 2013
43 slides from Public Bank Bhd's conference presentation, Aug 29, 2013
Slide 1: Investor Presentation – Macquarie ASEAN Conference
Investor Presentation Macquarie ASEAN Conference Singapore 27-29 August 2013 www.publicbank.com.my/corporate
Slide 2: Disclaimer
2 Disclaimer The materials and information in the presentations and other documents are for informational purposes only, and are not an offer or solicitation for the purchase or sale of any securities or financial instruments or to provide any investment service or investment advice. Public Bank doe
Slide 3: Quick Facts
3 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 Rec
Slide 4: Our Strategies remain unchanged
4 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 will continue to uphold its strong asset quality fortress and to lev
Slide 5: Investor Presentation
5 Investor Presentation Page INTRODUCTION TO PUBLIC BANK GROUP 6 - 10 GROUP PERFORMANCE 11 - 35 MARKET CAPITALISATION AND ANALYSTS’ POLL 36 - 39 SUMMARY 40 APPENDIX 41 - 42 Investor Presentation
Slide 6: Introduction to Public Bank Group
6 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 91% 90% 90% 91% 92% 93% 93% 85% 91% 93% 92% 94% 93% 93% 9%
Slide 7: Overview of PBB Group
Overview of PBB Group 7 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 Banking, Public Bank (Hldg Co) Public Bank (HK) (73.2%) Cambodian Public VID Public Bank Publ
Slide 8: Growth Strategy and Retail Business Focus
8 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 & microfi
Slide 9: Expansion in Business Delivery Channel
9 Expansion in Business Delivery Channel Jun 2013 Dec 2012 Dec 2008 Malaysian Operations Public Bank - Domestic 255 254 242 - Overseas 6 5 5 Public Islamic Bank 1 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
Slide 10: Reaffirmed High Credit Ratings
10 Reaffirmed High Credit Ratings Long term Short term Latest update RAM AAA P1 July 2013 Moody’s A3 P-2 January 2013 Standard & Poor’s A- A-2 November 2012 Standard & Poor’s ASEAN Scale Rating axAA axA-1 November 2012 RAM rating on Subordinated Notes and Capital Securities Longterm Long term Latest
Slide 11: Unbroken Profit Track Record
11 Unbroken Profit Track Record • 46 years of unbroken profitability • Strong profit growth in past 5 years RM’mil y-o-y growth (%) 2007 2008* 2009 2010 2011~ 2012^ 1H2013** 2008* 2009 2010 2011 2012 1H2013** Pre-tax profit 3,004 3,179 3,321 4,086 4,878 5,047 2,611 5.8 4.5 23.0 19.4 3.5 6.2 Net prof
Slide 12: Above-industry Return on Equity (ROE)
12 Above-industry Return on Equity (ROE) 36.9 34.3 33.8~ 35.1# 32.1 30.4^ 28.5 1.9x of 18.6 industry’s ROE 17.4 17.5 16.6 15.3* 14.0 2008 2009 2010 2011 2012 1H 2013 Pre-tax PBB ROE Pre-tax Industry ROE (Latest available*) # Excluding one-off goodwill income from ING ~ Restated with retrospective ap
Slide 13: Dividends
13 Dividends 1st Interim Dividend for 1H2013 Single tier dividend 22 sen per share Dividend payout RM770 million Investor Presentation
Slide 14: Key Highlights
Key Highlights 14 1H 2013 1H 2012^ Change (%) Income Statement (RM’mil) Pre-tax profit 2,611 2,458 6.2% Net profit attributable to shareholders 1,992 1,872 6.4% Earnings per share (sen) 56.9 53.5 6.4% Balance Sheet (RM’bil) Jun-13 Dec-12^ Change (%) Total assets 292.6 274.8 13.0%* Loan - Group 209.4
Slide 15: Steady Profit Growth
15 Steady Profit Growth Profits and EPS (RM’mil) 56.9 52.5~ 53.5^ 40.7 2,610.5 2,435.0 ~ 2,457.5 ^ 35.1 1,991.8 1,904.6 1,838.9 ~ 1,872.3^ 1,564.7 1,419.3 1,200.0 1H 2009 1H 2010 1H 2011 1H 2012 1H 2013 Pre-tax profit Net profit attributable to shareholders EPS (sen) ~ Restated with retrospective ap
Slide 16: Adoption of MFRS 119 Employee Benefits
16 Adoption of MFRS 119 Employee Benefits The adoption of the revised MFRS 119 effective 1 January 2013 affected the accounting treatment on the recognition of certain gains and losses arising from defined benefit plans. The key impacts are: • Actuarial gains and losses are recognised immediately in
Slide 17: Adoption of MFRS 119 Employee Benefits
17 Adoption of MFRS 119 Employee Benefits Restatement of key comparatives Restated Previously reported Change 1H 2012 1H 2012 Other operating expenses (RM’mil) 1,216 1,188 28 Pre-tax profit (RM’mil) 2,458 2,486 -28 Net profit (RM’mil) 1,872 1,894 -22 Cost to income ratio (%) 32.1 31.4 0.7 Restated P
Slide 18: Segmental Profit – Remained focus on retail operations
Segmental Profit – Remained focus on retail operations 18 Retail operations Hire purchase Fund management Treasury operations RM’mil 61.0% 10.4% 7.8% 6.8% 1H 2013 1,593.3 272.0 202.8 178.7 • Retail and HP operations 1H 2012^ 1,433.0 346.8 179.9 158.1 contributed >71% Change 11.2% -21.5% 12.7% 13.1%
Slide 19: Net Interest Margin – Continue to be under pressure
19 Net Interest Margin – Continue to be under pressure 2.54 2.67 2.69 2.69 2.61 2.70 2.68 2.62 2.55 2.53 2.52 2.43 2.36 2.36 Net Interest and Finance Income Net Int Margin 1,589 RM’mil 1,505 1,464 1,334 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2010 2011 2012 2013 Investor Presentation
Slide 20: Non-Interest Income Composition & Growth
20 Non-Interest Income Composition & Growth Non-interest Income Contribution RM’mil 869.2 Forex/ Revaluation 795.3 gain Others 14.6% 265.0 Investment 4.9% 259.2 income 8.6% 318.5 271.1 17.5% Stockbroking income 4.8% 41.7 41.8 74.9 88.2 26.8% 127.0 Fee income 100.2 Unit Trust 30.5% 34.8 42.1 income 3
Slide 21: Efficient Operating Overheads
21 Efficient Operating Overheads Operating Costs Contribution RM’mil RM’mil 1H 2013 1H 2012^ Changes Marketing Personnel Costs 873.9 822.0 6.3% Establishment Expenses Costs 6.0% 18.4% Establishment Costs 231.8 228.3 1.6% Administration Expenses Marketing Expenses 76.5 81.7 6.4% 6.3% Administration E
Slide 22: Consistently Above-Industry Loan Growth
22 Consistently Above-Industry Loan Growth Loan Growth vs Industry Gross Loans and Domestic Loan Market Share % RM’bil 16.5 15.6 16.7% 16.8% 14.1 16.3% 16.4% 209.4 14.0 13.8 13.6 12.5 197.8 15.9% 12.7 13.5 11.3 12.1 * 11.8 * 195.7 177.7 10.4 10.2* 184.5 156.5 164.1 7.8 137.6 143.8 124.4 Gross Loan C
Slide 23: Gross Loan Composition by Segment
23 Gross Loan Composition by Segment Retail operations Hire purchase Corporate lending RM’bil • Loan growth continues to be supported through the Group’s retail and hire 61.5% 19.9% 11.9% purchase segments Jun-13 128.7 41.7 24.9 Dec-12 120.4 40.4 23.3 Change 6.9% 3.1% 6.7% Hong Kong Cambodia Others
Slide 24: Retail Operations
24 Retail Operations Gross loan & financing in Domestic Operations RM’bil 33.2% 33.9% 32.9% 33.7% 33.7% 19.5% 18.1% 19.1% 16.6% 17.4% 62.7 Of which, financing to Domestic SMEs 58.0 48.8 48.1 41.4 44.4 40.5 34.9 36.3 36.5 30.9 29.6 24.7 26.0 22.5 Residential properties Commercial properties SME Marke
Slide 25: Hire Purchase
25 Hire Purchase HP Financing in Domestic Operations • Remained market leader in the passenger vehicle financing RM’bil • Consistent growth trend in hire 26.4% 26.3% 25.9% purchase financing 25.5% 24.6% 40.4 41.7 37.1 33.6 29.9 Hire purchase 2009 2010 2011 2012 Jun-13 Gross HP financing Market share
Slide 26: Sustaining Strong Asset Quality
26 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 resc
Slide 27: Upholding Strong Asset Quality
27 Upholding Strong Asset Quality Quarterly Loan Impairment Allowances (including collective allowances) RM’mil 0.18% 0.17% 0.17% 0.16% 0.15% 83.6 81.5 84.2 81.4 76.3 31.3 37.2 37.2 39.2 35.2 52.3 47.0 44.3 42.2 41.1 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Domestic Overseas Credit cost ratio Investo
Slide 28: Gross Impaired Loan
28 Gross Impaired Loan High loan loss reserves Of which: % Housing Loans RM’mil 126.0 0.9% 120.3 113.8~ 123.2 94.2~ 0.7% 0.7% 466 471 420 2009 2010 2011 2012 1H 2013 2011 2012 1H 2013 Loan loss reserves ~ Restated with retrospective application of MFRS 139 Hire Purchase RM’mil 0.7% Low gross impaire
Slide 29: Healthy Deposit Growth in Support of Liquidity
29 Healthy Deposit Growth in Support of Liquidity Deposit Growth vs Industry Deposits – Outstanding Balance and Market Share % 14.7 RM’bil 14.2 * 14.3 13.0 13.0 13.6 * 16.3% 15.2% 15.6% 14.8% 14.9% 13.3 11.7 12.3 191.9 9.3 177.0 8.7 * 157.3 8.4 143.6 127.6 7.3 4.3 3.5 42.1 42.9 47.8 48.3 32.8 Custom
Slide 30: Strong Core Deposit Growth
30 Strong Core Deposit Growth Source of Core Deposit Domestic Current Deposit RM’bil 35.1% 19.1% 15.6% 14.0% 15.1%* 17.2% 16.3% 16.6% 16.1% 10.7% 11.3% 13.2% 12.1% 2.7%* 15.4% 35.5 2009 2010 2011 2012 Jun-13 32.6 28.8 25.0 Domestic Savings Deposit 25.5 23.7 21.9% 22.2 21.9 10.4% 20.4 10.9% 10.7%* 8.
Slide 31: Unit Trust & Bancassurance
31 Unit Trust & Bancassurance Net Asset Value of Funds under management Bancassurance Business – Annual Premium Equivalent 43.5% 44.3% 42.5% 41.4% 40.8% RM’bil 58.9 RM’mil 54.6 143.5 44.7 20.1 124.5 40.6 18.1 116.2 30.1 35.6 13.3 27.2 20.1 10.3 8.8 72.4 9.4 113.4 49.2 36.5 38.8 97.3 96.1 30.3 31.4 2
Slide 32: Ensuring Healthy Capital Position
32 Ensuring Healthy Capital Position Groupπ Bankπ RM’bil Jun 2013# Dec 2012 Jun 2013# Dec 2012 Common Equity Tier I Capital 16.2 15.6 16.4 15.5 Tier I Capital 19.8 19.5 19.8 19.4 Total Capital Base 24.3 25.3 19.8 20.7 Risk-weighted Assets 189.7 179.7 158.9 150.0 Common Equity Tier I Capital Ratio 8.
Slide 33: Proactive Capital Management Initiative
33 Proactive Capital Management Initiative PBB Basel III transitional phase in Enhancement to Jun-13 # Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Group’s Core Equity Capital to be achieved COMMON by: EQUITY • Strong profit 8.5% TIER I 5.75% 6.375% 7.0% 4.0% 4.5% 5.125% generation capacity CAPI
Slide 34: Targets for 2013
34 Targets for 2013 For 1H 2013, the Public Bank Group’s achievement vs key performance targets are as follows: Key Performance Benchmarks 2013 Targets Achievement Net Return on Equity >20% 22.6% Total Capital Ratio >12% 12.8% Gross Impaired Loan Ratio <1% 0.7% Cost to Income Ratio <32% 31.4% Loan G
Slide 35: Our Business Growth Strategies
Our Business Growth Strategies 35 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 Business • Penetrate mid-market SMEs & micro enterprises in encouraged sector
Slide 36: Market Capitalisation and Analysts' Poll
36 Market Capitalisation and Analysts’ Poll • Improving Share Price and continued High Productivity Market Capitalisation & Share Price 17.32 16.28 15 August 2013 Market Capitalisation (RM’bil) 13.02 13.38 61.17 PBB 61.2 11.30 57.52 MBB 91.4 45.96 47.07 39.87 CIMB 62.1 HLB 26.7 AMMB 24.0 RHB 20.5 20
Slide 37: Market Capitalisation and Analysts' Poll
0 1000 1200 1400 1600 2000 200 400 800 600 1800 Jan-09 Feb-09 FBM KLCI Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Investor Presentation Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Resilient share price performance Jul-10 Kuala Lumpur Composite Index Aug-10 Sep-10 Oct-10 Nov-
Slide 38: Market Capitalisation and Analysts' Poll
38 Market Capitalisation and Analysts’ Poll) • Superior investment returns Illustration on investment returns Shares acquired Total returns Compounded annual rate since (capital appreciation^ + dividends) of return Medium term - 5 years 1 January 2008 +79.3% +13.3% Long term - since listing 1967 +6,
Slide 39: Market Capitalisation and Analysts' Poll
39 Market Capitalisation and Analysts’ Poll • Average daily volume/ value traded: Average Daily Volume Average Daily Value (million) (RM’million) 2012 4.2 60.1 YTD 15 Aug 2013 4.0 65.9 • Consensus net profit estimates (RM’mil): 2013 2014 2015 4,158 4,603 5,084 • Poll of analysts Buy/ Hold/ Sell reco
Slide 40: Summary
40 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 • L
Slide 41: Appendix
Appendix 41 RM’mil 2008 2009 2010~ 2011~^ 2012^ 1H2013 Operating profit 3,948 4,015 4,738 5,200 5,329 2,761 Profitability Profit before tax 3,379 3,321 4,086 4,878 5,047 2,611 Net profit 2,581 2,517 3,048 3,684 3,827 1,992 Earnings per share (sen) 76.9 73.3 87.2 105.2 109.3 56.9 Net assets per share
Slide 42: Appendix (cont'd)
Appendix (cont’d) 42 % 2008 2009 2010~ 2011~^ 2012^ 1H2013 Industry Net interest margin on yielding assets++ 3.2 3.2 3.4 3.3 3.1 2.9 N/A Profitability Net return on equity+ 30.4 26.1 27.1 26.8 24.1 22.6 N/A Ratios Pre-tax return on average assets 1.8 1.6 1.8 2.0 1.9 1.8 1.6 Cost to income ratio 31.2
Slide 43: Investor Relations Contact
43 Investor Relations Contact Ms Chang Siew Yen Mr Ng Seiw Kuan Senior General Manager Director, Corporate Planning and Strategy +(603) 2176 7460 +(603) 2177 3170 changsiewyen@publicbank.com.my ngseiwkuan@publicbank.com.my Ms Yik Sook Ling Chief Financial Officer +(603) 2177 3310 Investor Presentati