Public Bank’s profitability to continue outperforming industry: Moody’s

It is expected to maintain a low problem ratio through 2025.

Public Bank’s profitability is expected to continue outperforming the industry on the back of its “superior” asset quality and cost discipline, reports Moody’s Ratings.

The Malaysian bank is expected to maintain a low problem ratio of between 0.5% to 1% over the next 12 to 18 months, supported by its provisioning. Problem loan coverage is 154.2% as of June 2024.

Its return on tangible assets will remain stable at around 1.4% over the next 12-18 months.

Net interest margin is expected to stabilize at current levels, with deposit competition having eased, Moody’s said.

Funding will remain strong thanks to its established retail presence in Malaysia. This will offset its lower level of liquid assets compared to the industry.

Its average liquidity coverage ratio for the quarter ended June 2024 was 138.5%, well above the regulatory minimum of 100%.

“Our profitability estimate incorporates Public Bank's recent proposed acquisition of a highly profitable general insurer, but excludes potential releases of excess credit reserves,” it added.

However, Public Bank reportedly remains exposed to the risks associated with its credit concentration in Malaysia's property market and its loans in Greater China.

Public Bank Berhad is headquartered in Kuala Lumpur and reported total assets of MYR525.6b as of June 2024.