Pub­lic Bank ex­pects mar­gin squeeze to con­tinue

New Straits Times - - Business -

KUALA LUMPUR: Pub­lic Bank Bhd ex­pects mar­gins to tighten fur­ther ahead of in­ten­si­fy­ing com­pe­ti­tion in the fi­nan­cial sec­tor, af­fect­ing its re­turn on eq­uity (ROE) mov­ing for­ward.

How­ever, man­ag­ing di­rec­tor Tan Sri Tay Ah Lek said the bank would con­tinue to build on its busi­ness by look­ing at new rev­enue streams in the fu­ture, with its ROE still lead­ing the in­dus­try at 16.5 per cent.

He said this in re­sponse to a share­holder’s ques­tion at Pub­lic Bank’s an­nual gen­eral meet­ing, here, yes­ter­day, over con­cerns that the bank’s ROE was on a de­clin­ing trend.

“We ex­pect the mar­gin squeeze will con­tinue due to tremen­dous and in­tense com­pe­ti­tion, which is go­ing to af­fect ROE go­ing for­ward.

“Nev­er­the­less, our present ROE of 16.5 per cent is the high­est among our peers, which is only 10 per cent on av­er­age.

“Hav­ing said that, the team will have to work very hard to in­crease on the rev­enue stream as much as pos­si­ble,” he said.

On year-on-year ba­sis, Pub­lic Bank’s ROE de­clined 7.8 per cent to 16.5 per cent last year, from 17.8 per cent in 2015.

In 2014, Pub­lic Bank’s ROE was at 19.9 per cent, 22.4 per cent in 2013 and 24.1 per cent in 2012.

On its lower pro­jec­tion in key per­for­mance in­di­ca­tors this year, Tay said the lower loan and de­posit growth tar­gets were set af­ter tak­ing into con­sid­er­a­tion the cur­rent chal­leng­ing eco­nomic en­vi­ron­ment, mar­ket out­look and the mod­er­at­ing growth trend in the bank­ing in­dus­try.

Pub­lic Bank ex­pects a loan growth of six to seven per cent and tar­geted de­posit growth of five to six per cent in line or bet­ter than in­dus­try growth.

“Pub­lic Bank will con­tinue to grow its busi­ness or­gan­i­cally in both do­mes­tic and overseas op­er­a­tions, fo­cus­ing on re­tail con­sumer, com­mer­cial lend­ing and de­posit seg­ments, as well as grow­ing cor­po­rate loan port­fo­lio.

“The bank will fur­ther pen­e­trate new mar­ket seg­ments to en­hance its rev­enue stream, with im­proved cross sell­ing and fo­cus on grow­ing its fee based in­come.

“We will also con­tinue to drive pro­duc­tiv­ity to im­prove its cost ef­fi­ciency,” said Tay. Farah Adilla

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