KUALA LUMPUR (Aug 3): Moody’s Ratings has affirmed Public Bank Bhd’s (KL:PBBANK) A3 long-term deposit ratings with a stable outlook, reflecting by the bank's strong asset quality and profitability, which are expected to remain stable over the next 12 to 18 months.

The ratings agency — officially Moody's Investors Service Singapore Pte Ltd — also affirmed the bank's a3 baseline credit assessment (BCA), adjusted BCA and counterparty risk ratings.

“The affirmation of Public Bank's A3 ratings reflects the bank's strong asset quality, supported by its low credit costs and conservative risk culture. The bank remains well-capitalised despite higher dividend payouts, with its capitalisation supported by strong profitability,” said Moody’s in a statement.

It noted that risks to asset quality stem mainly from the bank's exposure to Malaysia's property sector and weaker loans in Hong Kong, although these are mitigated by its loan loss coverage ratio of 147% as at March 31, 2026.

Over the next 12 to 18 months, Moody's expects Public Bank's return on tangible assets to remain at around 1.3%, with growth in non-interest income offsetting pressure on net interest margins.

Meanwhile, the bank's tangible common equity-to-risk weighted assets ratio is expected to remain around 15% over the same period.

Moody's added that while Basel III standardised approach reforms should yield capital benefits, these will likely be offset by higher capital distributions to shareholders.

On funding, Moody's said Public Bank remains anchored by its large retail deposit base and its status as a systemically important deposit-taking institution, although its liquidity buffer is expected to remain relatively modest as it continues to allocate more assets towards loans.

“While we expect the bank to receive support from the government of Malaysia (A3 stable) in times of need, the bank's ratings do not benefit from any uplift because its BCA is already at the same level as Malaysia's sovereign rating,” said the credit ratings agency.

It also said a rating upgrade is unlikely at this stage. Conversely, a downgrade may occur if the bank’s standalone credit profile weakens — specifically if its impaired loan ratio rises above 1%, its tangible common equity-to-risk weighted assets ratio falls below 14.5%, or its return on tangible assets declines below 1%.

Public Bank’s total assets stood at RM570 billion as at March 31, 2026.