This article first appeared in The Edge Malaysia Weekly on October 5, 2026 - October 11, 2026

Generating consistent returns for shareholders has become increasingly challenging for banks amid a more competitive and volatile operating environment. To its credit, Public Bank Bhd (KL:PBBANK), the country’s third-largest banking group by assets, has maintained a strong track record in this area.

In a significant achievement, Public Bank has secured — for the 10th consecutive year (2017 to 2026) — The Edge Billion Ringgit Club award for the Highest return on equity (ROE) over three years in the financial services sector, among banks that have a market capitalisation of at least RM10 billion. It also won this accolade from 2010 to 2013.

The group’s earnings rose steadily over the three-year evaluation period. Net profit grew 8.7% to RM6.65 billion in the financial year ended Dec 31, 2023 (FY2023), and then by 7.5% to RM7.15 billion in FY2024. In FY2025, net profit increased at a slower pace of 1.1% to RM7.22 billion. The upward trajectory translated into a risk-weighted compound annual growth rate of 8.5% over the three years.

Its ROE, a measure of how effectively it used shareholders’ equity to generate profits, rose from 12.7% in FY2023 to 12.8% in FY2024, before easing to 12.3% in FY2025 as earnings growth moderated while its shareholders’ equity base expanded at a faster pace. Over those three years, Public Bank recorded an adjusted weighted ROE of 12.5%, the highest among its peers in the award category.

For the first half of FY2026 (1HFY2026), Public Bank registered a net profit of RM3.58 billion, up 2% year on year. Earnings were boosted by a 12% increase in non-interest income to RM186.6 million, driven mainly by higher unit trust-related fee income and foreign exchange income.

The group’s improved performance in the six-month period was partially offset by an increase in allowance for impairment of loans and financing of RM94.1 million, arising from normalisation of credit cost.

Reflecting its long-standing emphasis on cost discipline and prudent management, Public Bank continued to stand out among Malaysian lenders, with its asset quality and cost-to-income ratio at 0.54% and 35.1% respectively — both the best in the sector.

Challenges remain, however, particularly in managing pressure on net interest margin (NIM), an issue that continues to weigh on banks across the industry. In 2QFY2026, Public Bank’s NIM slipped three basis points (bps) quarter on quarter to 2.08%, the lowest since 2020.

Public Bank declared an interim dividend of 10.5 sen a share in 1HFY2026, amounting to RM2.04 billion in total, which represents about 57% of its net profit.

One of the more generous dividend paymasters in the market, Public Bank’s dividend per share rose from 19 sen in FY2023 (payout ratio: 55.5%) to 21 sen in FY2024 (57%) and 22.5 sen in FY2025 (60.5%).

In a notable development earlier in June, the family of the late Public Bank founder Tan Sri Teh Hong Piow undertook its first restricted offer for sale (ROS) of shares in the bank, to directors and employees. The family, through Consolidated Teh Holdings Sdn Bhd, disposed of 250.9 million shares, or a 1.9% stake, on June 9.

Following the disposal, the Teh family’s shareholding fell slightly to 21.38%. It remains the bank’s largest shareholder, followed by the Employees Provident Fund, with a 16.31% stake at the time of writing.

The disposal follows the family’s October 2024 announcement that it would pare its shareholding in Public Bank to 10% over five years through an ROS to meet regulatory requirements.

At the time of writing, analysts continued to view the stock favourably. Bloomberg data shows that 12 analysts have a “buy” recommendation and eight, a “hold”. There were no “sell” calls. The 12-month target price averaged at RM5.58, which suggests potential upside from its closing of RM4.95 on Aug 28. At that price, Public Bank had a market capitalisation of RM96.08 billion.

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