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Malaysia's best bank for SMEs 2017: Public Bank

Public Bank

Public Bank has SME banking in its corporate DNA, a culture stemming from its roots servicing many of the country’s ethnic Chinese shopkeepers and stallholders. So, it is unsurprising that SME lending by Public Bank grew by a healthy 11.4% to RM71 billion in 2016, its 50th anniversary year, much as it has done for many of those previous 49. That represents 24.3% of the bank’s total lending portfolio.

Those loans seem to be are sound, thanks to the bank’s famously-tight internal controls. Malaysia’s third largest bank by assets, after Maybank and CMB, Public Bank boasts that its bad loan ratio sustained of just 0.5% is the lowest of all Malaysian banks.

Which helps explain why Public Bank Group’s net return on equity, of 16.5% in 2016, is the highest among its local peer banks, and why it trades at 2.3 times book, making it one of the most expensive financial institutions in the country.

But change is afoot at Public Bank, with octogenarian founder-chairman Teh Hong Piow set to retire in early 2019. Teh owns 24% of Public Bank, which might make a juicy stake for a mainland Chinese bank with deep pockets to step up.