Public Bank Bhd · MYX:PBBANK
Public Bank Bhd — 21st CLSA Investors' Forum 2014
42 slides from Public Bank Bhd's conference presentation, September 2014
Slide 1: Investor Presentation – 21st CLSA Investors' Forum
Investor Presentation 21st CLSA Investors’ Forum Hong Kong 15-19 September 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: Investor Presentation Contents
Investor Presentation Page INTRODUCTION TO PUBLIC BANK GROUP 6-9 GROUP PERFORMANCE 10 - 35 SHARE PRICE AND MARKET CAPITALISATION 36 - 38 SUMMARY 39 APPENDIX 40 - 41 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 Jun-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 1H2014 2009 2010 2011 2012 2013 1H2014** Pre-tax profit 3,179 3,321 4,086 4,878 5,047 5,310 2,695 4.5 23.0 19.4 3.5 5.2 3.2 Net profit 2,
Slide 11: Steady Profit Growth
Steady Profit Growth Profits and EPS 59.2 56.9 52.5~ 53.5^ 40.7 2,694.8 2,610.5 RM’mil 2,435.0~ 2,457.5^ 1,991.8 2,073.3 1,904.6 1,838.9~ 1,872.3^ 1,419.3 1H 2010 1H 2011 1H 2012 1H 2013 1H 2014 Pre-tax profit Net profit attributable to shareholders EPS (sen) ~ Restated with retrospective applicatio
Slide 12: Above-industry Return on Equity (ROE)
Above-industry Return on Equity (ROE) 34.3 33.8~ 32.1 30.4^ 28.1 26.0 1.6x of industry’s 17.4 17.5 ROE 16.6 15.8 15.6 14.0 2009 2010 2011 2012 2013 Q2 2014 Pre-tax PBB ROE Pre-tax Industry ROE ~ Restated with retrospective application of MFRS 139 ^ Restated with retrospective application of MFRS 119
Slide 13: Dividends
Dividends 1st Interim Dividend for 1H2014 Single tier dividend 23 sen per share Dividend payout RM886 million 13 Investor Presentation
Slide 14: Key Highlights
Key Highlights Pre-tax Net profit Earnings per Total Net return on profit attributable to share assets equity shareholders RM2,695m RM2,073m 59.2sen RM323.7b 20.8% (+3.2%) (+4.1%) (+4.0%) (+11.7%)* 1H 2013: RM2,611m 1H 2013: RM1,992m 1H 2013: 56.9sen Dec 2013: RM305.7b Dec 2013: 22.4% Loan - Loan -
Slide 15: Key Highlights
Key Highlights Cost to Gross Loan loss income ratio impaired coverage loans ratio 31.8% 0.7% 117.6% 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 8.9%π 10.4%π 13.8%π Dec 2013: 8.8%π Dec 2013: 10.5%π Dec 2013: 13.8%π π Afte
Slide 16: Segmental Profit – Retail Centric
Segmental Profit – Retail Centric Retail operations Hire purchase Fund management Treasury operations RM’mil Retail and HP operations 59.1% 9.3% 8.8% 7.4% contributed >2/3 of the 1H 2014 1,593.8 249.9 236.8 198.8 Group’s pre- tax profit 1H 2013 1,593.3 272.0 202.8 185.9 Change 0.03% -8.2% 16.8% 6.9%
Slide 17: Net Interest Margin – Continued to be under pressure
Net Interest Margin – Continued to be under pressure 2.70 2.68 2.62 2.55 2.53 2.52 2.43 2.36 2.36 2.37 2.32 2.28 2.20 Net interest margin continued to be under Net Interest and Finance Income Net Interest Margin (%) pressure as a result of 1,618 intense market 1,589 RM’mil competition 1,505 1,464 Q2
Slide 18: Non-Interest Income Composition & Growth
Non-Interest Income Composition & Growth Non-interest Income Contribution 869.2 929.2 Forex/ RM’mil Revaluation gain 265.0 277.1 Others 13.4% Investment 3.7% income 10.8% Stockbroking 318.5 349.8 income 4.6% 41.7 42.8 74.9 100.4 Fee income Unit Trust 29.8% 127.0 124.9 income 37.7% 42.1 34.2 1H 2013
Slide 19: Efficient Operating Overheads
Efficient Operating Overheads Operating Costs Composition RM’mil 1H 2014 1H 2013 Changes Personnel Costs 947.6 873.9 8.4% Establishment Marketing Costs Expenses Establishment Costs 243.0 231.8 4.9% 18.4% 4.5% Administration Marketing Expenses 59.5 76.5 22.2% Expenses 5.4% Administration Expenses 71.
Slide 20: Consistently Above-Industry Loan Growth
Consistently Above-Industry Loan Growth Loan Growth vs Industry Gross Loans and Domestic Loan Market Share % RM’bil 17.1% 15.6 16.9% 14.1 16.7% 13.8 232.2 13.6 16.4% 221.2 12.5 12.0 16.3% 13.5 11.8 12.7 11.3 10.6* 197.8 217.6 10.6 206.6 10.4 9.9* 177.7 7.7* 184.5 156.5 164.1 143.8 2010 2011 2012 201
Slide 21: Gross Loan Composition by Segment
Gross Loan Composition by Segment Retail operations Hire purchase Corporate lending RM’bil 62.8% 19.4% 11.3% Loan growth continues to be supported through the Jun-14 145.9 45.0 26.2 Group’s retail and hire Dec-13 137.5 43.2 25.6 purchase segments Change 6.2% 4.2% 2.6% Hong Kong Cambodia Others ϒ 5.0
Slide 22: 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 62.8% 33.9% 33.7% 33.8% 33.
Slide 23: Hire Purchase
Hire Purchase Hire purchase HP Financing in Domestic Operations 27.4% 19.4% 26.4% 26.5% 25.9% 25.5% RM’bil • Remained market leader in the domestic passenger vehicle financing 43.2 45.0 40.4 • Consistent growth trend 37.1 in hire purchase 33.6 financing 2010 2011 2012 2013 Jun-14 Gross HP financing
Slide 24: 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 25: 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% 0.11% RM’mil 103.3 90.3 84.8 81.4 76.3 41.7 34.2 64.7 39.2 33.8 35.2 13.7 61.6 56.1 51.0 51.0 42.2 41.1 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Domestic Oversea
Slide 26: Gross Impaired Loan
Gross Impaired Loan High loan loss coverage Of which: Residential properties financing 126.0% 113.8%~ 118.5% 117.6% 0.7% 0.7% 0.7% 94.2%~ RM’mil 527 551 420 2010 2011 2012 2013 1H 2014 2012 2013 1H 2014 Loan loss coverage Passenger vehicle financing ~ Restated with retrospective application of MFRS
Slide 27: 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 14.3 13.0 15.7% 16.1% 11.6 14.8% 14.9% 15.2% 13.3 11.4* 12.3 212.7 11.5 10.9* 201.3 RM’bil 177.0 8.5 8.4 157.3 7.3 143.6 5.1 * 4.3 3.5 47.8 49.5 51.8 42.9 32.8 2010 2011 2
Slide 28: Strong Core Deposit Growth
Strong Core Deposit Growth Domestic Current Deposit Source of Core Deposit 35.1% 15.6% 14.0% 17.0% 18.5% 6.4%* 17.5% 13.2% 12.1% 12.8% 11.3% λ 16.3% 16.6% -0.2% 16.1% 2010 2011 2012 2013 Jun-14 39.6 RM’bil 38.2 Domestic Savings Deposit 32.6 27.1 25.8 28.8 10.4% 25.5 23.7 8.2% 8.3% 8.8%* 21.9 2.6% 6.
Slide 29: 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% 41.1% 64.2 RM’bil 62.5 RM’mil 54.6 17.3 18.3 44.7 121.1 40.6 18.1 113.4 13.3 97.3 96.1 10.3 66.8 44.2 46.9 36.5 30.3 31.4 27.2 29.8 20.1 3.8 6.9 2010 20
Slide 30: Ensuring Healthy Capital Position
Ensuring Healthy Capital Position Groupπ Bank π RM’bil Jun-14 Dec-13 Jun-14 Dec-13 Common Equity Tier I Capital 18.5 17.5 17.3 17.2 Tier I Capital 21.7 21.0 20.5 20.8 Total Capital 28.7 27.5 23.1 22.5 Risk-weighted Assets 207.8 199.7 174.3 167.4 Common Equity Tier I Capital Ratio 8.9% 8.8% 9.9% 10.3
Slide 31: 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 32: Rights Issue
Rights Issue • Public Bank successfully undertook a rights issue of 1 for 10 at a rights issue price of RM13.80 per share • The rights issue has raised gross proceeds of RM4.83 billion • The rights issue exercise is to support the continuous business growth of the Group and to build up adequate leve
Slide 33: Proactive Capital Management Initiative
Proactive Capital Management Initiative PBB Group Basel III transitional phase in # ## Jun-14 Jun-14 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 (Proforma) COMMON EQUITY TIER I 8.9% 10.6% 5.125% 5.75% 6.375% 7.0% CAPITAL 4.0% 4.5% TIER I 10.4% 12.1% CAPITAL 7.25% 7.875% 8.5% 5.5% 6.0% 6.625% TOTAL 16.
Slide 34: 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%ϵ 20.8% Total Capital Ratio >12% 13.8% Gross Impaired Loan Ratio <1% 0.7% Cost to Income Ratio <32% 31.8% Loan Growth – D
Slide 35: 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 36: Share Price & Market Capitalisation
Share Price & Market Capitalisation Share Price & Market Capitalisation 19.40 19.14 16.28 15 August 2014 Market Capitalisation 74.30 (RM’bil) 13.02 13.38 68.67 PBB 74.3 57.52 RM’bil MBB 91.7 45.96 47.07 CIMB 58.0 HLB 26.3 RHB 23.2 AMMB 21.6 2010 2011 2012 2013 Aug-14 Market Capitalisation (RM'bil) S
Slide 37: 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 20.00 1800 1600 1400 15.00 1200 1000 * 16 April 2014 10.00 800 600 5.00 400 200 0 0.00 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10
Slide 38: 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 2009 +159.5% +21.0% Long term - since listing 1967 +7,162.0% +
Slide 39: 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 40: Appendix
Appendix RM’mil 2009 2010~ 2011~^ 2012^ 2013 1H 2014 Operating profit 4,015 4,738 5,200 5,329 5,655 2,841 Profitability Profit before tax 3,321 4,086 4,878 5,047 5,310 2,695 Net profit 2,517 3,048 3,684 3,827 4,065 2,073 Earnings per share (sen) 73.3 87.2 105.2 109.3 116.1 59.2 Net assets per share
Slide 41: Appendix (cont'd)
Appendix (cont’d) % 2009 2010~ 2011~^ 2012^ 2013 1H 2014 Industry Net interest margin on yielding assets 2.4 2.7 2.7 2.5 2.4 2.2 N/A Profitability Net return on equity+ 26.1 27.1 26.8 24.1 22.4 20.8 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 42: 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