3 Numbers Investors Should Know About Public Bank Berhad Now

Source: Fool Editorial

Singapore’s stock market has only three banks, the largest of which is DBS Group Holdings Ltd (SGX: D05).

There aren’t a lot of choices for Singapore investors who are interested in the banking sector and so, it may be useful to also look at banks in foreign shores. Across the causeway in Malaysia’s stock market, Bursa Malaysia, there are a number of banks listed.

The second largest bank by market capitalisation in Malaysia right now is Public Bank Berhad (KLSE:1295.KL). Let’s have a look at three financial numbers about Public Bank that investors may find interesting:

1. Cost to income ratio

Source: Public Bank 2015 annual report

The cost to income ratio shows a bank’s non-interest expenses as a percentage of its income (for a bank, income is revenue). For this ratio, generally speaking, the lower it is, the better it could be.

We can see that Public Bank’s cost to income ratio has consistently been around 30% in the last five years. For perspective, DBS had a cost to income ratio of 45.4% in 2015.

2. Return on average assets

Source: Public Bank 2015 annual report

The return on average assets ratio is an indicator of how efficient a bank is at producing a profit with the assets it has. Unlike the cost to income ratio, a higher return on average asset is generally preferred.

Again, for perspective, DBS had a return on average asset of 1.0% in 2015.

3. Major shareholder’s ownership

Public Bank has a major shareholder in Tan Sri Dato’ Sri Dr. Teh Hong Piow, who has a 23.79% stake in the bank as of 26 January 2016. Teh is also the bank’s founder and chairman.

Given that Teh has a big stake in the bank, it may help align his interests with the bank’s minority shareholders.

Alignment of interest can be very subjective without clear-cut answers. But we can know one thing for sure: Public Bank Berhad, under Teh’s leadership, has been a solid long-term winner. If gains from dividends are included, Public Bank’s shares are up by 86% and 369%, respectively, over the past five and 10 years.

If you like what you've seen, you can get even more investing insights and analyses from The Motley Fool's weekly investing newsletter Take Stock Singapore. It's FREE, so do check it out here.

Also, like us on Facebook to follow our latest news and articles. The Motley Fool's purpose is to help the world invest, better.

The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned.