KUALA LUMPUR: Moody's Ratings has affirmed Public Bank Bhd
's A3/P-2 long- and short-term foreign and local currency deposit ratings, while maintaining a stable outlook.
In a statement, Moody's said that it also affirmed the bank's a3 Baseline Credit Assessment (BCA) and Adjusted BCA, A2/P-1 long- and short-term foreign and local currency Counterparty Risk Ratings, as well as its A2(cr)/P-1(cr) long- and short-term Counterparty Risk Assessments.
“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. The BCA also considers the bank's modest liquidity buffer, balanced by its strong funding,” Moody’s said.
It said the bank's ratings do not receive any uplift from expected government support as its BCA is already at the same level as Malaysia's sovereign rating.
“We expect Public Bank's problem loans ratio to remain below 1% over the next 12-18 months, supported by stable operating conditions in Malaysia,” Moody’s said.
However, it noted that the bank's loan quality remains exposed to Malaysia's property sector and weaknesses in its Hong Kong loan portfolio, although these risks are mitigated by a strong loan loss buffer.
Public Bank's loan loss coverage ratio stood at 147% as at March 31, 2026.
Moody's expects the bank's return on tangible assets to remain around 1.3% over the next 12 to 18 months, with pressure on net interest margins offset by growth in non-interest income.
It also forecasts Public Bank's tangible common equity-to-risk-weighted assets ratio to remain around 15%, with capital benefits from Basel III standardised approach reforms broadly offset by higher capital distributions.
The rating agency said the bank's funding profile will remain a key credit strength, supported by its large retail deposit base and status as a systemically important deposit-taking institution.
“An upgrade of Public Bank's A3 ratings and a3 BCA is unlikely because they are already at the same level as Malaysia's sovereign rating and the latter's outlook is stable,” Moody's said.
It said the ratings could come under pressure if the bank's problem 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%.
