Tuesday, May 6, 2008

Why Public Bank still a good BUY?

In today’s competitive environment, cost will be the effective way to judge how good one bank is. In this area, Public Bank is the most successful bank for Malaysia (33% compare to HLB 42% & MB 44%). Most of the staffs are hard working, thanks to the management who taking care of their staff well being.  In return, with this kind of working environment, create a good chain reaction.

 If you will to ask around what’s the most quality bank in terms of service efficiency, people mostly give you the answer, Public Bank. Yes, today if you go to Public Bank’s counter, within 5 minutes, you will be called. Even if the queue is so long, the manager will come forward and provide their service.  As a result, it managed to retain the existing customers as well as attracting new business.

 It has the lowest non performing loan (NPL) in the country (1.2% compare to average of 3.1% for industry). Thanks to the risk management policy and practice. When came the loan application process, if the amount is more than 3 million, uncle Teh will personally review the application, even though the team already pass the recommendation.  In this case, one should not compare Citigroup with Public Bank, since you never see Citigroup CEO personally review the application. Hence the risk is less for Public Bank to fall into the financing difficulties with its superior asset quality.

 Why Public Bank able to maintain the high ROE of 17 to 20%? Thanks to the loan growth and the operational efficiency. For the past 3 years, management have giving away most of the earning in terms of Dividend, last year, it paid 75 cents per share. This will give one Dividend Yield of 7% base on stock price of RM10.90.

For the time being, you may not find any of the other bank in Malaysia which beat Public Bank for all the above points. Hence, if one would to look for buying stock in Banking Industry, which one would he go for?

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.