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173Chairman’s Review – Business Operations ReviewDomestic Retail Banking & Financing OperationsPersonal Consumer FinancingThe Public Bank Group’s domestic personal consumerfinancing business is mainly driven by its subsidiary, PublicIslamic Bank. Public Islamic Bank’s personal financingproduct, the Bai’ Al-Einah (“BAE”) Personal Financing-i ismainly offered to staff of government agencies, statutorybodies and large corporations. As at the end of 2012, PublicIslamic Bank has established agency arrangements withmore than 290 entities.In 2012, Public Islamic Bank approved RM732.5 million ofBAE Personal Financing-i. As at the end of 2012, totalfinancing outstanding of BAE Personal Financing-i amountedto RM3.06 billion with a market share of 12.0%.Credit and Debit CardsThe Malaysian credit card industry continued to shrink as aresult of tighter credit card lending guidelines issued byBNM. various initiatives carried out to prevent credit cardattrition, the number of credit cards in circulation in theindustry further declined which has also resulted in areduction in Public Bank’s credit card base. Nevertheless,Public Bank’s debit card segment continued to achievecommendable growth during the year.Performance ReviewNotwithstanding the lower credit card base, Public Bank’scredit card receivables and credit card usage increased by5.4% and 7.4% respectively in 2012 as compared to thegrowth rate of 1.8% and 6.2% respectively in the cardindustry. The Bank’s market share of credit card base andcredit card receivables stood at 7.7% and 4.8% respectivelyas at the end of 2012.Public Bank’s debit card segment continued to thrive despitefierce market competition. The Bank’s debit card customerbase and usage increased by an impressive 56.5% and48.4% respectively in 2012. To further improve the Bank’sdebit card usage, the Bank will continue to create awarenessof the various benefits of using debit cards and encouragecustomers to convert their PB Bankcard to the Bank’s debitcard, the PB Day2Day card.In order to further grow its merchant base and revenuestream, Public Bank remained focused on the delivery ofefficient customer support to existing and newly acquiredmerchants. During the year, the Bank targeted smallerbusiness establishments and potential new market segmentsfor its merchant acquiring business in its effort to furtherexpand its merchant base. Even though competition wasstiff, the Bank’s merchant sales and merchant terminalrentals registered a growth of 11.6% and 19.3% respectivelyin 2012.Products and Marketing InitiativesThe Public Bank Group’s wide branch network remained asthe key channel to acquire new credit and debit cardholders.In view of the increasing popularity of social media ande-commerce amongst the young generation, Public Bankhas also started advertising on various e-channels to reachout to this particular segment of customers. To further tapinto the internet savvy customer market segment, the RM388cash back campaign was launched in October 2012 whichoffered cash back as well as attractive rewards to customerswho apply for credit card online.During the year, the PB Visa Infinite credit card was issuedby invitation only to existing high net worth customers withlong term banking relationships with Public Bank. Thispremium card offers unlimited cash rebate of up to 1% forspending and provides complimentary access to theMalaysian Plaza Premium lounge at the Kuala LumpurInternational Airport for cardholders. In addition, cardholdersalso enjoy 5% cash back when they spend at selectedparticipating merchants for luxury products.Public Bank also offered numerous attractive rewards andprivileges tailored to meet cardholders’ needs and lifestyle inits effort to retain cardholders and increase card sales. Toencourage card spending, the Bank partnered with hightraffic shopping malls and reputable retail merchants tolaunch various thematic campaigns from time to time, eachtargeting different customer segments.ProspectsDespite the competitive business environment, Public Bankis optimistic of sustaining the Bank’s card growth andincreasing its card market share by tapping into the Group’slarge retail customer base.
174PUBLIC BANK BERHAD Annual Report 2012Resilient AlwaysChairman’s Review – Business Operations ReviewDomestic Retail Banking & Financing OperationsShare Margin FinancingTotal gross brokerage and interest income from the PublicBank Group’s share trading and share margin businessdeclined by 28.2% and 2.8% respectively in 2012. This wasdue to a 26.0% drop in share trading business volume.However, the number of PB Sharelink accounts and theamount of approved share loans grew by 9.6% and 6.1%respectively to 48,594 accounts and RM2.22 billionrespectively in 2012.Public Bank undertook various initiatives to grow the Bank’sshare trading and share margin business in 2012. Theseinitiatives include promoting additional trading channels viahandphone and iPad, providing IPO/ESOS financing forselected counters on Bursa Malaysia, expanding the numberof Share Investment Units at strategically located branchesfrom 45 to 48 to tap on the branches’ large customer baseand offering more convenient access to the Bank’s PBSharelink service.In an intensely competitive business environment, the PublicBank Group will continue to improve its service deliverystandards in order to meet higher customer expectations.SME LendingThe small- and medium-sized enterprises (“SMEs”) businesssegment is a major driver of the country’s economy andplays a vital role in generating jobs and economic wealth inthe country. Recognising the importance of SMEs to theMalaysian economy, the Government has launched theSmall Medium Enterprise Masterplan 2012-2020 (“SMEMasterplan 2012-2020”) in 2012 with the objective to furtherincrease the sector’s contribution to the country’s GrossDomestic Product.The Public Bank Group continued to provide strong supportto SMEs through consistent growth of its SME portfolio andby being a leading supporter and provider of governmentinitiated schemes.Performance ReviewIn 2012, the Public Bank Group approved RM16.96 billioncommercial loans to domestic SMEs for their working capitaland business expansion needs, which accounted for 32.5%of the Group’s total new domestic retail loans approved for2012. Arising from higher volume of loans approved toSMEs, the Group’s SME loan portfolio grew by an impressive23.4% from RM29.64 billion as at the end of 2011 toRM36.57 billion as at the end of 2012. Loans to domesticSMEs accounted for 19.8% of the Group’s total domesticloan portfolio as at the end of 2012.Despite strong loans growth, the asset quality of the PublicBank Group’s domestic SME lending remained healthy asevidenced by gross impaired loans ratio of 0.8% as at the endof 2012, an improvement from 1.1% as at the end of 2011.ProductsSWIFT (“Shophouse, Warehouse, Industrial Factory andTrade Financing”) PlanThe Public Bank Group’s flagship commercial product, theSWIFT Plan continued to be the key lending product forSME financing. This product offers financing for assetacquisition and working capital as well as trade finance linesto facilitate business. In addition, flexible product bundlingis also available under this plan to suit the financingneeds of SMEs. In 2012, the Group approved a total ofRM7.37 billion under the SWIFT Plan.BNM and Government Initiated Financing SchemesThe Public Bank Group is a strong supporter of BNM andGovernment initiated financing schemes to promote SMEactivities. These schemes include the following:i. Schemes promoted by the Government such as theWorking Capital Guarantee Scheme, which is a financingscheme with 80% guarantee by the Government onfinancing facility granted by financial institutions. Thescheme is managed by a government agency and aimsto give viable companies access to financing to sustaintheir operations. In 2012, the Group has approved morethan 1,000 applications amounting to RM351.4 millionunder this scheme.ii. Schemes promoted by BNM such as:BNM priority sector lending to SMEs. In 2012, theGroup approved a total of RM17.58 billion in loansunder this scheme.The “New Entrepreneurs Fund” and “Fund for Smalland Medium Industries”, which provide financing atreasonable cost for eligible SMEs.The Micro Enterprise Fund launched by BNM toincrease access for micro enterprises with viablebusinesses to obtain financing.
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