Public Bank Berhad was established by Tan Sri Dato ‘ Sri Dr. Teh Hong Piow in Kuala Lumpur on 1966. After 45 old ages, Public Bank has developed from a individual subdivision to a premier-banking group in Malaysia. Public Bank Berhad has managed to perforate other markets in Southeast Asia including Cambodia, Vietnam, Laos, Hong Kong, China and Sri Lanka. Meanwhile, the limited fiscal services offered by the bank besides has expanded into full scope of services such as personal banking, commercial banking, Islamic banking, investing banking, stockbroking, gross revenues and direction of assorted common financess, and general insurance merchandises.
In 2011, Public Bank Group reached 401 subdivisions and employed more than 17,500 employees. The Public Bank Group is ranked the 3rd largest banking group in Malaysia with a entire assets of RM249 billion, doing them 6th largest among Southeasterly Asia banking groups, and the largest non-government linked corporation with market capitalisation of RM47 billion at the terminal of 2011 ( Public Bank Berhad, 2011 ) .
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The journey of Public Bank Group began with its first subdivision, opened in 1966 in Kuala Lumpur. Public Bank started to spread out its web by opening subdivisions in Malacca and Ipoh. The company gained a net income of RM71, 562 in the first five months of operations. The profile of Public Bank became good known with the official gap of the bank by Malaysia ‘s first Prime Minister, Y.T.M. Tunku Abdul Rahman and listed on Bursa Malaysia Securities Berhad in 1967. After three old ages of difficult work, the bank paid its first dividend of 3.5 % for every RM1.00 portion and moved their operations to Bangunan Public Bank, the first Head Office edifice owned by the bank, in 1978. In 1987, the bank entered into the stockbroking field by acquisition of PB Securities Sdn Bhd.
The period of early 1990s was a singular period for Public Bank Group as they began to perforate abroad market like acquisition of Public Finance Limited and listed on The Stock Exchange of Hong Kong Limited in 1991, joint- venture with Bank of Investment and Development of Vietnam and formed VID Public Bank, constitution of Cambodian Public Bank Plc, and other subdivisions in Laos and Sri Lanka. In 1993, the bank started to supply Islamic Banking service and acquired 55 % of involvement in Public Mutual Berhad. In 1996, the bank moved its Head Office to Menara Public Bank.
In 2007, Public Bank entered into confederation understanding with ING Asia Pacific Limited to develop bank confidence concern, Takaful concern and more for following 10 old ages, and formed Campu Lonpac Insurance in which 55 % of it is subsidized by Public Bank Group. In 2008, the Public Bank Group was ranked the largest banking group in Malaysia and 2nd largest listed company on Bursa Malaysia Securities Berhad with market capitalisation of RM36.03 billion. And the hereafter of the bank is even brighter with constitution of ING PUBLIC Takaful Ehsan Bhd last twelvemonth, a joint venture between Public Bank, Public Islamic Bank Berhad, and ING Management Holdings Sdn Bhd ( Public Bank Berhad, 2011 ) .
Corporate Strategy and Performance
To go a leader in retail banking market, Public Bank Group applies a focussed and growing scheme. The scheme sets the broad- based retail consumers and small- and medium- sized endeavors ( “ SMEs ” ) as the chief mark markets and pursues growing in the retail banking concern through concentrating on retail loaning, deposit- pickings, and fee- based concerns. At the terminal of 2011, the Public Bank Group reached the market portions of 18.1 % , 25.8 % , and 33.0 % for residential mortgages, rider vehicle funding, and commercial belongings funding in Malaysia, severally. In deposit- pickings concern, the bank recorded a growing rate of 14.7 % for entire sedimentations from clients in Malaysia, compared to domestic banking industry ‘s annualized growing rate of 11.8 % . And the bank besides reached the market portion of 44.3 % for fee- based concerns through Public Mutual.
To supply better services to domestic clients, Public Bank Group expanded its multiple bringing channels. At the terminal of 2011, the Public Bank Group has 252 subdivisions throughout Malaysia, with 529 Automated Teller Machines, 506 Check Deposit Machines, and 496 Cash Deposit Terminals. The bank besides strengthens its cyberspace banking and Mobile banking services to present first-class services for easy banking. The bank expanded its abroad web with 83 subdivisions in Hong Kong, 3 subdivisions in China, 23 subdivisions in Cambodia, 7 subdivisions in Vietnam, 3 subdivisions in Laos, 1 subdivision in Sri Lanka, every bit good as 3 representative offices located in Shanghai, Shenyang, and Taipei ( Public Bank Berhad, 2011 ) .
Public Bank Services
Public Bank Berhad provides a assortment of services other than the standard nest eggs and loan services. One of the most popular services introduced by Public Bank Berhad is the PB Cards. Public Bank is besides committed to giving out support for the SMEs by offering different merchandises or services based on the SMEs ‘ demands. Apart from that, Public bank is besides involved in investings such as common financess and gold investing.
Public Bank Berhad fundamentally offers Visa Cards and MasterCards. There are 12 types of cards under Visa Cards and the other eight under MasterCards. There are PB Visa Classic, Gold, Platinum, Electron, Infinite, Credit Card, Commercial Card, PB Day2Day Card, PB-Esso Mobil Visa Gold Credit card, PB-Esson Mobil Visa Debit Card, Manchester United Credit, Debit Card, and Mutual Gold-PB Visa Platinum Credit Card under Visa Cards ‘ merchandises.
MasterCards ‘ merchandises include PB MasterCard Standard, PB Executive, Gold, Platinum MasterCard, BING Credit or Debit MasterCard Paypass Card, and PB UTAR or TARC Debit MasterCard.
PB Visa Classic or PB MasterCard Standard Card members can bask a figure of benefits including hard currency discounts. Besides that, Public Bank Berhad offers card members free automatic travel insurance of RM350, 000 which provides them with security and easiness of head around the universe. Card members can claim for any incommodiousness such as flight hold, luggage hold or loss, trip cancellation and so on.
Public Bank Berhad declared themselves as a strong spouse to supply support for the SMEs. Public Bank Berhad provides services or merchandises such as loans for working capital, undertaking funding, and Credit Guarantee Corporation ( CGC ) Guarantee Schemes.
Public Bank Berhad loans working capital to SMEs by leting SMEs the convenience of overdraft whenever the SMEs would necessitate the financess. The involvement will be charged merely if the financess are used and if the overdraft sum is below RM250, 000, SMEs do non necessitate to pay for the committedness fee for using the overdraft sum.
Public Bank Berhad besides offer SMEs for go arounding recognition in order to turn to SMEs ‘ funding demands in a short to medium periods. With go arounding recognition, SMEs will hold the flexibleness on pulling financess when necessary and it is repayable in a month to six months term. SMEs can take to refund in full or merely the involvement.
Trade funding is another service provided under working capital loans. Public Bank Berhad will manage SMEs ‘ trade minutess expeditiously through a broad scope of ways such as missive of recognition, trust reception, banker ‘s credence, and banker ‘s warrant. This will guarantee that the international concern community accepts SMEs.
Besides supplying loans for working capital, Public Bank Berhad provides undertaking funding every bit good in which the bank might take to set about and provide all the financess or supply the fund jointly with the other fiscal establishments for those feasible undertakings. There are bridging loan, terminal funding, syndicated loan and banker ‘s warrant under undertaking funding.
CGC Guarantee Schemes is a choice of loan strategies in order to advance the development of SMEs. Among the loan schemes choice, there are New Principal Guarantee Scheme ( NPGS ) , Small Entrepreneur Guarantee Scheme ( SEGS ) , Flexi Guarantee Scheme ( FGS ) , and Rehabilitation Fund for Small Businesses ( RFSB ) , and Particular Relief Guarantee Facility ( SRGF ) . These strategies help SMEs to have the funding the demand when they have no necessary collateral.
The 3rd type of service provided by Public Bank Berhad will be the investings, PB series unit trust financess managed by Public Mutual Berhad. Currently, Public Mutual is advancing five classs of financess, which are equity fund, balance fund, bond fund, fixed income fund, and money market fund.
Public Bank Berhad is besides presenting for Gold Investment Account, which allows clients to purchase the purest gold ( 99.99 % choiceness ) , based on day-to-day monetary values per gm in Ringgit Malaysia. This investing allows clients to acquire higher return from the gilded monetary value and it is better to put in Gold instead than maintain the gold physically. Furthermore, the investing in gold is convenient as the trading will be carried out online, which is through a bankbook.
There are many more services that are provided by Public Bank Berhad, yet the most popular services other salvaging and loan will be the PB cards, services provided for SMEs, and investing. Other services such as PB mobile banking, insurance and measure payment makes clients ‘ life much easier and convenient.
Factors & A ; Policies Affecting Public Bank
Statutory Reserve Requirement ( SRR )
It is an instrument in pecuniary policy for Bank Negara Malaysia ( BNM ) liquidness direction. ( Finance Malaysia, 2011 ) Higher SRR set by the cardinal bank will take to lower loan growing, as there will be lesser financess to impart out and are capable to rigorous blessing.
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Beginning: OSK Research
Table 1.1 shows the sensitiveness of different bank ‘s statutory sedimentations as a per centum of entire hard currency and interbank assets at different SRR degrees. We could detect that when the SRR addition, the per centum of the entire hard currency and interbank assets increases. Public bank has an 8.1 % of entire hard currency and interbank assets when SRR is at 2 % whereas a 24.4 % of entire hard currency and interbank assets when SRR is at 6 % .
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Beginning: OSK Research
Table 1.2 shows the bank net incomes downside sensitiveness to when SRR addition. Public Bank faces a -0.9 % of downside when SRR is at 2 % and it goes up to -3.6 % when SRR is at 5 % . However, their net incomes downside is consider mean comparison to other Bankss as Ambank has the lowest of -1.3 % and Maybank has the highest which is -5.6 % . Therefore, addition in SRR could do Bank to hold a higher per centum of net incomes downside.
Nightlong Policy Rate
It is the involvement rate at which a depositary establishment lends instantly available financess to another depositary establishment overnight. ( BLR.MY, 2011 ) Changes in the OPR could impact the base loaning rate, short-run involvement rates, fixed sedimentation rate, foreign exchange rates, long-run involvement rates, the sum of money and recognition, and finally, a scope of economic variables, including employment, end product, and monetary values of goods and services which is the micro and macro factors on the economic. ( BLR.MY, 2011 ) Banks will be confronting lower cyberspace involvement borders with the increasing of OPR in the statutory modesty demands together with utmost competition, said RAM Ratings caput of fiscal establishment evaluations Promod Dass. ( Lam, J. , 2011 ) Malaysia ‘s policy rate has remained unchanged since mid-2001. The nightlong policy rate was adopted as a policy rate merely in April 2004, with the debut of New Interest Rate Framework. ( Singh, S. , 2006 )
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From the graph 1.1 above, we could see that addition in OPR would do the BLR to increase. At May 2011, when Bank Negara Malaysia announced that OPR increased to 3 % , the BLR is really standing at 6.27 % . Harmonizing to RHB Bank chief officer Renzo Viegas, each and every bank could put their ain BLR based on their ain cost and schemes. ( Lam, J. , 2011 ) “ If the cost construction and concern schemes remain integral, when BLR adjust in tandem with every OPR addition or lessening, said Renzo. ( Lam, J. , 2011 )
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“ Banks are raising their loaning rates by 30 footing points ( bits per second ) when BNM raise the OPR by 25bps to 3 % . ” ( Yong, Y. N. , 2011 ) Harmonizing to Yong ( 2011 ) , the OPR merely raised by 25 bits per second, nevertheless Bankss are raising their loaning rates by 30bps. This is besides due to the rise in the SRR from 1 % to 3 % . Harmonizing to Table 1.3, it indicates the per centum alterations of the mean lending output and the net involvement border, and it shows that public bank is at 0.17 % . However, the mean lending output is still low compared to the others.
Public Bank is besides subjected to recognition hazard. Credit hazard refers to the hazard that a borrower may default on his or her loan. As Public Bank maps in the commercial banking industry, the bank has provided loan services for its clients.
For a bank to be successful and profitable, it needs to hold proper recognition hazard direction. Public Bank Group implements a recognition hazard direction procedure to cipher observe and manage recognition hazard of the house.
Public Bank has a manual called the Recognition Policy Manual in which the standards for recognition measuring and extension are outlined. The manual besides provides a elaborate model of the recognition reappraisal, blessing and monitoring procedures. Furthermore, this manual classifies different types of loans and the proviso systems.
Harmonizing to Public Bank, “ recognition hazard exposures are measured and monitored against recognition bounds and other control bounds ( such as affiliated exposures, big exposures and hazard concentration bounds set by the Credit Risk Management Committee and approved by the Board of Directors ) ” ( Public Bank Group Hong Kong, 2012 ) . Public Bank assures their recognition hazard by holding a hierarchy of recognition authorization where each individual on each degree has to O.K. the recognition and do certain that it is compliant to the bank ‘s recognition policy. Additionally, the bank delegates the responsibilities of of import recognition map country to keep an aim and controlled recognition blessing procedure.
Should at that place be any recognition defaults ; the recovery procedure is managed by an independent work-out squad ( Public Bank Group Hong Kong, 2012 ) . Public Bank ‘s recognition direction is conservative and controlled as the company strictly proctors every facet of its recognition policy and procedure. Furthermore, the company is besides able to run into its duties to its ain creditors, gaining it first-class recognition evaluations. Rating Agency Malaysia ( RAM ) gives Public Bank Berhad a evaluation of AAA for its long-run duties and P1 for its short-run duties ( Rating Agency Malaysia, 2012 ) .
Harmonizing to RAM ( 2012 ) , Public Bank has achieved 0.8 % gross impaired-loan ratio in March 2012. Gross impaired-loan ratio refers to the ratio of gross non-performing loans to the entire gross loans. Public Bank is besides rated extremely in Moody ‘s with a evaluation of A3/P-1 and Standard and Poor ‘s with a evaluation of A-/A-2.
Like any other house, Public Bank is besides subjected to internal hazards within the company. Operational hazard causes losingss from inefficient internal procedures, system and human mistakes, and hapless direction determinations.
In order to cut down operational hazard, Public Bank employs careful designation, measuring, monitoring, commanding administrative, and system factors that may impact its public presentation and profitableness. The bank created an Operational Risk Management Committee that has specific outlined undertakings including a ) supervising formal development of operational hazard direction policies that is comprehensive of all concern activities and ensures the development of policy manuals, procedures, processs and patterns and B ) evaluating and measuring the adequateness of controls to pull off the overall operational hazards associated with concern activities including physical or premise security ( Public Bank Berhad, 2011 ) .
Public Bank is besides subjected to political hazard. Political hazard is considered an external factor that can non be controlled by the house. Because political hazard can non be controlled by the bank, Public Bank may seek to cut down the impact that political hazard might hold on their concern. One of the ways to cut down political hazard is to diversify their concerns to other states. Public Bank opened a subdivision in Hong Kong non merely for economic grounds but besides because the state is politically stable. Political hazard besides refers to the financial policies and other policies implemented by the authorities. Public Bank.
During twelvemonth 2003, Public Bank Group faced a really ambitious state of affairss where Malaysia and Hong Kong both affected by the Severe Acute Respiratory Syndrome ( SARS ) . Hong Kong is where the major concerns of Public Bank Group located and Public Bank Group were affected by the hapless economic. Another factor that affects Public Bank ‘s growing is war in Iraq in the beginning of 2003. However, there was a strong recovery in Malaysia in the 2nd half twelvemonth due to the disciplined financial policies and accommodating pecuniary policies of the Government. It hence led to a recoil in the Malayan economic system and sustained the growing. ( Public Bank Annual Report, 2003 )