Public Bank raises bar with 60% dividend goal

KUALA LUMPUR: Public Bank Bhd will focus on sustaining its business growth while effectively managing risks.

It will also continue to maintain operational efficiency and uphold prudent credit risk management.

The nation’s third-largest lender by asset size said the outlook for Malaysia’s economy remains positive, with projected stable growth driven by steady domestic demand, a growing services sector, and ongoing investments in infrastructure projects.

However, downside risks persist, mainly from weaker-than-expected external demand and the potential spillover effects of ongoing trade tensions and the imposition of tariffs by the United States.

Managing director and chief executive officer Tan Sri Dr Tay Ah Lek stated at the group’s AGM yesterday that Public Bank will continue to pursue synergistic growth in its retail and commercial banking segments.

“We will proactively look out for viable growth opportunities to leverage the positive synergy in both our interest and non-interest incomes, while also ensuring that digital transformation and environmental, social and governance initiatives remain top priorities on our agenda,” he said.

Most importantly, Tay revealed that the banking group is targeting a dividend payout ratio of 60% for 2025, following a payout of 57% in 2024.

The group declared a total dividend of 21 sen for the financial year ended December 2024, with an earnings per share of 36.84 sen.

That said, he pointed out any dividend proposal will still be subject to the group’s financial performance, capital conservation needs and regulatory approval.

He reiterated Public Bank’s commitment to ensuring sufficient capital buffers to support future business growth.

When asked if the restricted offer for sale (ROFS) by the bank’s largest shareholders – Consolidated Teh Holdings Sdn Bhd and the estate of the late Tan Sri Dr Teh Hong Piow – has any bearing on the group’s share price, Tay emphasised that Public Bank’s shares, which closed at RM4.46 yesterday, are still trading at 1.5 times book value.

“Our share price is ultimately determined by the group’s fundamentals, financial strength and market forces, and we believe the current standing is reflective of our strong position.

“The ROFS will be undertaken over a period of five years, and this should have minimal disruption to the market, as the timing of its implementation will be carefully managed,” he added.

On the effects of US tariffs on Malaysia and the bank’s business, Tay acknowledged that, as an open economy, Malaysia would not be immune to both direct and indirect impacts should US President Donald Trump decide to go ahead with the implementation after the current 90-day pause.

However, Tay noted that it is still too early to make firm predictions.

Like many Malaysians, he said the bank is awaiting the outcome of ongoing negotiations between the government and the Trump administration, adding that the actual impact would depend on the evolving terms of these discussions.

“Nevertheless, the country’s resilient fundamentals and stable employment market will continue to uphold our economy, and the domestic banking industry is strong, supported by ample liquidity and healthy capital buffers,” he commented.

As for Public Bank specifically, Tay said the group’s credit exposure to borrowers directly impacted by the tariffs is limited, with less than 3% of its total loans expected to be affected – highlighting the lender’s stable asset quality.

He added that Public Bank will continue to closely monitor developments and stands ready to provide financial assistance to customers who may be adversely affected by the tariffs, if implemented.

In 2024, Public Bank’s pre-tax profit grew by 4.6% to RM8.93bil, while net profit increased by 7.5% to RM7.15bil.

Excluding a one-off goodwill impairment of RM473.8mil from the group’s Hong Kong operations, its pre-tax profit recorded a higher growth of 10.1% year-on-year.

Tay attributed the improved profit performance to the continued expansion in loans and deposits, as well as stronger non-interest income growth.

As of end-2024, Public Bank’s total gross loans and financing stood at RM424.17bil, marking a 6.3% growth, with domestic loans rising by 6.7% – outpacing the domestic banking industry’s growth of 5.5%.

Its customer deposits grew by 4.9% to RM433.26bil, with domestic deposits increasing by 4.8%, also ahead of the industry average of 3%.

In particular, the group’s domestic core customer deposits grew by a robust 9.8%, supported mainly by a 13.1% rise in fixed deposits.