This article first appeared in The Edge Malaysia Weekly on September 16, 2024 - September 22, 2024

There aren’t many bankers today quite like Tan Sri Tay Ah Lek, the managing director and CEO of Public Bank Bhd (KL:PBBANK).

A pioneer staff member when Public Bank was founded in 1966, Tay has poured blood, sweat and tears into helping build the bank over the course of almost six decades together with its founder, the late Tan Sri Teh Hong Piow, who was Tay’s mentor.

Under their watch, Public Bank grew to become the country’s third-largest banking group by assets — after Malayan Banking Bhd (KL:MAYBANK) and CIMB Group Holdings Bhd (KL:CIMB) — and the second-largest listed company on Bursa Malaysia by market capitalisation.

For his role in taking the group to new heights, Tay — who has been in the driving seat since July 2002 — wins The Edge Billion Ringgit Club Value Creator: Outstanding CEO of Malaysia award this year. Teh had won the same award in 2010.

“Life is a confluence of opportunities and timing,” Tay, 81, reflects when asked by The Edge about his start in the world of banking.

“In those days, joining a bank was prestigious and coming from a humble background, stability and growth were important. I was lucky to be able to join the then Malayan Banking in 1961 and even more so to have met the late Tan Sri Teh.

“Teh interviewed me for my first job at Malayan Banking and recognised my potential. He took me under his wings and, later in 1966, offered me [the opportunity] to join him as a pioneer staffer when he founded Public Bank. The rest, as they say, is history.”

Today, Public Bank is widely considered by analysts to be one of the best-run banks in the country. It has consistently stood out in the industry as having the best return on equity (ROE), cost-to-income ratio (CIR) and asset quality.

Public Bank opened its first branch at No 4, Jalan Gereja, Kuala Lumpur, on Aug 6, 1966. The first five months of business saw the group yield a profit of RM71,562 — the start of an unbroken track record of profitability of 57 years.

Exactly a year after the business started, Public Bank was listed on the local stock exchange, then known as the Kuala Lumpur Stock Exchange. In 1970, it forked out its first dividend of 3.5% per ordinary share of RM1 each, in what would be the beginning of an unbroken stream of dividends paid out by the group every financial year. For many years now, the stock has been an investor darling, sought after in particular for its solid dividends.

Over the years, it has undertaken several major acquisitions, including that of Sime Merchant Bank Bhd in October 2000 and Hock Hua Bank Bhd in March 2001. It was one of the early banks to have spread its wings across the region, with a presence now in Hong Kong, China, Cambodia, Vietnam, Laos and Sri Lanka.

Public Bank has grown from strength to strength, showing resilience during periods of economic crises — it was profitable even during the 1997/98 Asian financial crisis that had brought many local lenders to their knees — and the unprecedented challenges of the Covid-19 pandemic. Even though the group’s net profit dipped to RM4.87 billion in the financial year ended Dec 31, 2020 (FY2020) — the first year of the pandemic — from RM5.51 billion in FY2019, it bounced back quickly. Its net profit gathered steam to grow to RM5.66 billion in FY2021, RM6.12 billion in FY2022 and RM6.65 billion in FY2023.

Since Tay took the helm in July 2002, Public Bank’s annual net profit has grown more than eightfold from just RM770.24 million in FY2002. Its total assets had expanded to RM510.6 billion in FY2023 from RM61.77 billion in FY2002.

Its net ROE and CIR, at 13% and 33.7% respectively in FY2023, remained easily the best among the local domestic banking groups. However, its gross impaired loan ratio — an indicator of asset quality — at 0.59% fell closely behind that of Hong Leong Bank Bhd (KL:HLBANK) (0.56%).

What is particularly interesting about Public Bank is that many of its investors and staff have stayed loyal to the group through its ups and downs over the years — a feat arguably no other bank has managed to pull off as successfully.

When asked what makes Public Bank unique in this sense, Tay attributes it to the culture instilled by Teh.

“Our founder consistently emphasised the importance of culture in building and expanding the bank. He firmly believed in the value of open lines of communication to ensure alignment with our vision and mission.

“This approach has fostered a unique corporate family culture that we, as a bank, take great pride in. The strong bonds within our team promote collaboration, allowing us to address issues swiftly and effectively, thereby enhancing our collective ability to adapt to changes and overcome challenges,” he says.

Teh passed away in December 2022 at the age of 92 while holding the role of chairman emeritus and adviser. Tay and his team, however, ensure that his legacy is upheld.

“The late founder taught us that the right people are a company’s greatest asset. He believed in giving credit where credit is due. Meritocracy was his middle name and he had always advocated that if you want to do something, you must always do it well or don’t do it at all.

“That said, setbacks are viewed as learning opportunities. Challenges are transient and it is also important to maintain an optimistic outlook to navigate the ever-­changing landscape of banking and life in general, and to move on.

“In short, my late mentor is a hard act to follow and [his were] very big shoes to fill … but I try and I am still trying,” Tay says.

The group has delivered superior returns for long-term shareholders, even making millionaires out of some. It points out that if a shareholder had bought 1,000 Public Bank shares in 1967 and held on to them over the years, subscribing for all its rights issues, that person would have accumulated 744,690 shares worth RM3.2 million, based on its share price of RM4.29 as at end-2023. In addition, the person would have received a total gross dividend of RM1.9 million.

This would have translated into a solid compound annual rate of return of 17.7% in shareholder returns (that is, total dividends received plus share price appreciation) for each of the 56 years that the person held the shares.

At the time of writing on Aug 27, the stock had gained 11.7% over this year to close at RM4.68, for a market capitalisation of RM90.84 billion — still comfortably the second-largest listed company on Bursa. For comparison, Malayan Banking, the largest, had a market cap of RM129.12 billion while the third-largest, CIMB, had RM84.86 billion.

An important lesson Tay has learnt over the years is that one must be prepared to “unlearn, learn and relearn at all stages in life”, he says. “Indeed, upscaling and rescaling are a necessity. I constantly and strongly encouraged my staff to pursue certifications.”

Throughout the interview, conducted via email, Tay pays homage to Teh, underscoring the vast influence that the elder banker had on his life.

“Right from the onset, it [was] drummed into the workforce that Public Bank is founded as the ‘Bank for the People’ and, through the years, we have never deviated from this compass,” Tay says.

Despite his many successes, Tay remains humble to the core.

“I come from a traditional and humble family. We were taught to respect the elders and it was ingrained in us that hard work is the key and nothing comes easy. Along the way, some sacrifices were made and I am happy to have arrived at where I am today,” he shares.

He says his journey thus far has been enriched by having had his “life mentor and benefactor” guide, teach and inspire him.

“He (Teh) guided and raised me up from day one of my banking career. Whatever business acumen I have acquired over the years, it is definitely through lessons learnt and guidance from my Sifu.

“While life has taken me to heights beyond my imagination all those years ago, I am still a simple man with simple tastes. I have always enjoyed a good round of weekend golf and the company of family members and old friends.”

The last few years since the pandemic, coupled with all sorts of economic uncertainties and Teh’s passing, have been challenging, Tay shares. But he is looking forward to the future.

“I feel energised by the possibilities within the unwritten pages that lie ahead — how we may be at the frontier of a new era of banking, where our human ingenuity can be elevated further with advanced tools like quantum computing and generative AI (artificial intelligence).

“I hope that one day, when I look back at how this story unfolded, I can take comfort that we had managed to utilise the great technological resources of our times to enrich the experiences and lives of our customers and all stakeholders. It would also mean a lot if we can truly live up to the sustainability agenda that we have set ourselves on.

“Ultimately, I also hope that I can ensure the sustainability of this bank for the next generation to continue to thrive with it. A sound leadership succession line with our corporate culture firmly etched across all layers of the organisation — this is my greatest responsibility,” he says.

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