RAM Ratings affirms Public Bank's and Public Islamic's AAA ratings on solid credit fundamentals

RAM Ratings has affirmed the AAA/Stable/P1 financial institution ratings of Public Bank Berhad (the Group) and its core subsidiary, Public Islamic Bank Berhad, as well as the issue ratings of the entities (Table 1). 

The affirmation is anchored on our view that the Group's strong loss absorption buffers and robust risk controls put it on a firm footing to navigate credit headwinds that may arise from evolving global tariff tensions. Public Bank's direct loan exposure to exportoriented borrowers is small, accounting for just 2.9% of gross loans as at end-March 2025. While the knock-on impact of tariff disputes on the domestic economy has yet to be ascertained, we take comfort in the Group's resilience during previous credit downcycles. The ratings also consider its entrenched domestic franchise, solid balance
sheet, pristine asset quality and systemic importance in Malaysia.

Public Bank's total assets amounted to RM543 bil (including overseas operations) as at end-December 2024, making it the third-largest banking group in Malaysia. It enjoys leading market positions in residential mortgages, automobile financing, small and medium enterprise (SME) lending and retail unit trusts. Commanding a respective
17.7% and 16.5% of the domestic banking systems loans and deposits as at endDecember 2024, the Group is designated as one of three domestic systemically important banks.

Public Bank's gross impaired loan ratio eased to 0.52% as at end-December 2024 (end-December 2023: 0.59%), the lowest among peers. The improvement was mainly driven by the settlement of an impaired syndicated property-related corporate loan in Hong Kong which more than offset some deterioration observed in Cambodia. Credit costs were negligible in FY Dec 2024 due to a writeback of management overlays and recoveries. Loan loss coverage (including regulatory reserves) was solid at 238% as at end