[RAM] RAM Ratings affirms Public Bank's and Public Islamic's AAA ratings on solid credit fundamentals

RAM Ratings has affirmed the AAA/Stable/P1 financial institution ratings of Public Bank Berhad (the Group) and its core subsidiary, Public Islamic Bank Berhad, as well as the issue ratings of the entities (Table 1).

The affirmation is anchored on our view that the Group’s strong loss absorption buffers and robust risk controls put it on a firm footing to navigate credit headwinds that may arise from evolving global tariff tensions. Public Bank’s direct loan exposure to export-oriented borrowers is small, accounting for just 2.9% of gross loans as at end-March 2025. While the knock-on impact of tariff disputes on the domestic economy has yet to be ascertained, we take comfort in the Group’s resilience during previous credit downcycles. The ratings also consider its entrenched domestic franchise, solid balance sheet, pristine asset quality and systemic importance in Malaysia.

Public Bank’s total assets amounted to RM543 bil (including overseas operations) as at end-December 2024, making it the third-largest banking group in Malaysia. It enjoys leading market positions in residential mortgages, automobile financing, small and medium enterprise (SME) lending and retail unit trusts. Commanding a respective 17.7% and 16.5% of the domestic banking system’s loans and deposits as at end-December 2024, the Group is designated as one of three domestic systemically important banks.  

Public Bank’s gross impaired loan ratio eased to 0.52% as at end-December 2024 (end-December 2023: 0.59%), the lowest among peers. The improvement was mainly driven by the settlement of an impaired syndicated property-related corporate loan in Hong Kong which more than offset some deterioration observed in Cambodia. Credit costs were negligible in FY Dec 2024 due to a writeback of management overlays and recoveries. Loan loss coverage (including regulatory reserves) was solid at 238% as at end-December 2024, well above the industry average of 143%. The strong coverage, along with healthy pre-provision profit and capitalisation (common equity tier-1 capital ratio: 14.3%), give the Group ample headroom to cushion any potential increase in credit losses.

Despite incurring heftier personnel expenses and a goodwill impairment (RM473.8 mil) for its Hong Kong operations, Public Bank’s pre-tax profit climbed 4.6% to RM8.9 bil in FY Dec 2024 (FY Dec 2023: RM8.5 bil) on account of a steady net interest margin of 2.18%, healthy financing growth (+6.3%) and the stronger performances of its unit trust and stockbroking businesses. A higher profit contribution from an associated company also boosted earnings. The return on risk-weighted assets stayed largely stable at 2.6%. The recent acquisition of LPI Capital Berhad (LPI) – one of Malaysia’s top six general insurers by gross direct premiums – offers opportunities for enhanced cross-selling, which will lift non-interest income. That said, the contribution to the Group’s bottom line is expected to be small. LPI posted a RM474.1 mil pre-tax profit in FY Dec 2024, which accounts for about 5% of the Group’s pro forma fully consolidated pre-tax earnings.




Analytical contacts
Jeremy Noel Paul
(603) 2708 8230
jeremynp@ram.com.my

Wong Yin Ching, CFA
(603) 2708 8280   
yinching@ram.com.my

Media contact
Sakinah Arifin
(603) 2708 8212
sakinah@ram.com.my