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172PUBLIC BANK BERHAD Annual Report 2012Resilient AlwaysChairman’s Review – Business Operations ReviewDomestic Retail Banking & Financing OperationsNotwithstanding the sustained market demand, the residentialproperty loans market will remain challenging mainly due tothe highly competitive banking environment and the morestringent lending guidelines issued by BNM which mayslowdown the overall market growth in affected sectors.Despite intense competition, the Public Bank Group isexpected to sustain its residential property financing segmentgrowth given its focus on home mortgages for owneroccupation and the broader base mass market segmentwhich are anticipated to maintain healthy growth.Passenger Vehicle Hire Purchase FinancingPassenger vehicle hire purchase financing remained one ofthe core retail business products of the Public Bank Groupand accounted for 20.4% of the Group’s total loan portfolio.The automobile industry recorded growth of 3.2% in 2012 dueto the lingering impact from the disrupted supply chain as aresult of natural disasters which happened in Japan andThailand last year, coupled with the introduction of theresponsible lending guidelines by BNM.Performance ReviewDespite the subdued automobile industry growth, the PublicBank Group’s domestic vehicle hire purchase financingincreased by RM3.33 billion or 9.0% to RM40.43 billion asat the end of 2012, outpacing the industry’s growth rate of7.1%. As a result, the Group maintained its pole positionwith an enlarged domestic vehicle hire purchase financingmarket share of 26.4% as at the end of 2012, up from25.9% as at the end of 2011.The strong performance of the Public Bank Group’s vehiclehire purchase financing business was the result of strongbusiness support from major passenger vehicle distributorsand panel car dealers, as well as the success of the Group’sstrategy to sustain its market share of vehicle hire purchasefinancing for used passenger and commercial vehicles.Notwithstanding Public Bank Group’s healthy expansion ofits vehicle hire purchase financing portfolio, the Group’sgross impaired loans ratio for vehicle hire purchase loansremained healthy at 0.6% which was well below theindustry’s ratio of 1.2% as at the end of 2012. The strongasset quality is a testament to the Group’s prudent lendingpolicy and sound risk management.Marketing InitiativesThe Public Bank Group’s marketing initiatives are driven fromthe Group’s large network of 255 branches nationwide, andits 27 Hire Purchase Centres (“HPC”) in key locations whichfully focus on providing and supporting the Group’s vehiclehire purchase financing business. With a dedicated andexperienced staff force of more than 1,100 staff, these HPCshave actively participated in car carnivals, roadshows andcollaboration programmes with car distributors and dealers tooffer attractive vehicle hire purchase financing packages tocustomers. In 2012, the Group participated in 1,082 jointsales promotions and sponsorship nationwide with theGroup’s 8,400 car dealers. The Group continues to emphasiseon providing efficient service delivery to panel car dealers,particularly in ensuring fast turnaround time on approval anddisbursement of hire purchase loans. These initiatives willfurther reinforce the Group’s relationship with car dealers andhelp the Group garner stronger business support.ProspectsSales of motor vehicles are expected to improve as cardealers continue to carry out more aggressive and proactivemarketing strategies such as launches of new car modelsand offers of attractive sales packages. This is expected toaugur well for the Public Bank Group to increase marketshare and sustain its leading position in the industry givenits focus on implementing proactive marketing strategieswhich are well supported by competitive pricing and efficientservice delivery.