Not changing is a tragedy

Public Bank branch in Seri Petaling, Selangor.

IN the Malaysian banking universe, it is a well-known fact that one financial institution stands out from the rest in terms of its valuation. Public Bank Bhd trades at a price-to-book ratio of 2.3 times. In fact, the bank has traded at an average of 3.1 times over the last 10 years. Other banks in Malaysia pale in comparison. The other five large banks in Malaysia trade at a price-to-book ratio range of between 0.8 times and 1.27 times. So, why the stark difference?

In a nutshell, Public Bank is conservative in its business approach. It has always stuck to the basics of banking. Just consider these pointers taken from a recent research report on Public Bank. For one, the report noted that Public Bank does not face direct forex risk, as its treasury operations do not take positions. It has one of the best capital provision buffers. It is also noted for having the most sound asset quality and having among the lowest cost-to-income ratios among its peers.