Public Bank 大眾銀行 53th AGM at Shang-rila KL

As usual , Public Bank 2019 53th Annual Shareholder Meeting AGM was held at Shangri La Kuala Lumpur. Public Bank is the 3rd largest bank by capitalization in Malaysia after Maybank and CIMB. The company is known for to be prudent and risk adverse.

I took Grab over to the AGM as this year as it is quite impossible to find parking.

This is the 1st year where the founder Tan Sri Datuk Sri Teh Hong Piow sitting in not as chairman but as Emeritus Chairman. This year the chairman was Mr Lai Wan, a former Bank Negara top gun. The COO did not do the briefing today instead all were done by Tan Sri Dato Sri Tay Ah Lek, the long time managing director of the company.

This year's door gift quite similar to last year's gift.

• Colored LED USB fan (build quality looks better than those sold in MrDIY) with low and strong fan blow setting.
• RM 50 Parkson Shopping voucher ( from the founder's best buddy Tan Sri William Cheng's company ) , valid until 2020.
• Public Bank branded recycle/tote bag.

AGM Door Gift

Some highlights of the day

• 2018 pre-tax profit of 5.59 billion, an increase of 2.2 % despite highly intense deposits competition
• Loan growth of 4.2% mainly from corporate sector
• ROE ( return on equity) 14.8% way above industry average 10%
• Public Mutual Berhad remains the main contributed non interest income to the bank having a leadership market share of 37.2% and numerous Lipper awards
• Still the bank with the lowest Cost-to-Income, way below industry peers
• Electronic Banking and Mobile Banking are experiencing high growth in users particularly in Mobile Banking
• Tan Sri Teh Ah Lek, the managing director reiterate that the bank's deposits are 80% variable and 20% fixed where the fixed will help cushion drops in OPR (overnight policy rate)
• The bank is looking into enhancing its remuneration enhancement policy 

• Management will be beefing up IT security as more and more users use the bank's online services (eg Pbebank, PbEngage, PbEnterprise), 600million into IT infrastructure
• Management will also be putting in more investments into IT infrastructure in view of digitalization of everything, 90million into Fintech related stuff.
• On subsidiaries : 

Cambodia Public Bank
Remains largest foreign bank in Cambodia. Not much more was mentioned.

PBVN (Public Bank Vietnam)

Branches increase from 7 branch to 18 branches. Target to open another 8 branches to reach 40 branches. The country business is currently being overseen by the Cambodia Public Bank country head, this guy was responsible for the mass expansion of the bank's branches in Cambodia. Economic growth is expected to expand 6% in the country so the bank wants to ride on this boom.

No mention about the other Bank's other subsidiaries in China, Hong Kong, Laos and Sri Lanka so I suppose those countries is expected to have flat growth.

• 2019 strategies - digital transformation through ICT initiatives.
• Introduce Digital signature pad to reduce onboarding time for account opening.
• Payment services to AliPay, WeChatPay, Samsung Pay 
• Fintech Initiatives announced
• Big data - use of data to create insights 
• EKYC (know your customer) - onboard customers without without being onsite
• Blockchain - not much mentioned about but I'm wondering if it's got anything to do with XRP or JPMCoin 
• OpenAPI - a Bank Negara driven initiative for standardized connectivity to Bank's systems

Improvements from Last years AGM 

• No need to wait until end of AGM to collect door gifts.

This year all the door gifts can be collected before the AGM starts. It vastly reduce
all the queuing and josling like what happened last year.

• Electronic voting done via Tricor's handhelds instead of members of public smartphone.

eVoting System

Last year's evoting (electronic) system was terrible, there were many problems for people signing onto the eVoting website. This time round, Tricor coordinated the activity much better.

Conclusion

My 2 cent guestimate analysis on PBB stock (1295) will be that the growth will be coming from PBVN aka Public Bank Vietnam. Growth from Malaysia is sure going to slow down given that the number of branch openings have slowed down a bit and competition for deposits from other Banks. The bank's average deposit growth is below industry average as pointing out by MSWG (Minority shareholder watch group).

Growth from ICT initiatives seems frothy but it's a good step forward, I do not think this will generate much big revenue to the bank. It's very obvious the bank needs to boost its ICT initiatives given the fact their mobile banking users in growing in double digits. 

If you bought 1 Lot of PBB Shares since the IPO

Small trivia, if you owned 1,000 units (1 lot) of Public Bank shares during its IPO in the yester years, today it's worth 3.3 million excluding dividends. If dividends were taken into consideration, it's worth 4 million. Second trivia is this is one of the very rare companies to issue out dividends before AGM (pointed out by one of the loyal shareholders comment).

This year's AGM was comparatively quite tame. I'm glad there were a few millennials coming out to give their comments on the bank's performance. Previously all the comments were dominated by older crowd.

Very strong support at RM20-21.

The share price has taken some beating from 52 week highs of RM26 and recovered a bit. Mid to Long term I'm positive about this company, reminding myself to buy on weakness for this share. Support line for the stock price is around RM20-21 and is unlikely to go down unless there's some major bad news.  While Maybank is embroiled in Hyflux financial scandal, this bank has so far never got any major hits.

The future of this stock will depend how it will penetrate new markets with the current slowdown in the local economy.