Public Bank Bhd · MYX:PBBANK
Public Bank Bhd — CLSA Investors' Forum 2019
32 slides from Public Bank Bhd's conference presentation, Sep 13, 2019
Slide 1: Investor Presentation – CLSA Investors' Forum
Investor Presentation CLSA Investors’ Forum Hong Kong 9-13 September 2019 THE WAY FORWARD www.publicbankgroup.com
Slide 2: Quick Facts
Quick Facts One of the Largest Premier Banks in Malaysia In 1966, Tan Sri Dato’ Sri Dr. Teh Hong Piow founded Public Bank with the vision of growing Public Bank to be a ‘bank for the people’ serving the banking needs of the people. For 52 years, this vision has been steering Public Bank’s successful
Slide 3: Quick Facts: Credit Ratings and Awards
Quick Facts Strong Credit Ratings With consistent financial performance and prudent management, the Group continues to receive strong credit and financial ratings from local and foreign rating agencies. • Standard & Poor’s A- long-term rating A-2 short-term counterparty credit rating with stable out
Slide 4: Contents
Contents Introduction to Group Share Price & #5 Public Bank #9 #26 Market Performance Group Capitalisation #29 Summary #30 Appendix 4 Investor Presentation
Slide 5: 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 6: 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 7: Expansion in Business Delivery Channel
Expansion in Business Delivery Channel Jun-19 2018 2010 Malaysian Operations Public Bank - Domestic 263 263 249 - 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 8: Strategic Focus
Strategic Focus FOCUS AREA STRATEGIC APPROACH SUPPORTED BY • Focus on consumer lending for purchase of residential Serving the Customer properties and passenger vehicles • Continue to penetrate mid-market SME-financing in Provide top-notch customer service in Domestic Consumer encouraged sectors lin
Slide 9: Unbroken Profit Track Record
Unbroken Profit Track Record • 52 years of unbroken profitability RM’mil y-o-y growth (%) 2014 2015 2016 2017 2018 1H 2019 2015 2016 2017 2018 1H 2019 Pre-tax profit 5,814 6,491 6,554 7,118 7,101 3,550 11.6 1.0 8.6 -0.2 -0.1 Net profit 4,519 5,062 5,207 5,470 5,591 2,743 12.0 2.9 5.1 2.2 -2.1 144.4
Slide 10: Above-industry Return on Equity (ROE)
Above-industry Return on Equity (ROE) 22.1 20.1 20.0 18.2 17.1 12.4 12.5 13.0 12.6 13.0 2015 2016 2017 2018 Jun-19 Pre-tax PBB ROE (%) Industry ROE (%) 10 Investor Presentation
Slide 11: Strong Record of Growing Dividends
Strong Record of Growing Dividends 32 33 26 27 1H 2019 1H 2018 24 Single tier dividend 33 sen 32 sen Dividend payout RM1.28 billion RM1.24 billion Dividend payout ratio 46.7% 44.3% 1,242 1,281 927 1,004 1,043 1H 2015 1H 2016 1H 2017 1H 2018 1H 2019 Total Dividends Paid/Declared (RM'mil) Gross Divide
Slide 12: 1H 2019 Key Highlights
1H 2019 Key Highlights Income Statement Financial Indicators (%) 1H 2019 1H 2018 Change Jun 2019 Dec 2018 Pre-tax profit RM3,550 mil RM3,552 mil -0.1% Net return on equity 13.6 14.8 Net profit RM2,743 mil RM2,802 mil -2.1% Cost to income ratio 34.2 33.0 attributable to Gross impaired loans ratio 0.5
Slide 13: Segmental Profit – Retail Centric
Segmental Profit – Retail Centric Revenue – 1H 2018 vs 1H 2019 Composition 50% 11% 9% 6% 6% 1% 8% 9% y-o-y 2.6% 0.8% 3.9% 14.5% 9.8% 18.4% 11.4% 13.7% RM’mil 5,432 5,573 Revenue 1H 2019: RM11,166 mil 1H 2019 1H 2018 1,276 1,266 974 1,011 912 961 629 720 721 651 819 845 89 72 Retail Hire purchase Cor
Slide 14: Net Interest Margin
Net Interest Margin 2.20 2.17 2.17 2.22 2.31 2.26 2.24 2.27 2.33 2.24 2.16 2.18 2.19 2.12 Net Interest and Finance Income Net Interest Margin (%) RM’mil 2,075 2,132 2,109 1,911 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 (%) 2016 2017 2018 1H 2019 Yearly Average 2.20 2.28 2.22 2.16 14 Investor Present
Slide 15: Non-Interest Income
Non-Interest Income (RM’mil) 1H 2019 1H 2018 Change Composition Net fee and commission 880.0 900.1 -2.2% Of which: - Unit trust income 447.7 477.6 -6.3% 37% - Fee & commission income 387.0 366.2 5.7% 32% - Stockbroking income 45.3 56.3 -19.6% 4% Net gains and losses on financial instruments 113.3 26
Slide 16: Efficient Operating Overheads & Lowest CIR
Efficient Operating Overheads & Lowest CIR (RM’mil) 1H 2019 1H 2018 Change Composition Personnel costs 1,351.9 1,267.4 6.7% 72% Establishment costs 347.3 318.7 9.0% 18% Marketing expenses 70.0 78.8 -11.1% 4% Administration and general expenses 112.2 132.7 -15.4% 6% Total other operating expenses 1,8
Slide 17: Steady Loan Growth
Steady Loan Growth Loan Growth vs Industry (%) Loan – Outstanding Balance and Market Share 17.4% 17.7% 17.8% Previously reported 17.2% 17.4% 11.6 Domestic Industry Average for 2018: 5.6% 317.3 323.7 10.3 RM’bil 294.0 304.5 7.7 273.4 7.5 294.1 300.4 282.3 7.9 7.2 269.9 4.6 251.8 4.2 4.3* 5.3 4.1 4.2
Slide 18: Healthy Gross Loan Growth
Healthy Gross Loan Growth Gross Loan by Segment 4.8% 2.4% 4.6% 0.2% 2.1%n RM’bil 204.6 209.5 7% 1% 13% Jun-19 48.0 48.6 41.0 41.9 RM323.7 bil 23.2 23.3 0.5 0.4 15% 64% Retail operations Corporate lending Others Hire purchase Overseas operations Dec-18 Note: Annualised growth (Dec 2018 vs. June 2019)
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 Gross impaired loans Loan Impairment Allowances 258.6% 248.5% 256.5% 237.5% 3,000 226.5% 0.5% 0.5% 0.5% Industry Jun’19: 120.8% 102.7% 126.0% 116.0% 2,500 95.5% 2,000 1.6% RM’mil 1,500 0.06% 0.07% 0.07% 0.05% 0.04% 1,000 RM’mil 1,476 1,621 1,718 500 (192.7) (203.3) (16
Slide 21: Healthy Deposit Growth in Support of Liquidity
Healthy Deposit Growth in Support of Liquidity Deposit Growth vs Industry (%) Deposit – Outstanding Balance and Market Share Previously reported Domestic Industry Average 16.6% 16.9% 16.6% 16.2% 16.4% for 2018: 7.5% 349.1 RM’bil 339.2 9.2 319.3 8.9 310.0 301.2 319.4 7.5 6.2 5.9* 310.6 293.2 4.0 277.
Slide 22: Healthy Deposit Growth
Healthy Deposit Growth RM’bil 339.2 349.1 319.3 50.4 18% 50.0 47.6 37.0 37.9 35.5 Demand deposit Jun-19 RM349.1 bil 15% Savings deposit 56% 196.5 196.8 Fixed deposit 186.6 11% Money market deposit and others 49.6 55.4 64.3 2017 2018 Jun-19 Core Deposit Growth in Domestic Operations Demand Savings Fi
Slide 23: Unit Trust & Bancassurance
Unit Trust & Bancassurance Net Asset Value of Funds Under Management Bancassurance Business – Annualised New Premium Private Unit Trust – Retail Market Share Jun-19: 36.4% RM’bil RM’mil 81.4 84.4 270.2 78.7 268.9 15.9 18.1 16.4 136.5 131.1 65.5 62.3 66.3 133.7 137.8 130.4 2017 2018 Jun-19 2017 2018
Slide 24: Stable Capital Position
Stable Capital Position PBB Group Basel III Dec-18 Jun-19 Requirement COMMON EQUITY TIER I 13.1% 13.2% CAPITAL 7.0% TIER I 13.7% 13.6% CAPITAL 8.5% Note: The Basel III capital ratio requirements are inclusive of the 2.5% capital conservation buffer, but excluding TOTAL other buffers eg. any counter-
Slide 25: Targets & Achievements
Targets & Achievements The Public Bank Group’s achievement vs key performance targets are as follows: Key Performance Benchmarks 2019 Jun-19 Targets Achievement Net Return on Equity 13% to 14% 13.6% Cost to Income Ratio 34% to 35% 34.2% Gross Impaired Loan Ratio <1% 0.5% Total Capital Ratio >13% 16.
Slide 26: Share Price & Market Capitalisation
Share Price & Market Capitalisation Share Price & Market Capitalisation 24.76 21.90 Market Capitalisation 20.78 19.72 96.12 31 July 2019 (RM’bil) 18.52 85.02 PBB 85.0 RM’bil 80.67 76.56 71.90 MBB 97.2 CIMB 49.4 HLB 38.9 RHB 22.1 AMMB 12.8 2015 2016 2017 2018 31 July 2019 Market Capitalisation (RM'bi
Slide 27: Share Price & Market Capitalisation
Share Price & Market Capitalisation Resilient share price performance FBM KLCI Public Bank Share (PB Share) FBM KLCI Share price (RM) 2000 25.00 20.00 1800 15.00 10.00 1600 5.00 1400 0.00 27 Investor Presentation
Slide 28: Share Price & Market Capitalisation
Share Price & Market Capitalisation • Superior investment returns Illustration on investment returns Shares acquired Total returns Compounded annual since (capital appreciation^ + dividends) rate of return Medium term - 5 years 1 January 2014 +50.2% 8.2% Long term - since 1967 +2,041.6% 19.0% listin
Slide 29: 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 Valuable PB Brand and retail franchise Proactive
Slide 30: Appendix
Appendix RM’mil 2015 2016 2017 2018 Jun-19 Operating profit 6,631 6,745 7,319 7,270 3,612 Profitability Profit before tax 6,491 6,554 7,118 7,101 3,550 Net profit 5,062 5,207 5,470 5,591 2,743 Earnings per share (sen) 131.1 134.8 141.7 144.4 70.7 Shareholder Net assets per share (RM) 8.09 8.86 9.68
Slide 31: Appendix (cont'd)
Appendix (cont’d) % 2015 2016 2017 2018 Jun-19 Industry Net interest margin on yielding assets 2.16 2.20 2.28 2.22 2.16 N/A Net return on equity+ 17.8 16.5 15.8 14.8 13.6 N/A Profitability Pre-tax return on average assets 1.8 1.8 1.8 1.7 1.7 1.4 Ratios Cost to income ratio 30.5 32.3 31.9 33.0 34.2 4
Slide 32: Head Office Investor Relations Contact
Head Office Investor Relations Contact Menara Public Bank Ms Chang Siew Yen 146, Jalan Ampang Chief Operating Officer 50450 Kuala Lumpur +(603) 2176 7460 Malaysia changsiewyen@publicbank.com.my Tel: 603-2176 6000 Website: www.publicbankgroup.com Ms Yik Sook Ling Chief Financial Officer +(603) 2177 3