KUALA LUMPUR: Public Bank Bhd
is expected to maintain robust capitalisation and healthy profitability over the next 12 to 24 months despite a HK$1.96bil goodwill impairment at its Hong Kong-listed subsidiary, Public Financial Holdings Ltd (PFHL), according to S&P Global Ratings.
In a report, the rating agency said Public Bank's strong domestic banking franchise and leading position in Malaysia's retail and small and medium enterprise (SME) banking segments would continue to support earnings and internal capital generation.
S&P said it expects Public Bank's risk-adjusted capital ratio to remain above 9% over the next two years, taking into account the goodwill impairment, the proposed privatisation of PFHL and the bank's RM3.5bil shareholder return plan through special dividends over three years.
Public Bank, which owns 73.2% of PFHL, intends to privatise and delist the Hong Kong subsidiary.
S&P noted that PFHL has faced margin compression and asset quality pressures, particularly in commercial real estate and taxi financing.
However, it said the Hong Kong operations accounted for less than 5% of Public Bank's total assets and 1% of its pre-tax profit in 2025, limiting the impact on the overall group.
“We expect Public Bank's asset quality to remain robust, underpinned by strong risk management and prudent underwriting.
“Although we anticipate a modest rise in non-performing loans due to potential vulnerabilities in SMEs and low-income households amid inflationary and cost pressures arising from geopolitical uncertainties, the bank's sizable provision buffers, management overlays, and significant collateral will limit potential credit losses and keep additional provisioning low,” S&P said.
S&P currently rates Public Bank at A-/Stable/A-2.
