RAM Ratings reaffirms Public Bank’s AAA/P1 financial institution ratings

Published on 05 June 2012

RAM Ratings has reaffirmed Public Bank Berhad’s (Public Bank or the Group) long- and short-term financial institution ratings, at AAA and P1, respectively. The long-term rating carries a stable outlook. The reaffirmation is premised on Public Bank’s robust financial profile and reputable franchise in the domestic market, underscored by its superior asset quality and commendable profit track record.

Public Bank’s asset quality has remained among the industry’s best, bearing testimony to the Group’s prudent credit culture and stringent underwriting standards. As at end-March 2012, the Group’s gross impaired-loan ratio stood at a commendable 0.8%. Meanwhile, despite the keenly competitive business environment, Public Bank has been able to maintain an excellent profit track record. The Group’s pre-tax profit of RM4.6 billion for FYE 31 December 2011 (FY Dec 2011) translated into respective returns on equity and returns on assets of 31.5% and 1.9% (FY Dec 2010: 32.2% and 1.8%).

Public Bank has been benefiting from a lower collective assessment rate of 0.8% following the full adoption of MFRS 139 on 1 January 2012. This has resulted in RM859 million of write-backs on excess collective assessment to retained earnings, which boosted the Group’s common equity tier-1 (CET1) ratio to 7.8%. Although this is above the recommended CET1 plus a conservation buffer of 7% under Basel III, it is still at the lower end of the scale compared to the Group’s peers in the domestic banking industry. This is reflective of Public Bank’s generous dividend-payout policy. That said, the Group’s lower CET1 ratio is balanced by its excellent asset quality and commendable profit track record. As at end-March 2012, the Group’s tier-1 and overall risk-weighted capital-adequacy ratios stood at a respective 10.3% and 14.4%.

At the same time, the respective long-term ratings of Public Bank’s Subordinated Medium-Term Notes (MTN) under its up to RM5 billion Subordinated MTN Programme, RM1.2 billion Innovative Tier-1 Capital Securities and up to RM5 billion Non-Cumulative Perpetual Capital Securities under the Non-Innovative Tier-1 Stapled Securities Programme have also been reaffirmed at AA1, AA2 and AA2. All the long-term ratings have a stable outlook.

Media contact
Chan Yin Huei
(603) 7628 1180
yinhuei@ram.com.my