KUALA LUMPUR: About 6,000 shareholders gathered at the annual general meeting (AGM) of Public Bank Bhd on Monday, not to hear about dividends, but to thank the man who had made it all possible.
They gathered in a show of appreciation for Teh Hong Piow, the chairman and main shareholder of the bank. Teh, who practically runs the bank, turned it into one of the most consistent performers with high dividend payouts year after year.
As a stock, Public Bank is the darling of investors. It has delivered an average annual return of about 19% since Teh founded it, according to a report in The Malaysian Reserve (TMR).
So far this year, it has been the best-performing banking stock among financial stocks on the Kuala Lumpur Financial Index. Public Bank is also the region’s third-most valuable bank – trading at 2.5 times the estimated book value of its assets.
Teh retired as chairman of Public Islamic Bank Bhd and Public Investment Bank Bhd on Jan 1. He will be stepping down as non-executive chairman of Public Bank on Jan 1, 2019, after which he will be named chairman emeritus and appointed adviser.
TMR reported that Teh’s ability to command such respect was not surprising, given that he has been with the bank which he founded in 1966 for 51 years now.
The report said many shareholders at the AGM also raised questions about the group’s leadership succession plan. The management said the succession plan was subject to the central bank’s approval and an announcement would be made at the appropriate time.
TMR said Public Bank shares closed 20 sen higher at RM23.80 on Monday, giving it a market capitalisation of RM91.98 billion.
Public Bank, the report said, had also consistently achieved the lowest cost-to-income ratio among major Southeast Asian lenders over the past five years.
It quoted a young shareholder of Public Bank, who only wanted to give her name as Jen, as saying she was confident the seasoned banker would leave behind a competent management team.
“I won’t buy any more lots in the meantime, I will first look at the company’s performance after he resigns,” she told TMR.
A shareholder who wished to be identified as Lim said he recently bought more shares in the company as it had consistently grown and given dividends.
TMR said another question, apart from who would succeed him, was over Teh’s 23.5% stake in the financial institution, worth about RM21.6 billion.
He is one of three individuals in Malaysia allowed to hold a stake larger than 10% in a domestic financial institution, reportedly exempted by the central bank as they have been holding their interest in the banks since before the establishment of the Financial Services Act 2013 under which the individual stakeholding limit ruling falls.
The others are Hong Leong Financial Group Bhd’s Quek Leng Chan and AMMB Holdings Bhd’s Azman Hashim, TMR reported.
Analysts are confident that Public Bank will continue its upward trajectory. A recent Bloomberg Intelligence report said the bank might continue to deliver the highest return on investment among its domestic peers, as well as maintain its edge on operating costs and asset-quality management.