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194PUBLIC BANK BERHAD Annual Report 2012Resilient AlwaysChairman’s Review – Business Operations ReviewIslamic BankingProfit Before Tax and ZakatRM’Million700606*60054552450046940034130020010002008 2009 2010 2011 2012YearPublic Islamic’s customer deposits registered a commendablegrowth of RM3.67 billion or 18.3% to RM23.7 billion as atthe end of 2012 mainly driven by growth in Non-MudharabahGeneral Investment deposit. Low cost deposits whichcomprise current and savings deposits constituted 30.2% ofPublic Islamic’s total deposits. As at the end of 2012, PublicIslamic’s customer deposits accounted for 10.5% of thePublic Bank Group’s total customer deposits.The quality of Public Islamic’s assets remained strong withgross impaired financing ratio of 0.9% as at the end of2012. Public Islamic’s capital position continued to behealthy as reflected by its Tier 1 capital ratio and riskweightedcapital ratio of 11.3% and 12.1% respectively asat the end of 2012.* Restated due to retrospective application of MFRS139Performance ReviewPublic Islamic registered pre-tax profit of RM544.7 million in2012, 10.1% lower than 2011 mainly due to higher sharedservice cost in 2012, partially offset by lower allowance forfinancing impairment. Another contributing factor was atransfer to the Profit Equalisation Reserve (“PER”) ofinvestment account holder in 2012 as compared to atransfer from PER in 2011. Public Islamic’s net return onequity stood at 18.7% in 2012.The financing portfolio of Public Islamic expanded byRM0.93 billion or 4.8% to RM20.42 billion fromRM19.49 billion a year ago, mainly driven by a 33.3%growth in ABBA House Financing-i. Public Islamic’s financingportfolio represent 10.3% of the Public Bank Group’s totalloan portfolio. As part of its strategy to rebalance its financingportfolio, Public Islamic reduced its exposure to fixed ratefinancing during the year. As a result, the floating ratefinancing as a percentage of total financing increased to29.2% as at the end of 2012 from 21.4% a year ago. Goingforward, Public Islamic will continue to grow floating ratefinancing particularly House Financing-i, Term Financing-i,retail commercial financing and selected corporate financing.Retail commercial financing will continue to be gearedtowards small- and medium-sized enterprises (“SME”).RAM RatingsIn June 2012, Rating Agency Malaysia reaffirmed PublicIslamic’s long- and short-term financial institution ratings, atAAA and P1. The reaffirmation of the ratings was premisedon the high level of integration between Public Islamic’soperations and its parent, Public Bank Berhad.New Products and InitiativesDeposits and FinancingPublic Islamic continuously seeks to provide innovativeShariah-compliant products to cater to the needs of itscustomers. In 2012, Public Islamic launched the followingnew financing and deposit products:HomeSave-i and ShopSave-iA financing package which is linked to a Current Account-i.The Current Account-i balance can be used to reduceoutstanding financing balance for the purpose of profitcalculation.Home Equity Financing-i and Term Equity Financing-iFinancing products offered as alternatives to the existingABBA House and Term Financing-i, structured underthe concept of Musharakah Mutanaqisah (“DiminishingPartnership”).