KUALA LUMPUR (May 8): Public Bank Bhd (KL:PBBANK) said on Thursday that any adverse impact from economic challenges, including tariff uncertainties, will be “very manageable” for the third-largest bank in Malaysia by assets.
Speaking at the bank’s annual general meeting, chief executive officer Tan Sri Tay Ah Lek said Public Bank has taken measures and is exercising greater prudence in lending. For now, the bank's exposure to borrowers directly affected by the sweeping US tariff remains below 3%, he noted.
“Over the years, the group has a proven track record of navigating diverse economic conditions with great resilience,” Tay said, highlighting Public Bank’s industry-leading asset quality and cost efficiency.
Overall, Public Bank reiterated that its net interest margin will remain stable or experience a slight compression in 2025.
Malaysian banks are not expected to emerge completely unscathed from the US tariff turmoil, as broad slowdown in economic growth may drag on demand for business loans and hit advisory fees from delays in capital investments, expansion plans, and merger-and-acquisition activities.
The sector may also see a rise in provisions set aside for potential losses from loans turning sour and adverse general conditions as their fortunes are closely tied to the health of the economy.
Hong Kong unit took steps
In Hong Kong, where a one-off goodwill impairment of HK$810 million (RM464 million) was recorded in the final quarter of 2024, Public Bank has taken steps to deal with the declining value of minibus and taxi licences, Tay said.
The bank’s 73%-owned unit Public Financial Holdings Ltd has reduced its exposure to taxi licence financing and tightened lending criteria and lowered the loan amount it dishes out relative to the value of the assets.
Minibus and taxi licences accounted for about 43.8% of Public Financial’s gross loans in Hong Kong, a market that was also suffering from a property downcycle, according to a Moody’s Ratings report from last year.
Nevertheless, Tay said the sector remains resilient while “the ones facing challenges are those who own multiple taxi licences”.
To mitigate potential defaults, Public Financial has adopted a prudent lending approach, focusing on credit risk management, tightening underwriting standards and enhancing credit monitoring, he said.
Public Bank is also rationalising the operations of its two other Hong Kong subsidiaries — Public Bank Hong Kong Ltd and Public Finance Ltd — focusing on optimising systems, human resources, and streamlining shared services to improve cost efficiency and productivity, Tay added.