PUBLIC BANK BERHAD

ANNUAL REPORT 2009

Audit Committee Report 103

1. ATTENDANCE OF MEETINGS
The details of attendance of each member at the Audit Committee (“Committee”) meetings held during 2009 are as
follows:

Number of
Committee Meetings

Name of Committee Member Held Attended

Tan Sri Dato’ Thong Yaw Hong 16 16

Chairman/Independent Non-Executive Director

Dato’ Haji Abdul Aziz bin Omar 16 16

Co-Chairman/Independent Non-Executive Director

Dato’ Yeoh Chin Kee 16 16

Member/Independent Non-Executive Director

Y.A.M. Tengku Abdul Rahman Ibni Sultan Haji Ahmad Shah Al-Mustain Billah 16 16
Member/Independent Non-Executive Director

Dato’ Dr Haji Mohamed Ishak bin Hj Mohd Ariff 16 16

Member/Independent Non-Executive Director

Mr Quah Poh Keat 16 16

Member/Independent Non-Executive Director

2. COMPOSITION AND TERMS OF REFERENCE c. At least one member of the Committee:

2.1 Composition i. must be a member of the MIA; or
a. The Committee shall be appointed by the Board
ii. if he is not a member of the MIA, he must
of Directors and shall consist of not less than
have at least three years working
three members, all of whom shall be non-
experience and:
executive directors. The majority of the
Committee members shall be independent • he must have passed the examinations
directors. specified in Part I of the 1st Schedule
of the Accountants Act, 1967; or
b. Chairman/Co-Chairman • he must be a member of one of the
• The Chairman and the Co-Chairman of the associations of accountants specified
Committee shall be approved by the Board in Part II of the 1st Schedule of the
of Directors and shall be an independent Accountants Act, 1967.
non-executive director. iii. fulfills such other requirements as
• The Chairman or the Co-Chairman shall be prescribed or approved by Bursa Malaysia
a member of the Malaysian Institute of Securities Berhad.
Accountants (“MIA”).
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
104 Audit Committee Report
2.2 Frequency of Meetings
Meetings shall be held not less than four times a
year.
2.3 Quorum
A quorum shall consists of two members and shall
comprise of independent directors.
2.4 Secretary
The Secretary of the Committee shall be the Head of
Internal Audit Division.
2.5 Rights
The Committee shall have the authority to:
• seek any information relevant to its activities
from employees of Public Bank and the Public
Bank Group.
• obtain such independent professional advice as it
considers necessary.
• have full and unrestricted access to any
information and documents pertaining to Public
Bank and the Public Bank Group.
• to convene meetings with the internal auditors
without the presence of the Executive Directors
and Management staff whenever deemed
necessary.
• to meet with the external auditors at least twice
a year without the presence of the Executive
Directors and Management staff.
2.6 Responsibilities and Duties
The responsibilities and duties of the Committee
shall be:
a. Risk Management
To review the adequacy and effectiveness of
risk managment, internal control and governance
systems instituted in Public Bank and the Public
Bank Group.
b. Internal Audit
• To approve the appointment, replacement
and dismissal of the Chief Internal Auditor.
• To review the adequacy of the scope,
functions, competency and resources of
Internal Audit Division and that it has the
necessary authority to carry out its work.
• To evaluate the performance and decide on
the remuneration of the internal auditors.
c. External Audit
• To review the external auditors’ audit plan,
scope of their audits and their audit
reports.
• To assess the performance of the external
auditors and make recommendations to the
Board of Directors on their appointment and
removal.
• To review the independence and objectivity
of the external auditors and their services,
including non-audit services.
• To approve the provision of non-audit
services by the external auditors.
d. Audit Reports
To review the:
• Internal and external audit reports to ensure
that appropriate and adequate remedial
actions are taken by management on
significant lapses in controls and procedures
that are identified.
• Significant internal and external audit
findings and management’s response.
e. Financial Reporting
To review the quarterly and annual financial
statements of Public Bank and the Public Bank
Group for recommendation to the Board of
Directors for approval, focusing particularly on:
• changes in or implementation of new
accounting policies and practices;
• significant and unusual events; and
• compliance with the applicable approved
accounting standards and other legal and
regulatory requirements.

f. Related Party Transactions
To monitor and review any related party
transactions that may arise within Public Bank
and the Public Bank Group.
g. Other Matters
To consider such other matters as the
Committee considers appropriate or as
authorised by the Board of Directors.
3. SUMMARY OF ACTIVITIES
During the year, the Committee carried out the following
activities:
3.1 Financial Reporting
a. Reviewed the quarterly and half-yearly unaudited
financial results of Public Bank and the Public
Bank Group before recommending them for
approval by the Board of Directors.
b. Reviewed the annual audited financial statements
of Public Bank and Public Bank Group with the
external auditors prior to submission to the
Board of Directors for their approval. The review
was to ensure that the financial reporting and
disclosures are in compliance with:
• Provisions of the Companies Act, 1965 and
the Banking and Financial Institutions Act,
1989;
• Listing Requirements of Bursa Malaysia
Securities Berhad;
• Applicable approved accounting standards
in Malaysia, and
• Other legal and regulatory requirements.
In the review of the annual audited financial
statements, the Audit Committee discussed
with Management and the external auditors the
accounting principles and standards that were
applied and their judgement of the items that
may affect the financial statements.
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
Audit Committee Report 105
3.2 Internal Audit
a. Reviewed the annual audit plan to ensure
adequate scope and comprehensive coverage
over the activities of Public Bank and the Public
Bank Group.
b. Reviewed the effectiveness of the audit process,
resource requirements for the year and assessed
the performance of Internal Audit Division.
c. Reviewed the internal audit reports which were
tabled during the year, the audit recommendations
made and management’s response to these
recommendations. Where appropriate, the
Committee has directed management to rectify
and improve control procedures and workflow
processes based on the internal auditors’
recommendations and suggestions for
improvement.
d. Monitored the corrective actions taken on the
outstanding audit issues to ensure that all the
key risks and control lapses have been
addressed.
e. Reviewed Internal Audit Division’s risk and audit
methodologies in assessing and rating risks of
auditable areas and ensure that all high and
critical risk areas are audited annually.
f. Conducted half-yearly reviews of the
performance, progress and adequacy of
coverage of the internal audit function.
g. Reviewed the staffing requirements of Internal
Audit Division, skills and the core competencies
of the internal auditors.
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
106 Audit Committee Report
3.3 External Audit
a. Reviewed with the external auditors:
• their audit plan, audit strategy and scope of
work for the year.
• the results of the annual audit, their audit
report and management letter together with
management’s response to the findings of
the external auditors.
b. Assessed the independence and objectivity of
the external auditors during the year and prior
to the appointment of the external auditors for
adhoc non-audit services. The Committee also
received reports from the external auditors on
their own policies regarding independence and
the measures used to control the quality of
their work.
c. Evaluate the performance and effectiveness of
the external auditors and made recommendations
to the Board of Directors on their appointment
and remuneration.
d. Reviewed the inspection and examination
reports issued by Bank Negara Malaysia and
other regulatory authorities and the remedial
actions taken in respect of the issues raised by
them.
3.4 Related Party Transactions
Reviewed the related party transactions entered into
by Public Bank and the Public Bank Group.
4. TRAINING
During the year, the Committee members have attended
conferences, seminars and training programmes on the
following areas :
a. Banking, Finance & Economy
• Riding Out the Global Financial Crisis – Banking
Reforms & Revival
• Economic Downturn & Risk Oversight: Reassessing
Risk in the Wake of Market Turmoil
• Public – Private Sector Collaborations Towards a
Globally Competitive Malaysia
• Comparison of the Financial Crises: Japan and
Asia in 1997 – 1998 vs US 2008 – 2009
• The Challenges of Implementing FRS 139
• Anti-Money Laundering & Counter Financing of
Terrorism: Trends & Typologies
• Financial Industry Conference 2009
• Banking Insights
• High Level Conference on Financial Stability
b. Corporate Governance
• The Global Financial Crisis: Implications for
Corporate Governance in Asia
• Governance Trends & Issues
• Reforming Governance and Adding Value: An
Investor’s Struggle
c. Role of an Effective Board
• The Board’s Responsibility for Internal Control,
Financial Reporting and Capital Management
• Building Board Teams, Compensation Issues and
Role of the Board in Strategy and Stakeholder
Relations
• 3D-Negotiation: A Strategic Tool for Board and
Senior Executives
d. Islamic Banking
• Risk Management in Islamic Finance
• Current Development of Islamic Banking &
Finance
• Islamic Banking – The Way Forward
• Masterclass for Islamic Bank’s Board of Directors
 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
Audit Committee Report 107

5. INTERNAL AUDIT FUNCTION The total costs incurred for the internal audit function of
The Committee is supported by the Internal Audit Division the Bank and the Group for 2009 are as follows:
in the discharge of its duties and responsibilities. Internal
Audit Division provides independent and objective RM’000
assurance on the adequacy and effectiveness of the risk Bank 18,113
management, internal control and governance processes.
Group 24,642
The internal audit function monitors the effectiveness of
the internal control structures over the Public Bank
Group’s activities focussing on areas of greatest risk as Further details of the activities of Internal Audit Division
determined using a risk based approach. All high risk are set out in the Statement on Internal Control.
activities in each auditable area are audited annually.

The internal audits cover the review of the adequacy of

risk management, operational controls, compliance with
established procedures, guidelines and statutory
requirements, quality of assets, management efficiency
and level of customer services, amongst others. These
audits are to ensure that the established controls are
appropriate, effectively applied and achieve acceptable
risk exposures consistent with Public Bank’s and the
Public Bank Group’s risk management policy.

Internal Audit Division also audits the computer hardware

and application systems and telecommunications network
of the Public Bank Group.

Internal Audit Division assists in the evaluation of risk

exposures of new business products and projects prior to
implementation and ensures that control procedures are
in place to mitigate the risks identified.

Internal Audit Division works collaboratively with the Risk

Management Division to monitor the risk governance
framework and the risk management processes of Public
Bank and the Public Bank Group for adequacy and
effectiveness.
 Our Winning Values

teamwork
The Public Bank Group defines teamwork as the sum total of all parts synergized on a growth platform. By reinforcing our
commitment pictured through seamless teamwork, allows the Group to enhance its capabilities in totality. We continue to uphold
this winning culture and practices of our people through excellence in actions. The result, an interconnected base for values
founded upon solid principles.
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
110 Board Executive
Committee
Tan Sri Dato’ Sri Dr.
Teh Hong Piow
Chairman
A respected banking
entrepreneur with a banking
career spanning more than
58 years. Commencing his
banking career in Singapore, he
founded Public Bank in 1965
after spending 6 years in a
senior management position in
another prominent local bank.
Since inception Tan Sri Teh has
been at the helm of Public Bank
and personally steered its
growth till today.
Tan Sri Dato’ Sri Dato’ Sri
Tan Sri Dato’ Sri Dr. Tay Ah Lek Lee Kong Lam
Teh Hong Piow Managing Director/ Executive Director
Chairman Chief Executive Officer
Tan Sri Dato’ Sri Tay Ah Lek
Managing Director/Chief Executive Officer
Holder of a Masters degree in Business Administration,
Tan Sri Tay is a veteran in the financial services
industry with 49 years experience. A pioneer staff of
Public Bank in 1966, he held several portfolios over
the years including the Executive Vice President
position in Public Finance and Public Bank. He was
appointed Executive Director of Public Bank in 1997
and Managing Director/Chief Executive Officer in
2002. He sits on the Board of Directors of several
subsidiary companies in the Public Bank Group.
Dato’ Sri Lee Kong Lam
Executive Director
An accountant by profession, Dato’ Sri Lee was
attached to Bank Negara Malaysia for 29 years and
retired as Head of its Examination Department.
He joined Public Bank as General Manager in 1996
and was subsequently appointed Senior General
Manager and Executive Vice President. He was
appointed Executive Director in 2001. He is also a
member on the Board of Directors of several subsidiary
companies in the Public Bank Group.
 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
Group Management Profile 111

1 Dato’ Chang Kat Kiam

1 2 3
Chief Operating Officer,
Public Bank Berhad

2 Leong Kwok Nyem

Chief Operating Officer,
Public Bank Berhad

3 Soong Hoe Seng

Group Chief Internal Auditor

4 5 6

8 9

4 Teoh Cheng Soon

Chief Executive Officer, Public Investment Bank Berhad

5 Tuan Haji Ismail bin Ibrahim

Chief Executive Officer, Public Islamic Bank Berhad

6 Yeoh Kim Hong

Chief Executive Officer, Public Mutual Berhad

7 Tan Yoke Kong

Executive Director & Chief Executive,
Public Bank (Hong Kong) Limited

8 Lee Huat Oon

General Manager/Chief Executive, Public Finance Limited

9 Phan Ying Tong

Country Head, Cambodian Public Bank Plc
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
112 Group Management Profile

1 Dato’ Chang Kat Kiam
Chief Operating Officer,
Public Bank Berhad
Holder of a Masters degree in
Business Administration, Dato’ Chang
has been with Public Bank since
1975. He is experienced in all aspects
of banking having managed branches
and banking business portfolios in
Head Office. Appointed Senior General
Manager in 2001 and Chief Operating
Officer in 2006. He oversees the
Bank’s overseas operations, retail
lending operations, share investment
and retail financial services.
2 Leong Kwok Nyem 3 Soong Hoe Seng
Chief Operating Officer, Group Chief Internal Auditor
Public Bank Berhad
An accountant by profession with 35
An accountant by profession. years of audit experience. Joined
Mr Leong was attached to the Public Bank in 1991 as Head of
accounting and auditing industry for 8 Internal Audit Division. Has been the
years before joining the Public Bank Group Chief Internal Auditor since
Group in 1988. Attached initially to 1999 overseeing the Group’s Internal
the Finance Division in Head Office, Audit portfolio.
he was transferred to Public Finance
Limited in Hong Kong in 1990.
He returned to Head Office in 1994
and was appointed Senior General
Manager in 2001 and Chief Operating
Officer in 2008. His portfolio includes
supervision of the Bank’s Banking
Operations, Finance, Property,
Information Technology, Treasury and
Deposit & Channel Management.

4 Teoh Cheng Soon 5 Tuan Haji Ismail bin Ibrahim

Chief Executive Officer, Chief Executive Officer,
Public Investment Bank Berhad Public Islamic Bank Berhad

Holder of a Bachelor of Arts (Economics) degree,
Mr Teoh started his career as an Assistant Economist
with Bank Negara Malaysia in 1968. He held several
positions during the 16 years he was attached to the
central bank. He was attached to several companies
in the financial services industry before joining the
Public Bank Group in 1998 initially as the Chief
Operating Officer of the Group’s stock broking
company and subsequently the Chief Executive Officer
of its merchant bank. Mr Teoh has been the Chief
Executive Officer of Public Investment Bank since
2006.
Holder of a Diploma in Business Studies. Tuan Haji
Ismail has been in the banking industry since 1973.
Having gained wide experience serving in several
financial institutions, he joined the Public Bank Group
in 1992 as Director of Credit Operations. He was
promoted General Manager in 1996. Tuan Haji Ismail
was overseeing Public Bank’s Islamic banking business
before his appointment as Chief Executive Officer of
Public Islamic Bank in 2008.
 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
Group Management Profile 113

6 Yeoh Kim Hong 7 Tan Yoke Kong

Chief Executive Officer, Executive Director & Chief Executive,
Public Mutual Berhad Public Bank (Hong Kong) Limited

A chartered accountant by profession. An accountant by profession, Mr Tan

Ms Yeoh has more than 14 years
experience in the unit trust industry.
Prior to joining Public Mutual, she
was attached to an international public
accounting firm. She joined the finance
department of Public Mutual in 1996,
and was promoted to General Manager
in 1999, Senior General Manager in
2004 and appointed Chief Executive
Officer in 2007. She is currently a
council member of the Federation of
Investment Managers Malaysia and a
board member of the Financial
Planning Association of Malaysia.
has over 28 years experience in the
banking and finance industry. He was
seconded from Public Bank to Hong
Kong in 1991 and was appointed
Executive Director of Public Financial
Holdings Limited, a company listed
on the Stock Exchange of Hong Kong,
in 1992. Mr Tan was appointed to his
current position as Executive Director
& Chief Executive of Public Bank
(Hong Kong) Limited after its
acquisition by the Group in May 2006.
Prior to this, he was the General
Manager & Chief Executive of Public
Finance Limited. Mr Tan is the Vice
Chairman of the Deposit Taking
Companies Association in Hong Kong
and had served as a member of the
Deposit-Taking Companies Advisory
Committee for several years.

8 Lee Huat Oon 9 Phan Ying Tong

General Manager/Chief Executive, Country Head,
Public Finance Limited Cambodian Public Bank Plc

Holder of a Bachelor of Accounting degree and a
Registered Accountant with the Malaysian Institute of
Accountants. Mr Lee has more than 22 years
experience in the banking and finance industry. He
joined the Public Bank Group’s Hong Kong operations
in 1995 and was appointed Chief Executive of Public
Finance Limited in 2006. Mr Lee is also an Executive
Director of Public Finance Limited and Public Financial
Holdings Limited, a company listed on the Hong Kong
Stock Exchange. He is currently a member of the
Executive Committee of the Deposit Taking Companies
Association and a member of the Deposit-Taking
Companies Advisory Committee in Hong Kong.
Holder of a Diploma in Management, Mr Phan has a
total of 28 years service with the Public Bank Group.
He was a Branch Manager of several branches in
Public Bank before his appointment as General
Manager of Cambodian Public Bank Plc in 2002.
Mr Phan is the Country Head of Cambodian Public
Bank Plc which has 14 branches located throughout
Cambodia.
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
114 Heads of Division
2 Chong You Lin
Senior General Manager,
PB Card Services & Support
Holder of Bachelor of Arts
(Economics) degree with 29
years experience in the card
industry. Having joined Public
Bank in 1991, she was
appointed Head of Division in
2000 and promoted to General
Manager in 2004 and to
Senior General Manager in
2010.
4 Nasaruddin bin Arshad
Group Economist,
Economics Division
Holder of Masters degree in Agriculture
Economics. Was in the academic field
for 17 years before joining the Public
Bank Group in 1995 as Director of
Economics Division. Appointed Group
Economist in 1999.
7 Koay Seok Khim
General Manager,
Knowledge & Learning
Holder of Bachelor of Arts/
Economics degree. Joined
Public Bank in 1981 as a
Trainer. Has been the head of
Knowledge & Learning Centre
since 1993.
1 Chia Lee Kee
Senior General Manager,
Secretariat Division
Holder of ICSA degree and
FCIS. Joined Public Bank in
1978 and was appointed
Head of Secretariat Division in
1997. Ms Chia is the Bank’s
Company Secretary and
oversees the Group’s company
secretarial matters.
3 Sulaiman bin Abd Manap
Senior General Manager,
Credit Operations and Retail Loans
Marketing & Product Development
Holder of Masters degree in Business
Administration. Joined Public Bank in
1981 and experienced in both branch
banking and Head Office credit. Was
appointed Head of Credit Operations
in 2003. Currently oversees Credit
Operations as well as Retail Loans
Marketing & Product Development.
5 Chan Chew Fung 6 Chang Siew Yen
General Manager, Chief Financial Officer/
Corporate Banking & Trade Finance General Manager, Finance and
Division Corporate Planning & Strategy
Holder of Bachelor of Arts (Economics) An accountant by profession. Joined
degree. Joined Public Bank in 1982 Public Bank in 2005 as Deputy
and appointed Head of Corporate Director of Finance Division and
Banking & Trade Finance Division in subsequently appointed Head of
Finance Division and Chief Financial
1995. Ms Chan was promoted to
Officer in 2006. Ms Chang was
General Manager in 2009.
promoted to General Manager in 2009
to also oversee the Corporate Planning
& Strategy Department.
8 Salmah bt Mohd Yunus
General Manager,
Human Resource Division
Holder of Bachelor of
Economics degree and a HR
practitioner with more than 28
years experience. Has been
with the Public Bank Group
since 1984. She oversees the
Group’s Human Resource
portfolio.
 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
Heads of Division 115

1 Chia Lee Kee

Senior General Manager, Secretariat Division

2 Chong You Lin

3 Senior General Manager,
PB Card Services & Support

3 Sulaiman bin Abd Manap

Senior General Manager,
Credit Operations and Retail Loans
Marketing & Product Development
4
4 Nasaruddin bin Arshad
Group Economist, Economics Division

5 6

8
5 Chan Chew Fung
General Manager, Corporate Banking &
Trade Finance Division

6 Chang Siew Yen

Chief Financial Officer/General Manager,
Finance and Corporate Planning & Strategy

7 Koay Seok Khim

General Manager, Knowledge & Learning

8 Salmah bt Mohd Yunus

General Manager,
Human Resource Division
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
116 Heads of Division

10

11

12 13

9 Abd Razak bin Md Dali

General Manager, Public Affairs
Division

10 Eddie Chan Kok Kwai

Director, Credit Administration &
Supervision Division
14 15
11 Chew Han Kang
Director, HP Operations

12 Tan Teck Kong

Director,
Information Technology Division

13 Lim Then Fui

Director, Risk Management Division

14 tang hong keat

Director, Treasury Division
16 17
15 Nizam bin Hj Zainal Abidin
Director, Security Division

16 Sim Goay Chye

Director, Property Division

17 Patrick Lim Yoong Leng

Deputy Director,
Banking Operations Division

9 Abd Razak bin Md Dali
General Manager,
Public Affairs Division
Holder of Masters degree in Science
(Corporate Communication). Joined
Public Bank in 1977 and appointed
Head of Public Affairs Division in
1994. Responsible for the Bank’s PR,
corporate communication, advertising
and sports portfolio.
12 Tan Teck Kong
Director,
Information Technology
Division
Holder of Bachelor of Science/
Mathematics degree. Joined
Public Bank in 1983 and was
appointed Director in 2000 to
head the Bank’s IT Division.
14 Tang Hong Keat
Director, Treasury Division
Joined Public Bank in 1979.
Experienced in Finance and Treasury
Operations. Has been Director of
Treasury Division since 2005.
16 Sim Goay Chye
Director, Property Division
Holder of Masters degree in Business
Management. Joined the Public Bank
Group in 1983. Held several
managerial portfolios at Head Office
before his appointment as Head of
Property Division in 2004.
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
Heads of Division 117
10 Eddie Chan Kok Kwai
Director,
Credit Administration &
Supervision Division
Holder of Bachelor of
Economics degree, FSD and
AIBM. Joined Public Bank in
1982 and appointed Head of 11 Chew Han Kang
Credit Administration and Director, HP Operations
Supervision Division in 1992.
Responsible for credit control Holder of Diploma in
and recovery of NPLs for Management. Has a total of
retail loans. 33 years experience in HP
financing. Joined the Public
Bank Group in 1976 and
appointed Director of
13 Lim Then Fui
HP Financing in 1997.
Director,
Responsible for the Bank’s
Risk Management Division
HP Operations since 2008.
An accountant by profession.
Has a total of 30 years
experience in Bank Negara
Malaysia and commercial
banking. Joined Public Bank
in 2001 and appointed Head
of Risk Management Division
in 2007.
15 Nizam bin Hj Zainal Abidin
Director, Security Division
En. Nizam was attached to the Royal
Malaysian Police for 13 years before
joining Public Bank in 1993 as Head
of Security Division.
17 Patrick Lim Yoong Leng
Deputy Director,
Banking Operations Division
Holder of Diploma in Management.
Has a total of 29 years experience in
Auditing and Banking Systems and
Processes.
 Our Winning Values

abundance
We lead through a generous choice of integrated financial services that proffers a wide range of financial products and services.
A winning value enjoyed by our customers that reap the benefits of a dynamic yield and consistent returns derived from the
Group’s prime industry leading position.
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
120
Chairman’s Review

Business Operations
OVERVIEW Outlook for 2010
Review

122 Thriving Even Under Difficult
Conditions
123 Overall Business Environment
124 Summary of Group Financial
Performance
k At a glance
k Profits and Dividends
• Profit Before Tax by
Business Segment
• Profit Before Tax by
Geographical Locations and
Major Companies
142 Domestic Retail Banking and 171 Outlook for the Banking Industry
Financing Operations
172 Expectations and Opportunities
148 Wealth Management
172 Strategies
155 Transactional Services
173 Outlook for the Malaysian
156 Capital Market Operations Economy
158 Islamic Banking
161 International Operations
165 Serving the Customer
167 Information & Communication
Technology

k Balance Sheet Growth, Asset 169 Branch Performance – KPIs and

Quality and Capital Position Awards
k Loans & Advances
• Continued Above Industry
Loans Growth and
Increasing Market Share
Despite Difficult Operating
Environment
k Asset Quality
• Sustained Superior Asset
Quality Defying Convention
k Customer Deposits
• Healthy Expansion in Core
Customer Deposits
k Funding and Liquidity
• Stable and Diversified
Funding Base and Strong
Liquidity

133 Key Performance Indicators

134 Benchmarking Against Banking

Industry's Performance

136 Capital Management

138 Credit Ratings

139 Impact of FRS 139 Financial

Instruments: Recognition and
Measurement
 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
Chairman’s Review 121

Tan Sri Dato’ Sri Dr. Teh Hong Piow

Chairman
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
122 Chairman’s Review
Overview

THRIVING EVEN UNDER DIFFICULT CONDITIONS

Profit before tax Gross loans, advances and financing

3,500 200 160,000

3,000 140,000
120,000
2,500
100,000

RM’million
RM’million

2,000
Increased Increased
80,000
1,500 by 4.5% by 14.4%
60,000
1,000
40,000
500 20,000
3,179 3,321 120,319 137,610
0 0
’08 Year ’09 ’08 Year ’09
Goodwill Profit before tax
(excluding one-off
goodwill income of RM200 mil)

Excluding the one-off RM200 million goodwill income in 2008, The Group maintains its strong growth in terms of gross
profit before tax increased by 4.5% despite the financial loans, advances and financing of 14.4% in 2009.
crisis and economic recession.

NPL ratio Core customer deposits

1.0 140,000
0.9
120,000
0.8 18,977
0.7 100,000 15,752
percentage (%)

22,858
0.6
RM’million

80,000 19,037
Improved Increased
0.5
by 0.1% 60,000 by 14.8%
0.4
0.3 40,000
0.2
20,000
0.1
0.9 0.8 76,415 85,788
0 0
’08 Year ’09 ’08 Year ’09
Demand Savings Fixed
deposits deposits deposits

Even under difficult economic conditions, the Group’s net Strong growth in core customer deposits in 2009 of 14.8%
NPL ratio further improved by 0.1% in 2009. provide stable and cost effective funding of the Group.

OVERALL BUSINESS ENVIRONMENT
2009 has been the most challenging time for the global
financial services industry since the Great Depression of the
1930s. The financial crisis, which had begun as a subprime
mortgage crisis in the United States, felled many revered
banking giants in the developed markets, and has brought
about recession in major economies. Many international banks
have reported substantial losses and have had to raise
significant amounts of new capital and some had to be rescued
by governments. The weakened global economies have exerted
a significant impact on Malaysia’s exports. Dwindling export
demand has posed significant pressure to both the resilience
of domestic demand and the overall buoyancy of the Malaysian
economy. In an effort to arrest the decline in domestic demand
as consumer and investor confidence waned, the Government
took several initiatives which included the announcement of the
RM60 billion second stimulus package in March 2009,
aggressive reduction of interest rates as well as liberalisation
measures to the services sector and the equity market. The
combination of fiscal stimulus and accommodative monetary
environment as well as easing inflation due to low energy and
food prices have allowed the Malaysian economy to remain
resilient and perform well relative to the other regional
economies. There are signs that the global downturn has
begun to stabilise, with some economies returning to the
growth path. Amid these emerging signs of gradual global
economic recovery, Malaysia’s GDP is expected to contract by
2.5% in 2009, less than earlier expectations, and forecast to
grow by 2% to 3% in 2010.
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
Chairman’s Review 123
Overall credit growth in Malaysia remained moderate in 2009.
With excess liquidity and the recent liberalisation of the financial
services sector, the banking industry will remain competitive,
particularly in the retail sector, and the pressure on net interest
margin will remain. In order to encourage credit growth and
ensure availability of lending to the private sector, Bank Negara
Malaysia (“BNM”) has taken various monetary measures. Since
November 2008, BNM has slashed the Overnight Policy Rate
three times, with an aggregate reduction of 1.50% to 2.0%. To
reduce further the cost of financing, the Statutory Reserve
Ratio was also reduced from 4.0% to 1.0%. Although
profitability has moderated due to the contracting economy,
the banking industry remained financially sound, supported by
ample liquidity and improved risk management practices. The
risk-weighted capital ratio of the banking industry strengthened
to 14.6%, whilst net non-performing loan ratio improved to
1.9% as at November 2009, reflecting the strong capitalisation
level and stable asset quality of the banking system.
Despite the unprecedented pressures on the global financial
system and the difficult domestic economy, the Public Bank
Group remained highly profitable in 2009 and is well positioned
both competitively and financially. The Group’s strong
performance is a tribute to the strength of the Group’s business
strategy of building sustainable business growth of its core
business of lending to retail customers and small- and medium-
sized enterprises as well as its retail deposit-taking business
whilst pursuing growth in its fee-based revenue.
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
124 Chairman’s Review

SUMMARY OF GROUP FINANCIAL PERFORMANCE

At a glance
2009 2008 Growth
RM’million RM’million %
Profit before tax expense and zakat
– excluding ING goodwill 3,321 3,179 4.5
– including ING goodwill 3,321 3,379 (1.7)
Net profit attributable to shareholders
– excluding ING goodwill 2,517 2,436 3.3
– including ING goodwill 2,517 2,581 (2.5)
Earnings per share (sen) 73.3 76.9 (4.7)
Total assets 217,136 196,163 10.7
Loans, advances and financing (net) 135,336 118,386 14.3
Deposits from customers 170,892 151,185 13.0
Core customer deposits* 127,623 111,204 14.8
Shareholders’ equity 11,023 9,537 15.6
Net interbank lending 25,249 26,996 (6.5)
Net return on equity 26.1% 30.4% (4.3)
Cost to income ratio 34.4% 31.2% 3.2
Net non-performing loans ratio 0.8% 0.9% (0.1)
Loan loss coverage 172.4% 159.7% 12.7
Net loan to deposit ratio 79.2% 78.3% 0.9
Risk-weighted capital ratio 14.7% 13.7% 1.0
Core capital ratio 10.5% 8.3% 2.2

* Comprise demand deposits, savings deposits and fixed deposits.

Profits and Dividends

k The Public Bank Group reported a pre-tax profit of
RM3.32 billion and net profit attributable to shareholders of
RM2.52 billion for 2009 on the back of strong increase in
net interest and financing income by 10.2% resulting from
high loan and deposit growth coupled with stable asset
quality.
k The Group’s pre-tax profit of RM3.38 billion in 2008
included a significant one-off goodwill income of
RM200.0 million in respect of the bancassurance distribution
alliance with ING Asia/Pacific Limited. Excluding this one-
off income in 2008, the Group’s pre-tax profit increased by
4.5% in 2009 whilst net profit attributable to shareholders
grew by 3.3% to RM2.52 billion.
k Earnings per share and net return on equity were strong at
73.3 sen and 26.1% respectively in 2009.
k The Group’s cost to income ratio increased from 31.2% in
2008 to 34.4% in 2009, still the most efficient amongst
Malaysian banking groups.
k The Board of Directors declared a second interim cash
dividend of 25 sen per ordinary share less 25% tax and a
share dividend of 1 ordinary share of RM1.00 each for
every 68 ordinary shares of RM1.00 each held, to be
distributed from the treasury shares held by Public Bank
arising from share buy-backs by the Bank. Together with
the first interim dividend of 30 sen per ordinary share less
25% tax, the total gross dividend for 2009 would amount
to 55 sen gross cash dividend and a share dividend which
is equivalent in value to a gross cash dividend of 22.2 sen
based on the share price of Public Bank (Local) shares of
RM11.30 per share as at 31 December 2009. Therefore, the
total dividend for the year is equivalent to a gross dividend
of 77.2 sen per ordinary share as compared to the gross
dividend of 87.4 sen per ordinary share for 2008. Total
dividend payment for 2009 is 79.3% of the Public Bank
Group’s net earnings.
 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
Chairman’s Review 125
Profit Before Tax By Business Segment
2009 2008
RM’million RM’million
Domestic Operations
comprise of:

Retail Operations 1,951 2,432

Hire Purchase 657 219
Treasury and Capital Market Operations 251 277
Corporate Lending 240 107
Fund Management 213 183
Investment Banking 40 34
Others* 8 28
3,360 3,280
General allowances and share of associated companies’ net profit (279) (222)
Total domestic operations 3,081 3,058

Overseas Operations 243 319

General allowances and share of associated companies’ net profit (3) 2
Total overseas operations 240 321
Profit before tax 3,321 3,379

* Including unallocated head office expenses

k Retail Operations continued to be the Public Bank Group’s
forte, accounting for 54.0% of the Group’s segmental profit
before tax in 2009, followed by Hire Purchase and Treasury
and Capital Market Operations which contributed 18.2%
and 6.9% respectively to the Group’s segmental profit before
tax.
k Retail Operations reported a lower pre-tax profit of
RM1,950.7 million as compared to RM2,432.1 million in
2008, a 19.8% decline despite the strong growth in loan
and deposit volumes. The decline in the Retail Operations
profits was mainly due to a squeeze in lending margins and
the time lag of deposit repricing as a result of several cuts
in the Overnight Policy Rate in late 2008 and the first
quarter of 2009.
k Hire Purchase Operations reported an impressive 199.4%
growth in pre-tax profits from RM219.3 million in 2008 to
RM656.6 million in 2009 mainly due to improved lending
yields, lower cost of funds resulting from the decline in
Overnight Policy Rate coupled with growth in hire purchase
loan volume.
k Fund Management Operations registered satisfactory results
with pre-tax profit growth of 16.1% to RM212.8 million in
2009 as a result of the rebound of equity markets, both in
Malaysia and globally. Despite the difficult economic
conditions, Treasury and Capital Market Operations
recorded commendable pre-tax profit of RM250.7 million in
2009.
k Corporate Lending Operations registered an increase in
pre-tax profit to RM239.7 million in 2009 from
RM106.8 million in 2008 mainly due to increase in net
interest income and fee income which was driven by strong
loan growth and improved net interest margins.
k Investment Banking Operation’s pre-tax profit increased by
16.8% to RM40.2 million in 2009 from RM34.4 million
in 2008 mainly due to growth in its share broking
operations.
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
126 Chairman’s Review

Profit Before Tax By Geographical Locations and Major Companies

2009 2008
% of % of
RM’million contribution RM’million contribution
In Malaysia 3,081 92.8 3,058 90.5
of which:
Public Bank Berhad* 2,379 71.6 2,539 75.1
Public Islamic Bank Berhad** 460 13.9 64 1.9
Public Mutual Berhad 219 6.6 183 5.4
Public Investment Bank Berhad 40 1.2 33 1.0
Outside Malaysia 240 7.2 321 9.5
of which:
Public Financial Holdings Group (Hong Kong) 142 4.3 166 4.9
Cambodian Public Bank Plc (Cambodia) 58 1.7 127 3.7
Profit before taxation 3,321 100.0 3,379 100.0
* Profit before dividends from subsidiaries and associated companies
** Public Islamic Bank Berhad commenced its Islamic banking business with effect from 1 November 2008

k The Public Bank Group’s domestic operations continued to be the main contributor to the Group’s pre-tax profits at 92.8%
in 2009 as compared to 90.5% in 2008.

k The contribution by the Group’s overseas operations to pre-tax profits decreased from RM321.0 million in 2008 to
RM239.9 million in 2009 or a 25.3% decline, due mainly to an increase in loan loss allowance of the Group’s subsidiary
companies in Hong Kong and Cambodia resulting from weakened credit conditions from the downturn in these economies.

Balance Sheet Growth, Asset Quality and Capital Position

k P u b l i c B a n k G r o u p ’ s t o t a l a s s e t s i n c r e a s e d b y
RM20.97 billion or 10.7% during the year to reach
RM217.14 billion as at the end of 2009.
k Total net loans and advances increased by RM16.95 billion
to RM135.34 billion as at the end of 2009, representing a
growth rate of 14.3%.
k T o t a l d e p o s i t s f r o m c u s t o m e r s i n c r e a s e d b y
RM19.71 billion to RM170.89 billion as at the end of 2009,
representing a growth rate of 13.0%.
k Core customer deposits, comprising demand deposits,
savings deposits and fixed deposits, showed strong growth
of RM16.42 billion or 14.8% to stand at RM127.62 billion
as at the end of 2009.
k Loan loss coverage further increased from 159.7% as at
the end of 2008 to 172.4% as at the end of 2009 which is
the highest and most prudent in the Malaysian banking
industry.
k The healthy and strong liquidity position of the Group is
reflected by its strong net loan to deposit ratio and net
interbank lending position of 79.2% and RM25.25 billion
respectively as at the end of 2009.
k The Group’s risk-weighted capital ratio and core capital
ratio had further improved from 13.7% and 8.3% respectively
as at the end of 2008 to 14.7% and 10.5% respectively as
at the end of 2009.

k Net non-performing loan ratio continued to improve from

0.9% as at the end of 2008 to 0.8% as at the end of 2009,
significantly lower than the Malaysian banking industry’s
net non-performing loan ratio of 1.9% as at the end of
November 2009.
 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
Chairman’s Review 127
Loans & Advances
Continued Above Industry Loan Growth and Increasing Market Share Despite Difficult Operating Environment
k The Public Bank Group’s gross
Public Bank Group
loans, advances and financing
Outstanding (Gross) Growth rate increased by RM17.29 billion from
Loans, Advances and 2009 2008 2009 2008 RM120.32 billion as at the end of
Financing % % 2008 to RM137.61 billion as at the
Group (RM’mil) 137,610 120,319 14.4 19.0 end of 2009. This represents a
growth rate of 14.4%, which is well
Public Bank Berhad (RM’mil) 109,689 94,691 15.8
above the Malaysian banking
Public Islamic Bank industry’s annualised growth rate of
Berhad (RM’mil) 14,590 12,440* 17.3 7.4% as at the end of November
124,279 107,131 16.0 16.8 2009.
Public Financial Holdings
Group (HKD’mil) 24,715 24,573 0.6 27.6
of which:
Public Bank (Hong Kong)
Ltd (HKD’mil) 20,314 20,124 0.9 30.1
Public Finance Ltd
(HKD’mil) 4,195 4,246 (1.2) 17.2
Cambodian Public Bank
Plc (USD’mil) 606 644 (5.9) 77.4
* The Islamic Banking business of Public Bank was vested to Public Islamic Bank Berhad on
1 November 2008.

Loan growth vs industry

30
23.9
25
19.7 20.2
19.0
20 Loan growth-
Percentage

14.4 Public Bank

15
10 13.0
5 8.6 8.8 Loan growth-
6.4 7.4
0 Industry
’05 ’06 ’07 ’08 ’09
Year

Net Loans – outstanding balance and market share k The Group’s strong loan growth at
well above the industry loan growth
15.9 rates have led to increasing market
140,000 14.4 14.8 16
13.2 share over the years. The Group’s
120,000 12.0 14
100,000 12 Domestic
domestic loan market share
10 increased further from 14.8% as at
Percentage

loan market
RM’million

80,000
8 share the end of 2008 to 15.9% as at the
60,000
6 end of November 2009, as compared
40,000
118,386

135,336

4 to only 12.0% as at the end of

66,813

82,788

99,328

20,000 2 Loans, 2005.

0 0 advances
’05 ’06 ’07 ’08 ’09 and financing
Year
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
128 Chairman’s Review

2009 Gross Loans – Economic Purposes k The Public Bank Group’s lending
activities remained concentrated in
Purchase of securities retail loans, particularly residential
1.7% properties and passenger vehicles as
Purchase of
4.3% transport vehicles well as commercial lending to SMEs.
15.3%
1.1% 23.0% Purchase of As at 31 December 2009, loans to
residential properties
these key sectors accounted for
0.0% Purchase of
non-residential properties 64.1% of the Group’s total loan
0.9% Purchase of fixed assets portfolio.
6.2% Personal use
k The Group’s strong loan growth is
Credit card
mainly driven by strong growth in
Purchase of
consumer durables financing of residential properties and
Construction SMEs, which increased by 17.8%
0.3%
Working capital to RM37.95 billion and 9.3% to
19.6% 27.6% Other purpose RM24.73 billion respectively as at the
end of 2009. Total lending for the
purchase of passenger vehicles
expanded by 8.1% to RM31.63 billion
as at the end of 2009.

Asset Quality
Sustained Superior Asset Quality Defying Convention
k The Public Bank Group defied
1,800 2.5 conventional wisdom which predicted
2.1
Gross deteriorating asset quality in the
1,600 NPL ratio
1.9 difficult recessionary environment by
1,400 2.0
not only maintaining its superior asset
1,200 Net quality but further improving its net
1.4 1.5
Percentage

1.7 NPL ratio from 0.9% as at the end of

RM’million

1,000 1.6 NPL ratio

800 1.0 1.0 2008 to 0.8% as at the end of
1.2 1.0 2009.
600
Gross NPL
400 0.9 k Over the past 5 years, the Group’s
0.8 0.5
gross NPL and net NPL ratios
1,210
1,037
1,406
1,173

1,578
1,320

1,404
1,250

1,320
1,097

200
0 0.0 Net NPL consistently improved from 2.1% and
’05 ’06 ’07 ’08 ’09
1.7% respectively as at the end of
Year 2005 to 1.0% and 0.8% respectively
as at the end of 2009, a testament to
the Group’s continued pursuit of
superior asset quality.

Public Bank Group k T h e G r o u p h a s b e e n a b l e t o

Latest available
consistently maintain superior asset
Gross NPL ratio by 2009 2008 industry ratios
quality, even in challenging and
sector % % % recessionary times, due to a
Consumer: combination of preventive and
proactive measures taken such as its
Residential
prudent credit culture, stringent
properties 1.2 1.6 4.3
lending policies, efficient restructuring
Transport and rescheduling processes as well
vehicles 0.5 0.6 1.3 as the rehabilitation of NPLs.
Credit cards 1.2 1.5 2.1 k W h i l s t t h e G r o u p r e p o r t e d a
RM17.29 billion growth in total gross
loans, advances and financing, total
gross NPL increased marginally by
only RM109.5 million to RM1.32 billion
as at the end of 2009 as compared
to RM1.21 billion a year ago.
 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
Chairman’s Review 129
k Domestic asset quality remained strong, as seen from the
Gross NPL 2009 2008
improvement in not just the net NPL ratio from 0.9% in
by geographical locations RM’mil RM’mil
2008 to 0.7% in 2009, but also a drop in the gross NPL
Gross NPL 1,320 1,210 balance from RM1.10 billion as at the end of 2008 to
Domestic 946 1,094 RM0.95 billion as at the end of 2009 despite the strong
Overseas 374 116 domestic loan growth during the year. The domestic net
NPL ratio of 0.7% is the lowest amongst Malaysian banking
groups and is significantly lower than the Malaysian banking
Public Bank Group industry’s net non-performing loan ratio of 1.9% as at the
2009 2008 end of November 2009.
Net NPL ratio % %
k The Group’s overseas operations’ net NPL ratio however
Group 0.8 0.9 had deteriorated from 0.5% as at the end of 2008 to 2.0%
Domestic 0.7 0.9 as at the end of 2009, with an increase in gross NPL
Public Bank Berhad 0.7 0.9 balance from RM116.1 million as at the end of 2008 to
RM373.8 million as at the end of 2009 contributed by the
Public Islamic Bank Berhad 0.8 0.9
increase in non-performing loans of its overseas subsidiaries
Overseas: 2.0 0.5 in Hong Kong and Cambodia.
Public Financial Holdings
Group 1.5 0.6
Cambodian Public Bank Plc 4.6 Nil

NPL formation Q1 Q2 Q3 Q4 2009 2008

Group
Net new NPL formation (RM’mil) 177.1 164.1 230.4 217.2 788.8 407.7
NPL formation rate (%) 0.14% 0.13% 0.18% 0.16% 0.61% 0.37%
Domestic
Net new NPL formation (RM’mil) 71.9 54.8 101.2 57.4 285.3 182.4
NPL formation rate (%) 0.07% 0.05% 0.09% 0.04% 0.25% 0.18%
Overseas
Net new NPL formation (RM’mil) 105.2 109.3 129.2 159.8 503.5 225.3
NPL formation rate (%) 0.75% 0.79% 0.96% 1.21% 3.71% 1.88%

k The Public Bank Group’s NPL formation rate had remained
relatively stable despite increasing from 0.37% in 2008 to
0.61% in 2009. The increase in NPL formation rate was
primarily due to increase in arrears and non-performing
loans of the Group’s overseas operations in Hong Kong
and Cambodia which faced a more pronounced deterioration
in their credit markets, as reflected by the increase in NPL
formation rate of the Group’s overseas operations from
1.88% in 2008 to 3.71% in 2009.
k The NPL formation rate of the domestic operations only
increased marginally from 0.18% in 2008 to 0.25% in 2009,
reflecting the relatively healthy Malaysian banking system
and in particular, the high credit standards of the Group.
On a quarter to quarter basis, the NPL formation rate has
shown an improvement towards the last quarter of 2009
as a result of close monitoring and management of
recoveries.
k Apart from the excellent net NPL ratio, the Group also
maintained the most prudent provisioning approach with a
loan loss coverage ratio, before taking into account
collateral, of 172.4%, significantly higher as compared to
the banking industry’s coverage ratio of 92.3% as at the
end of November 2009. The increase in the Group’s loan
loss coverage from 159.7% as at the end of 2008 was
mainly due to additional general allowance set aside for the
strong loan growth in 2009.
k As at the end of 2009, the Group’s general allowance of
RM2.05 billion was about 2 times of the net NPL amount
of RM1.10 billion, despite that more than 90% of the NPLs
are secured.
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
130 Chairman’s Review

Customer Deposits
Healthy Expansion in Core Customer Deposits

Deposits from customers k The Public Bank Group reported a growth of 13.0% or
– Outstanding balance and market share RM19.71 billion in deposits from customers to stand at
RM170.89 billion as at the end of 2009.
200,000 15.5 15.5 16
180,000 14.8 k Core customer deposits comprising demand deposits,
160,000 15
14.2 savings deposits and fixed deposits represent 74.7% of the
140,000 Deposits
14 Group’s total deposits from customers.

Percentage
13.2 market share
RM’million

120,000
100,000 13
80,000 k The Group’s core customer deposits had shown very
60,000 12 strong growth of 14.8% in 2009 as compared to the
126,028

151,185

170,892
75,153

98,213

40,000 11 domestic industry’s annualised growth of 6.9% as at the

20,000 Deposits
0 10 from end of November 2009. The Group’s demand deposits,
’05 ’06 ’07 ’08 ’09 customers savings deposits and fixed deposits increased by 20.5%,
Year 20.1% and 12.3% respectively in 2009. This is considerably
higher than the domestic industry’s annualised growth rate
of 12.3%, 8.7% and 4.7% respectively.
Deposits growth vs industry
k The Group’s strong core customer deposit growth, which
35 30.7
was supported by its strong domestic franchise, strong PB
30 28.3 Brand and high standards of customer delivery at its
25 Deposit branch network, resulted in an increase in the Group’s
20.0 domestic market share of core customer deposits to 15.1%
Percentage

20 growth
13.5 - PBB as at the end of November 2009 as compared to 14.7% as
15 13.0
16.8 17.5 at the end of 2008.
10
11.0 11.9
5 Deposit k The Group’s wholesale deposits in the form of negotiable
8.0 growth
0
- Industry
instruments of deposit and money market deposits grew by
’05 ’06 ’07 ’08 ’09 8.7% to RM42.09 billion as at the end of 2009.
Year

2009 Customer deposits mix

Demand
0.7% deposits
22.6% 11.1%
Savings
13.4% deposits
2.0%
Fixed
deposits
Negotiable
instruments
of deposit
Money market
deposits
50.2% Other
deposits

Outstanding Latest available

industry growth
2009 2008 Growth rate rate
Core customer deposits RM’million RM’million % %
Demand deposits 18,977 15,752 20.5 12.3
Savings deposits 22,858 19,037 20.1 8.7
Fixed deposits 85,788 76,415 12.3 4.7
127,623 111,204 14.8 6.9
 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
Chairman’s Review 131
k The deposit growth of the various
Outstanding Growth rate
major subsidiaries of the Public
2009 2008 Bank Group have improved from
Deposits from customers 2009 2008 % % the previous year and in particular,
Group (RM’mil) 170,892 151,185 13.0 20.0 Public Financial Holdings Group in
Public Bank Berhad (RM’mil) 135,387 124,091 9.1 Hong Kong and Cambodian Public
Bank Plc registered deposit growth
Public Islamic Bank
of 17.2% and 64.3% respectively in
Berhad (RM’mil) 13,074 9,622* 35.9
2009 as a result of their extensive
148,461 133,713 11.0 16.3 efforts in growing their respective
Public Financial Holdings deposit bases.
Group (HKD’mil) 29,364 25,064 17.2 11.1
k As a result of the strong customer
of which: deposit growth, the Group’s liquidity
Public Bank (Hong Kong) continued to improve with loan to
Ltd (HKD’mil) 26,057 21,671 20.2 6.0 deposit ratio standing at 79.2% as
Public Finance Ltd at the end of 2009 as compared to
(HKD’mil) 3,449 3,755 (8.2) 48.3 78.3% as at the end of 2008.

Cambodian Public Bank

Plc (USD’mil) 613 373 64.3 24.3
* The Islamic Banking business of Public Bank Berhad was vested to Public Islamic Bank Berhad on
1 November 2008.

2009 Customer deposits by type of customers k Individual deposits accounted for

41.4% of the Group’s total deposits
from customers as at the end of
2009 and represent a 17.5%
1.4%
Federal and domestic market share of deposits
15.9% 0.6% state governments
29.4% by individuals as at the end of
Local government November 2009. This provides the
11.3% and statutory authorities
Group with a stable long term
Business enterprises
deposit base and its low-cost
Individuals deposit funding structure.
Foreign customers

Others
41.4%
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
132 Chairman’s Review

Funding and Liquidity

Stable and Diversified Funding Base and Strong Liquidity

2009 Group funding profile k The Public Bank Group’s total funding increased by 10.9%
or RM21.03 billion to RM213.20 billion as at the end of
2009. The increase is mainly due to increase in customer
1.1% Core customer deposits, which grew by 13.0% or RM19.71 billion. The
deposits
5.2% Group’s core sources of funding, which consists of core
59.9% Wholesale
3.5% deposits customer deposits and wholesale deposits account for
10.6% Deposits and 59.9% and 19.7% respectively of the Group’s funding.
placements
of banks and These stable and cost efficient long-term sources of funding
other financial ensures the strong liquidity level of the Group and underpins
institutions
Long-term the Group’s ability to continue to grow volume and market
funding share in its core lending business.
19.7% Equity
k The Group’s long-term funding which comprise subordinated
Others notes, innovative Tier I capital securities and non-innovative
Tier I stapled securities represent 3.5% of the total funding
base of the Group.

Outstanding
2009 2008 Growth rate
Funding profile RM’mil RM’mil %
Core customer deposits 127,623 111,204 14.8
Wholesale deposits 42,089 38,715 8.7
Other deposits 1,179 1,266 (6.9)
Deposits and placements of banks and other financial institutions 22,614 16,684 35.5
Bills and acceptances payable 613 3,062 (80.0)
Term loans 653 860 (24.1)
Recourse obligations on loans sold to Cagamas 22 4,537 (99.5)
Tier 2 subordinated notes 3,335 4,178 (20.2)
Innovative Tier I capital securities 1,972 2,124 (7.2)
Non-innovative Tier I stapled securities 2,072 — 100.0
Equity 11,023 9,537 15.6
213,195 192,167 10.9

Liquid assets profile k Since 2005, the Group’s liquid assets have increased by
RM30.42 billion to stand at RM67.99 billion as at the end
70,000 36.8 36.2 40 of 2009. This accounted for 31.3% of the Group’s total
33.6 assets, allowing the Group to easily meet its liquidity
60,000 30.9 31.3 35
50,000 30 requirements even in difficult market conditions.
25
Percentage
RM’million

40,000
20 Liquid Assets
30,000 Ratio
15
20,000 10
37,567

54,417

63,099

60,656

67,986

10,000 5
Liquid Assets
0 0
’05 ’06 ’07 ’08 ’09
Year
 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
Chairman’s Review 133
KEY PERFORMANCE INDICATORS
Delivering strong performance in challenging times
The table below summarises the key performance indicators of the Public Bank Group and the medium-term targets set by the
Group:

Medium Term
Key Performance Indicators 2005 2006 2007 2008 2009 Targets
Profitability (%)
Net return on equity 19.1 21.9 26.3 30.4 26.1 30.0
Cost to income 33.8 32.7 33.1 31.2 34.4 30.0

Asset Quality (%)

Net NPL ratio 1.7 1.6 1.2 0.9 0.8 below 1%

Balance sheet (RM’billion)

Assets 111.7 147.8 174.2 196.2 217.1 320.0
Net loans 66.8 82.8 99.3 118.4 135.3 200.0
Deposits 75.2 98.2 126.0 151.2 170.9 250.0

The fallout from the volatility in global financial markets and
recessionary economic conditions have combined to place
significant pressure on the financial performance of a large
number of international banks. In this environment, the Public
Bank Group has performed well, delivering another year of
solid performance. This is due, in no small measure, to the
several years of building size and market share with consistently
strong balance sheet growth and healthy asset quality. The
macro key performance objectives of the Group include the
continued pursuit of growth in profitability and balance sheet,
as well as the maintenance of a high quality loan portfolio and
improvement in productivity.
The Public Bank Group’s strong profitability has resulted in an
increase of its net return on equity to 26.1% in 2009 from
19.1% in 2005. In terms of cost efficiency, the Group’s cost to
income ratio has remained low at 34.4% in 2009, being the
most efficient amongst Malaysian banking groups.
Despite the contractionary economic conditions, the Public
Bank Group’s total assets have almost doubled from
RM111.69 billion as at the end of 2005 to RM217.14 billion as
at the end of 2009. Total net loans grew from RM66.81 billion
as at the end of 2005 to RM135.34 billion as at the end of
2009, consistently delivering double digit annual growth over
the past 5 years. The Group has more than doubled its
deposits from customers to RM170.89 billion as at the end of
2009 from RM75.15 billion as at the end of 2005.
For the 3 year period from 2010 to 2012, the Group aims to
achieve a net return on equity of 30.0%, cost to income ratio
of 30.0% whilst maintaining a net NPL ratio below 1.0%. The
Group is also targeting to increase its total assets, loans and
deposits to RM320 billion, RM200 billion and RM250 billion
respectively.

Despite the weak economic conditions and challenging credit

markets, the Public Bank Group continued to improve its asset
quality, a testimony to the Group’s prudent and stringent credit
culture. The Group has successfully reduced its net NPL ratio
by more than half to a new low of 0.8% as at the end of 2009
as compared to 1.7% in 2005.
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
134 Chairman’s Review

BENCHMARKING AGAINST BANKING INDUSTRY’S PERFORMANCE

The table below compares the key financial indicators of the Public Bank Group with those of the banking system in Malaysia.

2009 2008
Public Latest Public Latest
Bank Industry Bank Industry
Key Financial Indicators Group Average Rank# Group Average Rank#
Profitability (%)
Pre-tax return on average equity 32.1 13.0 1 36.9 18.5 1
Pre-tax return on average assets 1.6 1.2 1 1.8 1.5 @
Cost to income ratio 34.4 46.4 1 31.2 46.4 1

Productivity (RM’000)
Pre-tax profit/employee 193 136 1 209 171 1
Gross loans/employee 8,015 6,705 1 7,467 6,281 1
Deposits/employee 9,953 9,082 1 9,356 8,465 1

Asset Quality (%)

Gross NPL ratio 1.0 3.4 1 1.0 4.1 1
Net NPL ratio 0.8 1.9 1 0.9 2.2 1
Loan loss coverage 172.4 92.3 1 159.7 87.1 1

Growth rate (%)

Assets 10.7 5.8* NA 12.6 9.5 NA
Gross loans 14.4 7.4* NA 19.0 13.0 NA
Deposits 13.0 8.0* NA 20.0 11.9 NA
* Banking industry annualised growth rate
# Latest available ranking for domestic commercial banking operations
@ Above industry average; ranking not available
NA Not available

Despite difficult market conditions, the Public Bank Group
continued to grow its market share and maintained high levels
of productivity and stable asset quality. The Group’s domestic
market share of total assets and gross loans stood at 13.1%
and 15.9% as at the end of November 2009. The Group’s
domestic market share of customer deposits remained high at
15.5% as at the end of November 2009.
Public Bank maintained its top ranking in terms of profitability
and cost efficiency for its domestic commercial banking
operations. The Public Bank Group achieved a pre-tax return
on average equity and pre-tax return on average asset of
32.1% and 1.6% respectively, which is above the banking
industry’s average of 13.0% and 1.2% respectively. The
Group’s pre-tax return on average equity and pre-tax return on
average asset are also the highest amongst Malaysian banking
groups. The Group’s cost to income ratio of 34.4% as at the
end of 2009 was the lowest amongst Malaysian banking
groups and was well below the industry average of 46.4%.
To maintain profitability growth in an environment of intense
competition and narrowing net interest margins, the Public
Bank Group continued to improve its cost efficiency through
the enhancement of its staff productivity. The Group’s pre-tax
profit per employee remained high at RM193,000, whilst its
gross loans per employee and total deposits per employee
achieved 7.3% and 6.4% growth respectively to RM8.0 million
and RM10.0 million respectively as at the end of 2009. This
has enabled the Group to also maintain its no.1 ranking among
its domestic banking peers in terms of productivity.
The Public Bank Group also maintained its top ranking amongst
banking groups in Malaysia in terms of its asset quality and
loan loss coverage. The Group’s net NPL ratio improved
further to 0.8% as at the end of 2009 from 0.9% as at the end
of 2008. The Group’s net NPL ratio of 0.8% is significantly
lower than the banking system’s ratio of 1.9% as at the end
of November 2009. The Group maintained the highest loan
 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
Chairman’s Review 135
loss coverage of 172.4% as at the end of 2009, which was almost twice the industry average of 92.3% as at the end of November
2009, reflecting the Group’s prudent provisioning with a low and stable level of non-performing loans.

The table below compares the key financial indicators of the Public Bank Group with those of the leading regional banks in the
Asia Pacific region.

Net return Cost to Dividend

on equity income ratio payout ratio
Banks % % %
Public Bank Group 26.1 34.4 79.3

SINGAPORE
DBS Group 10.1 43.3 60.7
UOB 12.2 39.0 48.0
OCBC 11.8 41.9 51.3

HONG KONG
Hang Seng Bank 26.0 29.2 85.5
Hongkong and Shanghai Bank Corporation Limited of
Hong Kong (“HSBC HK”) 24.3 42.1 61.9

AUSTRALIA
ANZ Bank 10.3 45.7 82.3
Commonwealth Bank of Australia 16.5 45.4 73.1
National Australia Bank 11.8 43.9 73.6

CHINA
Industrial and Commercial Bank of China 19.4 29.8 50.0
Bank of China 14.6 37.6 52.0
China Construction Bank 20.7 36.8 48.6

The Public Bank Group’s key financial indicators were also outstanding when benchmarked against the leading regional banks.
The Group’s net return on equity of 26.1% is the highest in the region. The Group’s cost to income ratio ranks third amongst
leading banking groups in the Asia Pacific region. The Group’s dividend payout ratio of 79.3% was amongst the top three as
compared to the leading regional banking groups.
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
136 Chairman’s Review

CAPITAL MANAGEMENT
Capital Management Framework and Strategies
The Public Bank Group proactively seeks to manage its capital
structure to improve the efficiency of its capital to enhance
shareholders’ returns whilst maintaining a strong and robust
capital position to support growth of the Group’s business. As
part of the Group’s on-going initiatives to pursue an efficient
and healthy capital position, the Group’s Capital Management
Framework was put in place with the following objectives:
k Meeting regulatory capital requirements
k Optimising returns to shareholders
k Maintaining adequate levels of capital and an optimum mix
of the different components of capital in order to:
a) support the underlying risks of the Group’s business
b) optimise growth; and
c) be able to withstand capital demands under market
shocks and stress condition
k Maintain Public Bank’s strong credit ratings
k Allocate appropriate levels of capital to the business units
and subsidiaries to optimise return on capital
The Public Bank Group has also established a detailed strategic
plan over a medium term horizon to continuously monitor and
review the Group’s capital position, with the following key
initiatives:
k Continuous enhancement of the efficient usage of capital
k Assigning return on equity as one of the key performance
indicators for assessing branch managers’ and business
heads’ performance
k Growing non-interest income sources which are less capital
intensive
k Significant focus on measuring risk adjusted return on
capital in evaluating business proposals
k Continuous monitoring of the robustness of its capital
position and an efficient mix of capital through a 3-year
capital management plan
k Maintaining flexibility to enhance capital efficiency through
the distribution of treasury shares to enhance equity
capital

Efficient Capital Structure and Enhancing Value to Shareholders

Public Bank Group Public Bank
2009 2008 2009 2008
Shareholders’ equity (RM’mil) 11,023 9,537 10,442 9,392
Capital base (RM’mil) 18,394 15,775 14,745 12,729
of which:
Tier I capital (RM’mil) 13,125 9,597 13,447 10,277
– equity capital 9,161 8,157 9,483 8,736
– debt capital 3,964 1,440 3,964 1,541
Tier II capital (RM’mil) 5,270 6,179 4,892 5,771
– loan loss reserves 2,052 1,759 1,654 1,433
– debt capital 3,218 4,420 3,238 4,338
Risk-weighted assets (RM’mil) 125,278 115,342 103,333 94,647

Public Bank Group Public Bank Banking

2009 2008 2009 2008 System1
Core capital ratio 10.5% 8.3% 13.0% 10.9% 13.0%
Risk-weighted capital ratio 14.7% 13.7% 14.3% 13.4% 14.6%
1
As at 30 November 2009

The risk-weighted capital ratio of the Public Bank Group and
Public Bank improved from 13.7% and 13.4% respectively as
at the end of 2008 to 14.7% and 14.3% respectively as at the
end of 2009, well above the 8% statutory requirement. The
core capital ratio of the Group and the Bank have also improved
from 8.3% and 10.9% respectively as at the end of 2008 to
10.5% and 13.0% respectively as at the end of 2009.
In its pursuit of an efficient and healthy capital structure, the
following initiatives were undertaken by the Public Bank
Group:
k Gearing up of capital
Between 2004 and 2008, Public Bank had issued
Subordinated Notes amounting to USD750 million and
RM1.4 billion, as well as Innovative Tier I Capital Securities
amounting to USD200 million and RM1.2 billion. In 2009,
the following debt capital issuance initiatives were
undertaken:
Tier I capital
Public Bank set up a RM5.0 billion Non-Innovative Tier I
Stapled Securities Programme (“Stapled Securities
Programme”) and in June 2009 and November 2009, the
Bank issued RM1.2 billion and RM888.0 million Non-
Innovative Tier I Stapled Securities under the Stapled
Securities Programme to institutional as well as high net
worth retail investors.
Tier II capital
In September 2009, the Bank fully redeemed
USD350 million of Subordinated Notes. In November 2009
and December 2009, Public Bank issued a total of
RM473 million Subordinated Notes under Public Bank’s
RM5 billion Subordinated Medium Term Note Programme.
The Public Bank Group’s proactive measures in gearing up
its capital has allowed the Group to pursue strong growth
of its business without burdening shareholders for equity
capital, hence, reducing cost of capital and enhancing the
Group’s return on equity.
k Share buy back
As at the end of 2008, Public Bank had bought back a
total of 176.3 million of the Bank’s shares at a total cost
of RM1.27 billion representing 5.0% of the issued and
paid-up share capital of the Bank. These shares bought
back were held as treasury shares. In March 2009, a total
of 95.8 million treasury shares were distributed to
shareholders of the Bank as a share dividend on the basis
of 1 treasury share for every 35 ordinary shares held by
shareholders. As at the end of 2009, the remaining treasury
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
Chairman’s Review 137
shares held amounted to 80.5 million shares. On 19 January
2010, the Board of Directors declared a further distribution
of approximately 50.8 million of treasury shares to
shareholders of the Bank as a share dividend on the basis
of 1 treasury share for every 68 ordinary shares held by
shareholders.
k Healthy dividend payout
Notwithstanding the particularly challenging economic
conditions this year, the Public Bank Group continues to
provide a healthy dividend payout to its shareholders.
In 2009, Public Bank paid an interim dividend of 30 sen
less 25% tax and will pay a 2nd interim dividend of 25 sen
less 25% tax as well as a share dividend to be distributed
from the treasury shares held by Public Bank. The Board
of Directors does not propose the payment of any final
dividend. In total, the distribution of cash and share
dividends during the year amounted to RM2.0 billion and
represents 79.3% of the Group’s net profit attributable to
equity holders of Public Bank for 2009.
Share price performance represents a part of return to
shareholders. The global financial crisis has seen massive
share value destruction of banks all over the world and the
Asia Pacific region was not spared. Whilst banking stocks
tumbled all over the world, Public Bank shares have exhibited
remarkable resilience, a testament of its consistently above
industry rates of growth, returns, pristine asset quality and
superior cost efficiency. Public Bank’s share price had increased
by 72.5% from RM6.55 as at the end of 2005 to RM11.30 as
at the end of 2009, whilst the price to book ratio has increased
from 2.5 times as the end of 2005 to 3.5 times as at the end
of 2009. Despite the volatile stock market performance on
Bursa Securities during the year, Public Bank’s share price still
appreciated by 27.7% from RM8.85 as at the end of 2008 to
RM11.30 as at the end of 2009, reflecting a high quality and
defensive stock.
In the wake of the global financial crisis, the Basel Committee
of Banking Supervision and the central banks of the G-20
nations have taken initiatives to restructure the regulatory
landscape, focusing on the regulatory capital framework of
banks and financial institutions. The proposed changes to the
Basel II capital accord and the European Union’s European
Capital Requirements Directive are currently being reviewed
and will eventually lead to banks and financial institutions
maintaining higher levels of shareholders’ capital to support
their business. Even with more stringent capital requirements,
the Public Bank Group’s strong profitability growth, exceptionally
strong asset quality and prudent risk management policies will
enable the Group to navigate these uncertain times from a
position of strength.
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
138 Chairman’s Review
CREDIT RATINGS
Public Bank Berhad Long Term
RAM AAA
Moody’s A3
Standard & Poor’s A-
Standard & Poor’s ASEAN Scale Issuer
Credit Ratings axAA
In April 2009, Rating Agency Malaysia (“RAM”) reaffirmed
Public Bank’s long-term and short-term general banking ratings
at AAA and P1 respectively. The AAA rating is the highest
rating given by RAM and reflects the Bank’s ability to offer the
highest level of safety for timely payment of its financial
obligations. The reaffirmation of the highest rating was based
on the Bank’s well-regarded franchise and strong financial
profile, underpinned by its track record of superior asset
quality and sustainable profitability. At the same time, the long-
term ratings of the Bank’s Subordinated Medium Term Notes
Programme of up to RM5.0 billion and RM1.2 billion Innovative
Tier 1 Capital Securities have been reaffirmed at AA1 and AA2
respectively whilst the Non-Cumulative Perpetual Capital
Securities Programme of up to RM5.0 billion was assigned an
AA2 rating by RAM.
In December 2009, Moody’s Investors Service reaffirmed
Public Bank’s long-term deposit rating of A3 and short term
deposit rating of P-1. The Bank’s Financial Strength Rating of
C was also reaffirmed for its strong earnings, underpinned by
its well-established and profitable franchise, as well as its very
liquid and adequately capitalised balance sheet.
Short Term
P1
P-1
A-2
axA-1
In November 2009, Standard & Poor’s reaffirmed Public Bank’s
long-term credit rating of A- and short-term credit rating of A-2
with a stable outlook. Public Bank continues to be one of only
two Malaysian banks with a single A rating by Standard &
Poor’s. The high credit ratings reflect Public Bank’s good track
record and strong position in the domestic market, especially
in the consumer and middle-market segments, underpinned by
superior asset quality and strong income generation
capability.
In May 2009, Standard & Poor’s launched its ASEAN credit
rating scale to provide additional transparency in respect of the
credit risk of borrowers in the region. The new ratings will
provide information for investors in the region’s developing
debt markets and help companies across South East Asia
access new sources of capital. Public Bank was assigned a
long-term credit rating of axAA and short-term credit rating of
axA-1 under the ASEAN credit rating scale.

Impact of FRS 139 Financial Instruments: Recognition and Measurement
The Malaysian Accounting Standards Board (“MASB”) has
announced that the effective date for applying Financial
Reporting Standard 139 (“FRS 139”) will be 1 January 2010.
The adoption and application of FRS 139 have major
implications for banks as the requirements for the accounting
of financial instruments under FRS 139 are complex and
involve substantial changes to systems, processes and
documentation. The entire FRS 139 project was carried out
in-house and the Public Bank Group is ready to adopt
FRS 139 on 1 January 2010.
The key areas which would impact the financial results of the
Group and the Bank as a result of the adoption of FRS 139
are:
1. Provisions of FRS 139 covered under the BNM/GP8
Guidelines on Financial Reporting for Licensed Institutions
and which have already been adopted by the Group and
the Bank with effect from 1 January 2005:
i) Classification and measurement of securities
ii) Recognition of derivative financial instruments and
hedge accounting
2. Provisions of FRS 139 not covered under the BNM/GP8
Guidelines on Financial Reporting for Licensed Institutions
and which will be adopted by the Group and the Bank
effective 1 January 2010:
i) Recognition of transaction costs
ii) Embedded derivatives
iii) Interest recognition based on effective interest rate
(“EIR”)
iv) Loan impairment
The adoption of FRS 139 in relation to the recognition of
transaction costs and embedded derivatives is not expected to
have a material impact on the financial results of the Group
and the Bank as all material transaction costs have been
capitalised and amortised and there are no significant
embedded derivatives which would result in a material impact
on the financial results of the Group and the Bank.
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
Chairman’s Review 139
On 8 January 2010, BNM issued the guidelines on Classification
and Impairment Provisions for Loans/Financing which is
effective for annual periods beginning on and after 1 January
2010. The guidelines set out the minimum requirements on
classification of impaired loans/financing, provisioning for
impaired loans/financing and expectations that must be met by
banking institutions with the adoption of FRS 139. With the
issuance of the guidelines, the existing revised BNM/GP3
which was issued on 7 August 2008 will be withdrawn and
replaced with the requirements of the guidelines.
In accordance with the transitional provisions under the
Amendments to FRS 139 Financial Instruments: Recognition
and Measurement, the Financial Services sector is granted a
transitional period for the purpose of complying with the
collective assessment of impairment required under FRS 139.
During the transitional period, banking institutions will be
required to comply with the requirements on collective
assessment of impairment of loans and financing under the
BNM’s guidelines on Classification and Impairment Provisions
for Loans/Financing. Banking institutions are required to
maintain collective impairment provisions of at least 1.5% of
total outstanding loans/financing, net of individual impairment
provisions under the transitional provisions in the guidelines.
Subject to the prior written approval from BNM, banking
institutions are allowed to maintain a lower collective impairment
provision.
The financial impact from the adoption of FRS 139 as modified
by BNM’s guidelines on Classification and Impairment
Provisions for Loans/Financing will be due mainly to:
1. Loan impairment
2. Recognition of interest on an EIR basis
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
140 Chairman’s Review
1. Loan impairment
Prior to 1 January 2010, the Group’s loan loss allowance
was determined in accordance with BNM/GP3 Guidelines
on the Classification of Non-Performing Loans and
Provision for Substandard, Bad and Doubtful Debts
(“BNM/GP3”). Consistent with previous years, the Group
had adopted a more stringent policy on the classification
of non-performing loans, whereby loans are classified as
non-performing and sub-standard when repayments are in
arrears for more than three months from the first day of
default or after maturity date. The Group’s policy on
provisioning requirement for non-performing loans is as set
out below:
Specific allowance
on the shortfall in
collateral value
against the
outstanding loan
Period of default Classification amount
3 months from the
first day of default
but less than 9
months Substandard 20%
9 months from the
first day of default
but less than 12
months Doubtful 50%
12 months and
above Bad 100%
Under FRS 139, the Group uses an incurred loss model
for the recognition of losses on impaired loans and
advances. This means that losses can only be recognised
when objective evidence of a specific loss event has been
observed. Loan impairment is calculated as the difference
between the carrying amount and the present value of
future expected cash flows discounted at the loans and
advance’s original effective interest rate. The Group
addresses impairment of loans and advances in two
ways: individually assessed provisions and collectively
assessed provisions.
(i) Individually assessed provisions
The Group determines the provisions appropriate for
each individually significant loan or advance on an
individual basis. The provisions are established based
primarily on estimates of the realisable value of the
collateral to secure the loan or advances and are
measured as the difference between the loan or
advance’s carrying amount and the present value of
the expected future cash flows discounted at the
loan or advance’s original effective interest rate.
All other loans and advances that have been
individually evaluated, but not considered to be
individually impaired are assessed collectively for
impairment.
(ii) Collectively assessed provisions
Based on the collective assessment impairment
requirement under FRS 139, collective provisions are
maintained to reduce the carrying amount of portfolios
of similar loans and advances to their estimated
recoverable amounts at the balance sheet date. For
the purposes of a collective evaluation of impairment,
exposures that are assessed collectively are placed
into pools of similar loans and advances with similar
credit risk characteristics (such as by collateral types,
geographical location, past due status and other
relevant common factors).
Each portfolio of individually smaller loans with
similar credit risk characteristics is collectively
evaluated for impairment. The key determinant of
changes in the collective impairment provisions are
observed historical loss experience, which is
determined by the probability of default and
recoverability of each portfolio. Overall portfolio
indicators, including historical credit losses and
delinquency rates are considered in determining the
probability of default of the portfolio. Probability of
recoverability is assessed based on the level of
collateral held of the loans and advances comprising
the portfolio, determined on a loan-by-loan basis
and based on the Group’s assessment of the loans
and advances’ collateral value at the time of loan
application and any subsequent valuations. These
historical loss experiences are based on historical
data for periods of between three to five years for
the respective portfolio of loans and advances which
are being assessed.
The total collective assessment provisions computed
under the incurred loss model as required under FRS
139 is significantly lower than the 1.5% impairment
provisions required under the transitional provision of
the BNM’s guidelines on Classification and Impairment
Provisions for Loans/Financing. Any potential positive
impact to equity and annual earnings of the Group
is subject to BNM’s approval to allow a lower
collective impairment provision to be made.
2. Recognition of interest on an EIR basis
Prior to 1 January 2010, interest on loans was recognised
in the income statement at contracted interest rates. FRS
139 requires interest income to be recognised on an EIR
basis. The EIR is the rate that exactly discounts the
estimated future cash receipts through the expected life
of the loan or, when appropriate, a shorter period to the
net carrying amount of the loan. This will mainly affect the
Group’s loans and advances with step-up interest rates,
resulting in higher income recognition during the initial

period of the loan tenor under FRS 139 as the effective
interest rate is higher than the contracted rate for such
loans and advances. Interest income will be lower in the
later period of the loan and advances tenor when the
effective interest rate is lower than the contracted rate.
Upon the initial adoption of FRS 139, a positive adjustment
will be made to opening retained profits to reflect the
recognition of interest income on a constant effective
interest rate based on the carrying amount of the loan,
which will enhance the equity and capital ratios of the
Group.
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
Chairman’s Review 141
Publication of IFRS 9 represents the completion of the first
phase of the 3 phase project to replace IAS 39 with a new
standard. This first phase of the project addresses the
requirements on the classification and measurement of financial
assets in IAS 39. IFRS 9 uses a single approach to determine
whether a financial asset is measured at amortised cost or fair
value, replacing the many different rules in IAS 39. The
approach in IFRS 9 is based on how an entity manages its
financial instruments (its business model) and the contractual
cash flow characteristics of the financial assets. The new
Standard also requires a single impairment method to be used,
replacing the many different impairment methods in IAS 39.

The Group had commenced parallel runs on the application of The Exposure Draft on Financial Instruments: Amortised Cost
FRS 139 since September 2007. During the year, the progress and Impairment sets out the principles for the measurement of
of the FRS 139 preparation project and the results of the financial assets at amortised cost that will present information
parallel runs have been reported on a quarterly basis to the to users of financial statements for their assessment of the
Board Executive Committee, Audit Committee and the Board amounts, timing and uncertainty of future cash flows derived
of Directors of the Bank. from such financial assets. The Exposure Draft is proposing to
move from the current incurred loss impairment method to one
based on expected loss.
International developments of IAS 39
The global financial crisis has accentuated concerns about the The expected cash flow approach requires an entity:
complexity of the accounting for financial instruments. The • to determine the expected credit losses on a financial asset
International Accounting Standards Board (“IASB”) is currently when that asset is first obtained
working on an IAS 39 replacement project which seeks to • to recognise contractual interest revenue, less the initial
simplify the many different classification categories and expected credit losses, over the life of the instrument
associated impairment methods of financial instruments in
• to build up a provision over the life of the instrument for
existence today.
the expected credit losses
IASB has divided the project to replace IAS 39 into 3 main • to reassess the expected credit loss of each period
phases: • to recognise immediately the effects of any changes in
credit loss expectations.
Exposure
Draft The Exposure Draft is at a consultative stage until 30 June
Project Phase issued Finalisation 2010. It remains uncertain as to how different the final standard
1. Classification July 2009 IFRS 9: Financial will be from the Exposure Draft. At the same time, it is also
and Instruments was issued uncertain when the IAS 39 replacement project and its various
measurement on 12 November 2009 phases will be adopted in Malaysia. However, the full
which is effective for convergence with International Financial Reporting Standards
financial periods in Malaysia is expected to be completed by 1 January 2012.
beginning on or after Public Bank Group continues to participate actively in the
1 January 2013. industry consultation process surrounding the development
and implementation of the IAS 39 replacement project. The
2. Impairment November The standard is expected
Group will monitor closely these developments and assess its
methodology 2009 to be issued in the fourth
readiness as well as the impact of any potential changes
quarter of 2010 which is
expected.
effective 3 years after the
issuance of the standard
3. Hedge Expected to In 2010
accounting be issued in
the first
quarter of
2010
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
142 Chairman’s Review
Business Operations Review
Domestic Retail Banking and
Financing Operations
At a glance
2009 2008 Increase/
(Decrease)
%
Domestic Retail
Operations Segment
Segment profit (RM’mil) 1,950.7 2,432.1 (19.8)
Gross loans, advances
and financing (RM’bil) 78.19 66.42 17.7
of which:
– Residential properties 34.15 28.68 19.1
– SME 22.49 20.66 8.8
– Personal loans 6.41 5.29 21.2
Net NPL ratio (%) 0.9 1.2 (0.3)
Domestic Hire Purchase
Segment
Segment profit (RM’mil) 656.6 219.3 199.4
Gross loans, advances
and financing (RM’bil) 29.92 27.60 8.4
Net NPL ratio (%) 0.3 0.5 (0.2)

Despite the difficult operating conditions in 2009, the Public
Bank Group’s core retail banking and hire purchase loan
portfolio grew by 15.0% to RM108.11 billion as at the end of
2009 and accounted for 78.6% of total loans, advances and
financing of the Group. The Group’s domestic retail loan and
hire purchase loan growth was mainly supported by strong
growth in loans for residential properties by 19.1%, for
passenger vehicles by 8.4% and SME lending by 8.8%. As at
the end of 2009, 71.3% of the Group’s domestic retail loan
portfolio were for loans to consumers whilst the remaining
28.7% were for loans to SMEs.
CONSUMER CREDIT
Domestic Residential Property Financing
The financing of residential properties remained a key
component of the Public Bank Group’s domestic retail lending
business. Despite the economic contraction in 2009, the
demand for residential houses remained resilient, as can be
seen by the domestic banking industry’s annualised growth in
housing loans of 11.5% as at the end November of 2009, as
compared to 13.1% in 2008 when the economy was stronger.
The Group’s domestic lending to the residential property sector
grew by 19.1% and 18.4% in 2009 and 2008 respectively,
significantly outpacing the industry’s rate of growth.
In 2009, the Public Bank Group approved residential property
loans totalling RM11.58 billion, which accounted for 28.8% of
total domestic retail loans approved during the year. The
Group’s domestic lending to the residential property sector
stood at RM34.15 billion as at the end of 2009 and accounted
for 24.8% of the Group’s total loan portfolio. Due to the above
industry rate of growth, the Group’s domestic market share of
residential property loans increased from 15.3% at the beginning
of 2009 to 16.5% as at the end of November 2009.
The core lending products for the Public Bank Group’s
residential property loans were the HOME (“Home Ownership
Made Easy”) Plan and the MORE (“Mortgage Refinancing”)
Plan. During the year, a total of RM9.74 billion of residential
property loans were approved under the HOME Plan and the
MORE Plan. The “Free Legal Documentation” (“FLD”) package
under the HOME Plan and MORE Plan remained the most
popular package in 2009, attracting 52,498 loan applications.
About 66.5% of residential property loans approved by Public
Bank were under the FLD package.
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
Chairman’s Review 143
To maintain the Public Bank Group’s leading market share of
the Malaysian residential property financing sector, aggressive
marketing efforts were undertaken. Besides the Group’s well
distributed network of 248 branches and an expanded force of
518 Sales and Marketing Executives, the Group also continued
to expand and enhance its existing relationships with reputable
developers, real estate agents and solicitors for potential
customer leads. In addition, special end-financing packages
with attractive pricing and special features were offered to
buyers of 25 selected new housing projects. During the year,
the Group participated in 2 property roadshows and exhibitions
held nationwide, namely the Malaysian Property Expo (“MAPEX”)
2009 in the Klang Valley and The Star Property & Home Fair
2009 in Kuala Lumpur to bolster market awareness of Public
Bank’s products and loan packages especially in the residential
property financing sector.
The Public Bank Group’s residential property loans were
granted predominantly for mid-range properties which cost
between RM100,000 to RM250,000. Total loans outstanding
from this segment amounted to RM16.15 billion or 47.3% of
the Group’s domestic residential property financing portfolio.
In 2009, Public Bank approved RM3.94 billion of residential
property loans for the financing of such mid-range properties,
accounting for 34.0% of the total number of residential property
loans approved in 2009.
The Public Bank Group’s exposure to high-end properties
costing above RM1,000,000 each, stood at RM1.78 billion and
accounted for 5.2% of the residential financing portfolio. The
Group remained vigilant in the financing of such high-end
properties, particularly in the present challenging economic
environment with such financing being focused on properties
in well developed areas such as the Klang Valley, Penang
island and Johor Bahru.
The Public Bank Group remains firmly committed to support
the Government’s initiatives to promote home ownership
amongst low income earners. The priority sector for residential
property financing is defined as loans for properties costing
RM100,000 and below for Peninsular Malaysia and RM120,000
and below for properties in East Malaysia. In 2008 and 2009,
the Group had committed to the financing of a total of 3,812
units of low cost properties under this priority sector. Such
loans amounted to RM4.43 billion or 13.0% of the Group’s
residential property financing portfolio as at the end of 2009.
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
144 Chairman’s Review
The Government has initiated steps to alleviate the burden of
the rising cost of living by enabling house purchasers to
reduce their housing loan balances through more flexible
withdrawals of their Employees Provident Fund (“EPF”) savings.
In addition, to help residential property financing customers’
household cashflow needs in the more stressful economic
conditions in 2009, such customers could make monthly EPF
withdrawals to fund their monthly housing loan instalment
payments. In support of the Government’s initiative, Public
Bank assisted more than 24,000 housing loan customers to
apply for EPF withdrawals in 2009. Another measure taken by
the Bank to assist customers is by reducing the monthly loan
instalment payments by extending the loan tenures for eligible
customers.
Domestic Vehicle Hire Purchase Financing
The Public Bank Group’s domestic vehicle hire purchase
financing loans registered an increase of RM2.32 billion or
8.4% to reach RM29.92 billion as at the end of 2009. As the
industry’s vehicle hire purchase recorded a lower annualised
growth rate of 5.9% as at the end of November 2009,
the Group maintained its pole position with an enlarged vehicle
hire purchase financing market share of 24.4% as at the
end of November 2009, up from 23.9% as at the beginning of
the year.
The Public Bank Group’s strategy to capture a bigger market
share of vehicle hire purchase financing for used passenger
and commercial vehicles, which provide better yields, had
shown impressive results. In 2009, this market segment
registered significant growth of RM2.09 billion or 18.5% to
RM13.45 billion and now accounts for 45.0% of the Group’s
total vehicle hire purchase financing portfolio. In the same
period, the Group’s domestic market share of the used
passenger vehicle segment had jumped to 41.0% from 31.0%
as at the end of 2008.
The strong performance of Public Bank’s vehicle hire purchase
financing business was contributed by improved overall vehicle
sales in 2009 as well as strong business support of major
passenger vehicle distributors and panel car dealers. The
passenger vehicle industry recorded strong sales in the second
half of 2009, which compensated for slower sales in the first
half of the year due to the impact of the global economic
slowdown. In 2009, the Public Bank Group implemented
numerous initiatives which focused on better customer service
delivery through the Group’s Hire Purchase Centres as well as
reinforcing the Group’s close relationship with car dealers.
The Public Bank Group has centralised the vehicle hire
purchase financing operations of 92 branches to form 27 Hire
Purchase Centres in key locations nationwide to fully focus on
providing vehicle hire purchase financing. With an experienced
and dedicated staff force of more than 1,000 staff, these Hire
Purchase Centres carried out 1,182 joint sales promotions
nationwide with the Group’s 7,500 car dealers in 2009. Other
marketing campaigns encompass car carnivals and roadshows
as well as other collaboration programmes with car distributors
and dealers to offer exclusive vehicle hire purchase financing
packages to customers. These efforts generated a consistently
high origination of vehicle hire purchase financing business
which on average exceeded RM1.10 billion per month. The
Group’s marketing officers are now better equipped with
portable biometric Mykad readers to authenticate customer
identity, which will further improve the credit processing
turnaround time as well as provide further convenience to
customers.
Notwithstanding the strong growth in the Public Bank Group’s
vehicle hire purchase financing business, the Group’s net non-
performing loan ratio for vehicle hire purchase loans improved
to 0.3% as at the end of 2009 as compared to 0.5% a year
ago. The strong asset quality is a testament to the Group’s
overall consistent prudent lending policy and sound risk
management.

Domestic Personal Consumer Loans
In Malaysia, the Public Bank Group’s personal consumer
financing business is driven by its subsidiary, Public Islamic
Bank Berhad (“Public Islamic”). The Bai’-Al-Einah (“BAE”)
Personal Financing-i is offered to the staff of government
agencies, quasi government corporations, institutions of higher
learning and government-linked corporations (“GLCs”).
At the end of 2009, Public Islamic’s BAE Personal Financing-i
was available to the staff of 255 government agencies, quasi
government corporations, institutions of higher learning and
GLCs as compared to 218 such entities as at end of 2008.
Public Islamic’s dedicated marketing team has been conducting
direct marketing calls and promotional activities at these
entities. As a result of the aggressive marketing approach
adopted, Public Islamic’s BAE Personal Financing-i recorded a
strong growth of RM840.3 million or 51.9% to RM2.46 billion
as at the end of 2009 from RM1.62 billion as at the end of
2008.
Public Islamic is expected to tie-up with the Accountant
General of Malaysia to enable its BAE Personal Financing-i to
be offered to federal government employees in 2010. This
would significantly increase Public Islamic’s personal consumer
financing business in view of the large base of federal
government employees.
As part of its customer retention strategy, Public Islamic also
offers Plus BAE Personal Financing-i to existing Al-Bai’
Bithaman Ajil (“ABBA”) House Financing-i and Term Financing-i
as well as Cash Line Facility-i to customers with healthy
repayment track record. Customers who have paid down part
of their ABBA House Financing-i, Term Financing-i or Cash
Line Facility-i are offered the Plus BAE Personal Financing-i at
competitive rates.
Credit and Debit Cards
In line with the Malaysian Government’s initiative to inculcate
prudent spending as well as the Public Bank Group’s strategy
to reach out to the younger customer segment, the Group
launched its first Bankcard with Visa debit card functions in
June 2009.
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
Chairman’s Review 145
Named the PB Day2Day Card, the new Bankcard or ATM card
with debit card capabilities has further strengthened the Public
Bank Group’s foray into the debit card market following the
previous year’s launch of the PB ING, PB UTAR and PB TARC
MasterCard Debit Card. Designed to appeal to a wider market
segment, the PB Day2Day Card won The Most Innovative Card
Design, awarded by Visa Card Malaysia in 2009. Combining
both ATM and debit card capabilities, the PB Day2Day Card is
accepted at more than 29 million merchant outlets worldwide
that carry the Visa logo. Cardholders can also use the PB
Day2Day Card for making internet purchases. In addition,
cardholders can enjoy up to 0.8% Cash Back for petrol and
grocery transactions and up to 0.3% on other retail purchases
charged to their PB Day2Day Card.
The Public Bank Group relaunched the Manchester United
Credit Card in 2009 in partnership with Manchester United
Financial Services’ new affinity partner, AIG-CFG Ltd. Under
the new tie-up, Manchester United Credit Card cardholders are
rewarded with exclusive Manchester United merchandise as
welcome gifts and contest prizes, and gain access to a suite
of credit card privileges and programmes specially designed to
match their support for the Manchester United Football Club.
In conjunction with a host of credit and debit card marketing
activities, Public Bank expanded further its multi-channel
distribution capabilities with the establishment of a new in
house card sales team comprising Cards Sales Executives in
September 2009 to further accelerate credit and debit cards
acquisition.
With the establishment of the in-house card sales team and
the introduction of the PB Day2Day Card, the debit card base
recorded a growth of 262.8% in 2009. The credit card base of
Public Bank registered a growth of 8.8% in 2009 as compared
to the 2.1% increase recorded by the Malaysian banking
industry.
With the healthy expansion of its cardbase, Public Bank’s card
sales increased by 17.2% whilst card receivables increased by
14.6% as compared to the industry’s growth rate of 4.4% and
3.7% respectively. This strong growth was supported by the
various mega card acquisitions cum usage programmes held
throughout 2009 rewarding cardholders with cash rebates and
instant gifts upon card usage and spending.
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
146 Chairman’s Review
Public Bank further strengthened its business relationship with
new and existing card merchants and high traffic malls via
continuous thematic programmes .with establishments such as
the Curve, 1 Utama Shopping Centre, MINES Shopping Fair,
Parkson, Tangs, Carrefour Hypermarket, Guardian, the
Singapore Tourism Board, the Crystal Jade Group, Giordano
and Popular Book Stores.
Public Bank further enhanced its card branding with the
sponsorship of concerts such as the SuperBand concert, the
Eason Chan concert and the Alan Tam & Hacken Lee concert.
To further enhance cardholder privileges, the Bank continued
to participate as the “Official Acquiring Bank” and/or the
“Official Credit Card” for major exhibitions such as HOMEDEC’09,
Popular Bookfest’09, Parenthood Expo’09, Hush Puppies
Warehouse Sale, Giordano Warehouse Sale and PC fairs.
The launch of the PB Balance Transfer X plan was an initiative
to tap the credit card revolvers segment. This plan rewarded
cardholders who signed up for balance transfers with free
gadgets such as netbooks, watches and handphones whilst
the PB Balance Transfer VIII plan offered lower rates from
1.5% with extended repayment periods of up to 24 months for
cardholders who are more rate sensitive. To complement the
balance transfer programmes, various flexible payment schemes
were also offered to cardholders to ease their cashflow. The
PB FlexiPay scheme offered rates as low as 2.0% with
extended repayment periods of up to 36 months whilst our
Zero Interest Instalment Plan allowed cardholders to purchase
items at merchant outlets at zero interest rate.
Although the introduction of a service tax on credit cards by
the Government in its Budget 2010 is expected to dampen
credit card applications and increase credit card attrition,
Public Bank will seek to overcome this with its aggressive
marketing and usage campaigns.
Under its merchant acquisition programme, Public Bank
continued to aggressively roll-out more e-debit card acceptance
terminals to merchants. Total terminals rolled out with e-debit
acceptance increased by 37.0% in 2009. The Bank also further
enhanced its existing e-commerce platform to allow for Multi
Currency Conversion acceptance under 3D Secure e-commerce
payments. With the increase in sales force and clear focus on
targeted corporate accounts, the Group’s merchant sales
registered an impressive growth of 19.7% in 2009.
Share Margin Financing
The Public Bank Group’s share trading and share margin
business in Malaysia, PB Sharelink, recorded an increase in
share volume traded to RM8.07 billion in 2009 as compared to
RM5.13 billion in 2008. The increase in share trading volume
by RM2.94 billion or 57.3% is attributed to the improved
performance of Bursa Securities where the FBM Kuala Lumpur
Composite Index, the barometer of the Malaysian stock market,
rose by 396.03 points or 45.2% to 1,272.78 points as at
31 December 2009 from 876.75 points as at the beginning of
the year. The number of PB Sharelink accounts and approved
share loan limits grew by 33.2% and 30.3% respectively to
31,365 and RM1.61 billion respectively during the year. Total
gross brokerage and interest income amounted to
RM41.4 million, an increase of RM9.0 million or 27.8% as
compared to 2008.
In 2009, the Public Bank Group’s initiatives to grow its share
trading and share margin business included the launch of
cross border share trading on share markets in Hong Kong,
Singapore and the USA. Public Bank’s panel of stockbroking
companies increased from 16 to 18. The number of Share
Investment Units was expanded from 36 branches to 40
branches to tap on the customer base in strategically located
areas and to offer more convenient access to the Bank’s
competitive PB Sharelink service.
SME LENDING
The majority of business establishments by numbers in Malaysia
are small- and medium-sized enterprises (“SMEs”). There are
an estimated 500,000 SMEs in 2009 employing about
5.6 million people and contributing about 32% of Malaysia’s
gross domestic product. The bulk of the Public Bank Group’s
lending to commercial customers is to SMEs for the financing
of working capital and business expansion needs. Malaysian
SMEs were adversely hit by the global economic downturn
with many sectors registering negative growth in 2009.

Despite the more difficult market conditions, the Group’s loans
to SMEs registered a growth of 8.8% from RM20.66 billion as
at the end of 2008 to RM22.49 billion as at the end of 2009,
and accounted for 16.3% of the Group’s total loan portfolio.
Domestic SME loan approvals which totalled RM10.29 billion in
2009 accounted for 25.6% of the Group’s new domestic retail
loans approved in 2009.
The majority of Public Bank Group’s commercial lending is
approved under the SWIFT (“Shophouse, Warehouse, Industrial
Factory and Trade Financing”) Plan. In 2009, total new loans
of RM6.71 billion were approved for 13,517 loan applicants
under the SWIFT Plan. This was lower than the RM8.2 billion
of SWIFT loans approved in the previous year.
Public Bank offers a full range of trade financing facilities to
facilitate SMEs to purchase or import materials for their
production activities as well as to cater for the growth of SMEs
in the export market. In 2009, Public Bank’s trade finance
business increased by 10.3% to RM148.91 billion from
RM135.00 billion recorded in 2008. To encourage higher usage
of trade and overdraft facilities, Public Bank offers existing
SME customers with good conduct of trade bills facilities and
overdraft facilities the “Utilisation Incentive Programme” which
gives preferential pricing for incremental utilisation of these
facilities.
The Public Bank Group supports Government initiated financing
schemes to promote SME activities and to assist them to
weather the economic downturn. These include:
k The Multi Currency Trade Financing and the Indirect
Exporter Financing schemes by Exim Bank Malaysia, which
provide SMEs the benefit of lower financing cost without
collateral requirements.
k The RM200 million Micro Enterprise Fund (“MEF”) launched
by BNM at the end of 2008 to assist very small businesses
and micro enterprises to obtain adequate financing.
Public Bank approved 1,026 new loans amounting to
RM29.0 million under the MEF in 2009.
k The RM2 billion SME Assistance Guarantee Scheme
(“SAGS”) launched by BNM in February 2009 to provide
viable SMEs facing cashflow constraints in the slow
economic conditions continued access to adequate
financing. The benefits of SAGS include low financing cost
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
Chairman’s Review 147
and guarantee cover by Credit Guarantee Corporation
(“CGC”) without any guarantee fees charged to the SMEs.
Public Bank approved total loans of RM265.1 million to
2,038 customers under the SAGS scheme in 2009.
k The Working Capital Guarantee Scheme (“WCGS”) and
Industry Restructuring Financing Guarantee Scheme
(“IRFGS”), introduced in March 2009 with a combined total
committed guarantee by the Government of RM10 billion,
to assist viable businesses to sustain their business
operations and promote investments that increase
productivity, high value-added activities and greater
application of green technology. Public Bank approved
total loans of RM192.1 million and RM9.8 million under the
WCGS and IRFGS respectively.
Public Bank’s Bumiputra Business Development Department
has been supporting Bumiputra entrepreneurs by increasing
business development activities with Bumiputra SMEs and
micro enterprises. Besides conducting market studies on
targeted Bumiputra segments to identify their financing needs,
Public Bank offers competitive loan products, including those
which leverage on CGC schemes such as the new “Credit
Enhancer Scheme”, the revised “Small Entrepreneur Guarantee
Scheme”, the revised “Flexi Guarantee Scheme” and BNM
funding schemes such as the “New Entrepreneur Fund 2” and
the “Fund for Small and Medium Industries 2”.
In 2009, Public Bank participated in trade exhibitions such as
the Small and Medium Industry Development Expo (“SMIDEX”)
2009, financing fairs and dialogues with business enterprises
organised by BNM jointly with the Association of Banks in
Malaysia in various states, as well as seminars organised by
numerous bodies such as the Malaysia External Trade
Development Corporation, the SMI Association of Malaysia, the
National SMI Consultative Centre and the Federation of
Malaysian Manufacturers. The purpose of participation in these
activities is to establish and build business relationships with
SMEs and to obtain a better understanding of the operations
and financing requirements of these SMEs.
Public Bank’s website, www.pbebank.com also caters to SMEs
by providing SMEs with information on banking products and
services, financing facilities, loan packages and other banking
services. SMEs are also able to submit their enquiries online or
seek an appointment with the sales and marketing personnel
of the Bank.
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
148 Chairman’s Review
Wealth Management

Customer Deposits
In 2009, financial institutions faced several key challenges in
attracting customer deposits due to the low interest rate
environment, alternative higher-yielding investment products
offered by government institutions as well as a plethora of
capital-guaranteed structured investment products available in
the market.
Notwithstanding these challenges, the Public Bank Group’s
deposit growth was strong, in particular the growth of its core
customer deposits comprising demand deposits, savings
deposits and fixed deposits. The Public Bank Group’s core
customer deposits grew by 14.8% to RM127.62 billion as at
the end of 2009 as compared to the Malaysian banking
industry’s annualised growth rate of 6.9% as at the end of
November 2009. Public Bank’s core customer deposits market
share rose to 15.1% as at the end of November 2009, while
its share of the stable and low-cost savings deposit market
was higher, standing at 19.3%.
The Public Bank Group’s demand deposits increased by
20.5% whilst savings deposits and fixed deposits increased by
20.1% and 12.3% respectively. The Malaysian banking
industry’s annualised growth rate of these deposits were
12.3%, 8.7% and 4.7% respectively. During the year, a total of
767,446 new deposit accounts were opened, representing a
12.2% growth of the Group’s deposit customer base. Public
Bank’s wholesale deposits, in the form of money market
deposits and the issuance of negotiable instruments of deposit
to mostly corporate and institutional depositors, grew by
RM3.37 billion or 8.7% in 2009.
The continued strong growth of the Public Bank Group’s
deposit-taking business is due to its strong financial standing
and reputation, as well as its excellent customer service and
strong customer relationship management.
From April to September 2009, Public Bank enhanced the
competitiveness of its Foreign Currency Current Account (“FCY
CA”) and Foreign Currency Fixed Deposit Account (“FCY FD”)
in several ways, such as removing the minimum account
balance requirement of the FCY CA, offering daily interest for
selected FCY CA denominated in USD, GBP, AUD, EUR, HKD
and NZD and adding Canadian Dollar fixed deposits to its
offerings of FCY FD. In September 2009, Public Bank launched
the ‘PB FCY FD Power Invest Campaign’ to further drive the
growth of FCY FD deposits and to supplement the existing PB
FCY FD Campaign. The campaign, which promoted the benefits
of dollar cost averaging principle to customers, offered an
additional interest of up to 9% p.a. to customers who made
4 equal monthly placements consecutively over 4 months. This
campaign was well-received by customers, achieving a growth
in FCY FD deposits of RM43.6 million in 2009. Public Bank’s
FCY FD and FCY CA grew by 33.9% and 27.5% respectively
in 2009 to RM3,506.6 million and RM597.9 million respectively.
In January 2010, Public Bank launched the Chinese Renminbi
(“RMB”) Fixed Deposits and RMB Current Account to provide
more currency options for customers of Public Bank’s foreign
currency deposit accounts services. With the People’s Republic
of China’s move to liberalise the use of the Chinese Yuan in
the international market, Public Bank expects good response
for these products.
The Public Bank Group’s customer deposits in Hong Kong
recorded an increase of 17.2% or HKD4.30 billion in 2009 to
HKD29.36 billion as at the end of 2009. In Cambodia,
Cambodian Public Bank Plc increased its customer deposits in
2009 by 64.3% to USD612.9 million as at the end of 2009.

Public Bank launched a new children’s savings account known

as the PB Bright Star Savings Account (“PB Bright Star”) in
May 2009, with its main feature being the Star Achiever
Programme. The Star Achiever Programme is an annual reward
programme which encourages children to excel academically
by offering up to 710 prizes based on academic achievements.
The PB Bright Star also offers parents a convenient way of
making regular savings for their children as well as monitoring
their children’s spending habits. More than 30,000 new
accounts with balances of RM47.9 million were captured under
the PB Bright Star Savings Account in 2009.
 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
Chairman’s Review 149

Fund Management
At a glance
2009 2008 Increase
Public Mutual Berhad RM’million RM’million %
Operating revenue* 420.0 372.8 12.7
Profit before tax 218.9 183.3 19.4
Total assets 482.6 437.7 10.3
Shareholders’ funds 73.9 48.6 52.1
* After offsetting direct sales commission and including interest income of RM2.9 million received
and receivable from the Public Bank Group (RM4.9 million in 2008).

Net asset value Units in circulation

40 42.5 45
40.0 39.0 100
35 40
33.5 35
30 NAV - 80
27.6 30 Conventional
25
13.8

25 60
9.3

20
billion

20
Percentage
8.8
RM’billion

NAV -
15 40
4.2

15 Islamic
2.8

10 10
20
5 5 Market share
23.6

32.7

68.7

82.1

97.4
12.0

19.1

14.6

21.8
9.3

– Overall
0 0 0
’05 ’06 ’07 ’08 ’09 ’05 ’06 ’07 ’08 ’09
Year Year

Number of funds Number of account holders

80 2.5
70
2.0
60
50 1.5
million

40
30 1.0

20
0.5
10
0.7

0.9

1.7

2.1

2.3
26

34

55

67

72

0 0
’05 ’06 ’07 ’08 ’09 ’05 ’06 ’07 ’08 ’09
Year Year
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
150 Chairman’s Review

While the first quarter of 2009 was regional equity funds in 2009 further boosted Public Mutual’s market share of foreign
challenging due to the contagion impact fund assets to 55.6%, while the performance and robust sales of its Islamic unit trust
of the financial crisis in the United States funds contributed towards raising Public Mutual’s market share of Islamic fund
of America and Europe, the global assets to a high of 55.6%.
economy began to stabilise from the
second quarter of 2009 onwards following In 2009, Public Mutual launched a total of 5 new unit trust funds comprising 3 equity
concerted measures by various funds, 1 balanced fund and a bond fund as set out below:
governments, including Malaysia, to
implement expansionary fiscal and Fund Category/ Approved Fund
monetary policies. The private unit trust Type/ Size
industry in Malaysia turned around in Geographical Date of Units RM
2009, registering a growth of 39.9% in No. Fund Name Coverage Launch (million) (million)
total assets under management (“AUM”)
1 Public Select Equity/Capital
in 2009 from a contraction of 15.7% in
Alpha-30 Fund Growth/Local 7 April 2009 1,500 375
2008.
2 PB Australia Balanced/Income
By comparison, Public Mutual’s AUM Dynamic & Capital
registered an exceptional growth of Balanced Fund Growth/Regional 12 May 2009 1,500 375
52.6% to a record RM35.58 billion as at 3 Public Natural
the end of 2009, far ahead of the 39.9% Resources Equity/Capital 30 June
growth rate in AUM registered by the Equity Fund Growth/Regional 2009 1,500 375
Malaysia private unit trust industry over 4 Public Australia Equity/Capital 8 September
the same period. Driven by the strong Equity Fund Growth/Regional 2009 1,500 375
performances of its funds and sale of
5 PBB MTN Bond/Income/ 10 November
existing and new unit trust funds, Public
Fund 1 Local 2009 200 200
Mutual accounted for 51.4% of the
private unit trust industry’s total increase
in AUM of RM23.86 billion. This resulted Following the new fund launches, the number of unit trust funds managed by Public
in Public Mutual’s AUM surpassing its Mutual rose to 72 funds consisting of 52 equity and balanced funds, 11 bond funds,
previous high of RM28.4 billion achieved 6 money market funds and 3 capital protected funds.
in May 2008.
In terms of fund performance, conventional domestic equity funds managed by
Public Mutual’s market leadership of the Public Mutual registered robust returns with total returns ranging between 38.7%
private unit trust industry further and 54.2% for the year. In comparison, the FTSE Bursa Malaysia Kuala Lumpur
strengthened in 2009 with its overall Composite Index (“FBM KLCI”) registered an increase of 45.2% over the same
market share rising significantly to 42.5% period. The funds under this category which outperformed the FBM KLCI comprised
in 2009 when compared to 39.0% as at the Public Equity Fund, the Public Growth Fund, the Public Index Fund, the Public
the end of 2008. Public Mutual also Aggressive Growth Fund, the Public Regular Savings Fund, the Public Sector Select
expanded its market share in the key Fund and the PB Growth Fund which registered returns ranging from 45.7% to
fund sector of equity assets to 57.5%. 54.2%.
The strong fund performance of its
 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
Chairman’s Review 151

The domestic Islamic funds managed by Public Mutual registered returns ranging
from 30.7% to 53.1% for 2009 while the benchmark FTSE Bursa Malaysia EMAS
Shariah Index registered an increase of 43.0% over the same period. Public
Mutual’s Asia Pacific equity funds generally outperformed their respective
benchmarks with buoyant returns between 43.1% and 98.5% following the
strong rebound in regional stock markets during the year. The Public Far-East
Property & Resorts Fund registered a strong return of 98.5%, while the PB China
ASEAN Equity Fund and the Public Far-East Consumer Themes Fund chalked up
a gain of 76.6% and 69.7% respectively for the year.
The low interest rate environment and high domestic liquidity helped to support
domestic bond prices in 2009. Consequently, all of Public Mutual’s bond funds
outperformed their respective benchmarks with returns ranging from 6.3% to
11.1% for the year.
The Public Islamic Bond Fund was named
the “Best Malaysian Islamic Bond Fund” for
the 5-year category at the Annual Failaka
Islamic Fund Awards  2008 for its consistently
outstanding performance in the Islamic fund
management industry. Public Mutual also
received the “Most Outstanding Islamic Fund
Manager” Award at the Kuala Lumpur Islamic
Finance Forum (“KLIFF”) Islamic Finance
Awards 2009 in recognition of its consistently
outstanding performance in the Islamic fund
management industry. Public Mutual had won
the highly coveted KLIFF Islamic Finance
Award for the third consecutive year.

For the sixth consecutive year, Public Mutual maintained its premier position as
the most awarded private unit trust company in Malaysia by winning a total of
17 awards for 2008, of which 8 awards were for fund performance. Public Mutual
received 7 The Edge-Lipper Malaysia Fund Awards, including the prestigious
Best Overall Fund Group Award and was the winner of the Malaysian Ringgit
Islamic Bond category at the Morningstar 2008 Fund Awards (Malaysia). The fund
performance awards won by Public Mutual were in various key fund categories
and for various performance periods, attesting to Public Mutual’s expertise in
both conventional and Islamic fund management and for investment performances
over the medium to long-term horizon.
Total
FUND PERFORMANCE AWARDS
Awards
The Edge Lipper Malaysia Fund Awards 2009
Category
3 Year
Other notable accolades received by Public
Mutual for 2009 were the “Best Fund House”
and “Best House for Offshore Funds” at the
2008 Asia Asset Management Best of the
Best Country Awards. In addition, Public
Mutual also won the AsianInvestor 2009
Investment Performance Award for the “Best
Malaysian Onshore Fund House” award for
the second successive year.
Public Mutual continued to receive recognition
as the most trusted and favourite brand in
the Reader’s Digest annual survey, winning
the Reader’s Digest Trusted Brands 2009
Gold Award for the Investment Fund Company
category in Malaysia for the fourth consecutive

1) Best Overall Fund Group year. Public Mutual was again honoured with
the BrandLaureate Award for brand excellence
in the Financial Services – Unit Trust Category
1) Equity Malaysia: PB Growth Fund for the third consecutive year at The
BrandLaureate Awards 2008-2009. Public
Category

2) Equity Malaysia Small & Mid Cap: Public SmallCap Fund

5 Year

3) Mixed Asset MYR Balanced: PB Balanced Fund 7 Mutual’s outstanding achievements were
4) Bond Malaysian Ringgit-Islamic: Public Islamic Bond further validated when it won the 8th Asia
Fund Pacific International Entrepreneur Excellence
Award 2009 for the category of Excellence
Category

Product and the Malaysia Independence

10 Year

1) Mixed Asset MYR Balanced: PB Balanced Fund

Award 1957 for Grand Company for the
2) Bond Malaysian Ringgit: Public Bond Fund
Corporate category.

Morningstar 2008 Fund Awards (Malaysia)

1) Malaysian Ringgit Islamic Bond: Public Islamic Bond Fund 1
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
152 Chairman’s Review
2009 was also significant for Public Mutual in terms of online
service delivery. The Public Mutual Online e-commerce portal
morphed into a full-fledged transactions and customer service
platform with the availability of online switching and repurchase
facilities to investors as part of Public Mutual’s e-commerce
service. These services were in addition to the existing Public
Mutual Online facilities such as initial and additional investments,
balance enquiries, E-Statements and E-Reports and personal
profile maintenance.
The number of high net worth customers of Public Mutual,
namely Mutual Gold Elite and Mutual Gold Members, continued
to grow in 2009. Mutual Gold members increased by 13.5%
whilst Mutual Gold Elite Members increased at an even higher
rate of 22.8% during the year. New benefits to Mutual Gold
members in the form of free trust nominations worth RM450
and free will writing services worth RM500, were provided as
part of on-going customer service enhancements for 2009.
Several initiatives were launched in 2009 to support Public
Mutual’s ongoing focus on improving the productivity,
knowledge and quality of its 42,000 unit trust consultants
(“UTCs”). Key among these were the Unit Trust Investment
Planning Practice Series (“UTIPPS”) and the Enhanced
Productivity Programme (“EN-PRO”). UTIPPS involves the
practice of process-based selling that is centred on utilising
enhanced knowledge of the unit trust investment planning
process to create and customise unit trust investment portfolios
to meet clients’ goals. EN-PRO, on the other hand, aims at
inculcating positive work approaches and greater professionalism
among UTCs which will help raise client service standards as
well as boost sales productivity. The Wills and Wasiat Writing
services were introduced in early 2009 as part of the
enhancement of value-added financial planning services for
investors. To-date, over 3,000 UTCs had been trained by
Public Mutual to provide will writing services to their clients.
To maintain its “top of mind recall” position among investors
during these challenging times, Public Mutual intensified its
efforts at projecting itself as a strong, stable and progressive
unit trust company through advertising initiatives in 2009.
These included the placement of corporate advertisement
billboards and similar theme advertisements that were placed
with major local newspapers and magazines. In 2009, a total
of 10 billboards featuring the re-imaged Public Mutual Corporate
No.1 advertisement were put up at strategic locations in Kuala
Lumpur, Petaling Jaya, Klang, Ipoh, Kota Bharu, Melaka,
Penang and Alor Setar to promote investor consciousness and
heighten their awareness of Public Mutual’s strong value
proposition as the No. 1 unit trust company in Malaysia.
Bancassurance
2009 marks the 2nd year of the 10-year exclusive distribution
agreement between the Public Bank Group and the ING
Group. The PB-ING partnership is considered the fastest
growing bancassurance provider in the industry, moving up to
the 2nd position in 2009 from 7th place in 2008 based on the
volume of new business. The Group’s bancassurance products
cover a wide array of regular premium unit-linked insurance,
credit-related insurance, single premium capital guaranteed
unit-linked and telemarketing product offerings.
In Malaysia, a total of 20 products have been launched since
the inception of the PB-ING bancassurance partnership on
1 January 2008. The core bancassurance product known as
One Solution Plan (“OSP”) is a whole-life regular premium unit-
linked product that comprises a series of 7 packages. The One
Protect, One Care, One Health and One Educate packages
were launched in 2008, while 3 new packages were added to
the series in April 2009, namely, One Lady, One Lady Premier
and One Health Junior. All these pre-packaged insurance plans
are designed for different target market segments and,
depending on the choice of packages, the insurance benefits
cover death and total and permanent disability (“TPD”), critical
illness, hospitalization, illnesses affecting ladies and a savings
fund for children’s education. For the investment component,
part of the allocated premium will be invested. In October
2009, the features of the OSP were upgraded to allow for
flexibility to increase the investment component to meet the
needs of high net worth customers under the Smartsell
programme. The OSP increased 7 fold year-on-year since the
product was introduced in May 2008 and this trend is set to
continue with more products in the pipeline.

To offer a broader range of credit related insurance products
to commercial loan customers, Public Bank started offering the
Flexi-Business Loan Decreasing Term Assurance (“FBLDTA”)
and Flexi-Business Loan Overdraft Level Term Assurance
(“FBLOLTA”) in March 2009. These two products are an
extension of the single premium commercial credit life insurance
and offer customers an alternative to purchase credit life
protection by paying yearly premiums instead of making a
lump sum single premium payment upfront, thus easing their
cash flows.
In July 2009, Public Bank launched a single premium capital
guaranteed unit-linked insurance product called the PB-ING
Asian Jewels Plan, a 5-year plan denominated in Australian
Dollars that provides not only protection against death and/or
TPD but also a fixed annual coupon and potential gain from
investing in several Asian equity markets. It successfully
generated RM204.8 million of investments.
The bancassurance business was supported by a dedicated
sales force of 265 Bancassurance Sales Executives (“BSEs”)
as at 31 December 2009, and this number is set to grow to
600 by 2014. The BSEs are trained and licensed under the Life
Insurance Association of Malaysia to sell insurance products,
and undergo intensive training via “FASTRAC Selling” and
“Sales Clinic” programmes to equip them with strong product
knowledge and selling skills.
Road shows were conducted at branches which included fun-
filled activities for children such as colouring contests and
story telling sessions as part of the cross-selling activities for
fee-based products and the PB-ING Co-brand Master credit
and debit cards. F1 themed activities and campaigns such as
simulator racing, games and lifestyle surveys sponsored by
ING were carried out at shopping malls to generate sales
leads. There were other marketing campaigns such as the “42”
PHILIPS LCD TV” gift campaign for lucky consumer loan
customers who have taken Mortgage Decreasing Term
Assurance (“MDTA”) or Overdraft Level Term Assurance
(“OLTA”).
With the launch of Family Care PA, a general insurance
telemarketing plan in 2009, Public Bank was distributing 3
telemarketing products as at the end of 2009.
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
Chairman’s Review 153
From the full range of bancassurance products distributed by
Public Bank in Malaysia, a total of RM433.1 million of sales
premium was generated in 2009 with an annualised premium
equivalent of RM65.7 million.
In Hong Kong, there are 20 bancassurance products covering
endowment annuity plans, mortgage life plans, term life plans
and medical plans being distributed by Public Bank (Hong
Kong) Limited through 187 Customer Service Officers. Insurance
sales are mostly contributed by the enhanced i.Ulife which is
a traditional life insurance product, due to the tightening of
controls by the Hong Kong Monetary Authority on investment-
related products. Public Finance Limited’s focus is on
distributing medical plans under the refundable hospital income
and endowment plan to its target segment of low- to middle-
income customers through its 121 Customer Service Officers.
As at 31 December 2009, the sales premium and annualised
premium equivalent in Hong Kong were HKD70.2 million and
HKD20.9 million respectively.
Structured Investment Products
The weak global investment sentiment adversely affected
demand for structured investment products in 2009. In addition,
the reduction of the Overnight Policy Rate by BNM from
3.50% to 1.00% had made it challenging to provide capital
protection and attractive upside.
Given these challenging conditions, Public Bank developed
and launched 3 structured investment products with simple
and straight forward investment themes in 2009 to cater for
customers with different investment preferences. Despite the
cautious investment sentiment which prevailed in 2009, Public
Bank was able to garner a total RM220.0 million in sales of
structured investment products. The good response reflects
the strength of the Public Bank Group’s base of high net worth
customers.
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
154 Chairman’s Review

The structured investment products launched in 2009 were all
100% capital protected in Ringgit if held till maturity in order
to preserve customers’ wealth, and have short- to medium-
term maturities ranging from 3 years 9 months to 5 years. The
structured investment products provided diversification to
customers’ investment portfolio by offering different underlying
assets including an equity index, and international mutual
funds which provided customers the investment access into
global bond, Asian equity and emerging equity markets. All 3
structured investment products launched in 2009 were offered
via Floating Rate Negotiable Instruments of Deposit (“FRNID”).
In May 2009, Public Bank launched the PB USA Recovery, a
5-year investment product that aims to provide potential
returns linked to the performance of the recovery of the USA
equity market.
The PB Templeton Global Asian Focus and the PB Templeton
BRIC provided investors access to investments that are not
otherwise available in Malaysia. In addition the funds are
actively managed by the fund manager to enhance returns.
Public Bank will continue to focus on structured investment
products that have simple investment themes and offer
reasonable rewards without taking undue risk for customers. In
addition, Public Bank’s well-trained sales personnel will
continuously engage with customers, and update them on the
performance of the investment products to strengthen
relationships with customers.

The PB Templeton Global Asian Focus has a 5-year tenure

that allowed customers to participate in the upside of the
Asian equity markets and regular returns from the global bond
market as the underlying assets are two internationally
renowned mutual funds i.e. the Templeton Global Bond Fund
and the Templeton Asian Growth Fund.

The PB Templeton BRIC was Public Bank’s third structural

investment product in 2009, with a tenure of 3 years 9 months
and enabled customers to participate in the growth of the
emerging countries of Brazil, Russia, India and China. PB
Templeton BRIC has an annual payout feature when the
reference underlying asset appreciates above the defined strike
level, where the reference underlying asset is linked to the
Templeton BRIC Fund that is managed by Franklin Templeton
Investment.

transactional services
REMITTANCES
The Public Bank Group continues to expand the scope and
scale of its remittances business through its domestic branch
network of 248 Public Bank branches, as well as the Group’s
branches in Hong Kong, Sri Lanka, Laos, Cambodia and
Vietnam. Public Bank’s remittance business increased by
20.5% in 2009 as compared to 2008.
Public Bank also partnered with key nostro agent banks in
various countries throughout the world to strengthen its reach
in the delivery of innovative remittance products. In one such
partnership, Public Bank provides students who are furthering
their studies overseas with pre-account opening arrangements
with financial institutions in their destination country. The
provision of such convenience is expected to encourage
students and their parents to make use of Public Bank’s
remittance services.
Public Bank had in August 2008 partnered with the Western
Union Company to launch the Public Bank – Western Union
Money Transfer Service, mainly targeted at the foreign workers
remittance market. In 2009, Public Bank strengthened its
market share of Western Union Money Transfer Service to
7.0%. To further enhance its customer service delivery, Public
Bank added Western Union Services into its e-banking portal,
PBeBank.com, in September 2009.
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
Chairman’s Review 155
Cash and Channel Management Services
In Malaysia, the number of Public Bank ATMs increased to 426
in-branch ATMs and 33 off-branch ATMs while Cheque Deposit
Machines and Cash Deposit Terminals increased to 442 and
407 units respectively.
Public Bank will roll out new Information Kiosks at all its
branches so as to provide more modern banking convenience
to the Bank’s customers in a phased approach. The Information
Kiosk not only provides information on banking products and
facilitates rates inquiry but also enables customers to perform
internet banking enquiries and transactions. Currently, there are
142 Information Kiosks at branches.
The Public Bank Group’s cash management services has seen
a 24.8% growth in the number of payee corporations to 302
as at the end of 2009, with 60 new payee corporations added
during 2009. Public Bank continues to focus on increasing new
customers from the Government sectors as well as corporate
bodies to utilise its multiple diversified channels.
The Public Bank Group’s electronic credit payment (“ECP”)
service grew by 57.0% as compared to 2008. ECP is a web-
based fund disbursement service that enables the Group’s
corporate customers to make payments electronically.
The PB Mobile Banking channel offers customers the freedom
of “bank anywhere” capabilities. Services like account inquiry,
funds transfer, payments, investment top-ups, and stop cheque
instructions can all be performed by just using a mobile
phone.
PBeBank.com, Public Bank’s internet banking channel,
continues to see growth in its transactions and new registered
users with an increase of 30.8% and 25.8% respectively in
2009. The integration of Public Bank’s online payment
infrastructure into Western Union’s global money transfer
network in 2009 allows for real time cross-border money
transfer services online.
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
156 Chairman’s Review
Capital Market Operations

Treasury Domestic Corporate Lending

Whilst the global economic outlook in 2009 has improved At a glance
significantly since the onset of the financial crisis in 2008,
financial markets still experienced intermittent bouts of financial 2009 2008 Growth
upheaval. Under such circumstances, one of the main objectives (%)
of the Public Bank Group was to build up its base of customer Segment profit
deposits which are more stable than funds sourced from the (RM’mil) 239.7 106.8 124.4
inter-bank market, which can be fleeting in times of stress. In Gross loans,
this regard, the Group intensified its marketing efforts to advances and
increase its market share of customer deposits. As a result of financing (RM’bil) 15.99 12.16 31.5
these stepped up marketing efforts, the Group’s total customer
Net NPL ratio (%) 0.1 0.1 —
deposits, including the issuance of negotiable instruments
of deposit and money market deposits stood at
The Public Bank Group’s corporate lending portfolio grew by
RM170.89 billion on 31 December 2009, or an increase of
31.5% from RM12.16 billion as at the end of 2008 to stand at
13.0% from 31 December 2008.
RM15.99 billion as at the end of 2009, mainly supported by
strong demand for loans in the property, finance and agriculture
Another major treasury activity of the Public Bank Group is the
sectors. The healthy growth in corporate lending was spurred
trading of Ringgit denominated securities in the domestic bond
by dwindling interest in the capital markets as customers
market through the treasury operations of Public Bank and
remained cautious in view of the global financial crisis, preferring
Public Investment Bank. As a Principal Dealer, Public Bank
commercial loans to meet their financing needs.
provides market liquidity for securities specified by BNM,
consisting of twelve conventional RENTAS securities and six
Notwithstanding the strong growth of the Public Bank Group’s
Islamic RENTAS securities. Public Bank’s transactions in these
corporate lending portfolio, the net NPL continued to improve
specified securities accounted for 4.6% of the total volume
from 0.13% as at the end of 2008 to 0.08% as at the end of
traded in the secondary market for 2009. Meanwhile, the
2009. This is attributed to the Group’s stringent credit policy
treasury offices of Public Bank, Public Bank (Hong Kong)
and preventive as well as proactive actions taken to continuously
Limited and Public Bank (L) Ltd. continued to hold portfolios
review and restructure problematic loans.
of foreign currency denominated bonds, mainly in USD, for
their investment books.
Fee and commission income from corporate lending activities
grew by 8.7% to RM36.9 million in 2009 mainly due to active
The Public Bank Group continued to focus on the sale and
participation by Public Bank in the private debt securities
distribution of foreign exchange related services to the retail
market. As a result of the Group’s strong growth in corporate
and corporate customers of Public Bank to generate foreign
loans, strong asset quality coupled with the easing of the
exchange income. Proprietary trading in foreign exchange,
margin squeeze due to decline in funding costs, profit before
confined to prudent limits, are carried out by the treasury
tax of the Group’s corporate lending operations grew 124.4%
operations of Public Bank and Public Bank (Hong Kong)
to RM239.7 million in 2009.
Limited. Volatility in financial markets also presented arbitrage
opportunities for treasury traders and Public Bank was able to
generate low risk returns by arbitraging between the swap and
money markets whenever these opportunities arose.

In 2009, Public Bank rolled-out an electronic foreign exchange

trading platform to its branches. The Branch Electronic Treasury
System provides branches with real-time foreign exchange
rates and allows for greater automation of processes between
Public Bank’s treasury dealing room and its branches, thereby
enhancing the management of operational risks which are
inherent in such foreign exchange transactions.
 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
Chairman’s Review 157

INVESTMENT BANKING Public Investment Bank maintained its

At a glance market share of the share broking
business by focusing on its retail business
Increase/ and leveraging on the Public Bank
(Decrease) Group’s large branch network and retail
Public Investment Bank Berhad 2009 2008 % customer base, as well as developing its
institutional client base. Through
Operating revenue (RM’mil) 230.0 256.5 (10.3) enhancements made in its internet share
Profit before tax (RM’mil) 40.4 33.3 21.3 trading services which provides an
alternative and efficient channel to carry
Total assets (RM’mil) 7,851.8 5,748.6 36.6 out share trading activities, Public
Investment Bank now offers its share
Shareholders’ funds (RM’mil) 261.9 234.5 11.7
broking customers access to the Hong
Capital adequacy ratio (%) 20.1 20.9 (0.8) Kong and Singapore stock markets.

Public Investment Bank provides a wide range of services from corporate advisory Despite the challenging operating
services, placements and underwriting of public securities to private debt securities, environment, Public Investment Bank
share broking and provision of financial solutions to corporate clients. managed to improve its profit before tax
by 21.3% to RM40.4 million in 2009,
In 2009, Public Investment Bank successfully completed 39 corporate exercise mainly attributed to growth in its share
mandates, including initial public offerings, corporate restructuring exercises, general broking and treasury operations.
offers and merger and acquisition exercises. Public Investment Bank was one of
three Asian investment banks awarded the Top Global Investment Bank for Asia at
the 3rd Annual Asian Mergers & Acquisition Conference, organised by the Pinnacle
Group. Public Investment Bank, through its debt capital market team had also
managed to generate funding amounting to RM9.50 billion for its clients. This
included the successful completion of two debt capital market transactions involving
a non-innovative Tier I stapled securities programme of up to RM5.0 billion and a
joint book-building exercise for an Islamic Medium Term Note Programme of
RM4.5 billion and an Islamic Commercial Paper/Islamic Medium Term Note
Programme of RM500 million.
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
158 Chairman’s Review
Islamic Banking

Islamic Banking Total Islamic deposits from customers

2009 marked Public Islamic Bank Berhad’s (“Public Islamic”)
14,000
first full year of operations as a separate entity, having
commenced operations as a full-fledged Islamic bank on 12,000

1 November 2008. Public Islamic reflects the Public Bank 10,000

RM’ million
Group’s strong commitment to expand its Islamic banking 8,000
business which had previously been operating under the
6,000
window concept since 1993. Total assets of Public Islamic
stands at RM22.86 billion as at the end of 2009, making Public 4,000

13,074
Islamic the 4th largest Islamic bank in Malaysia.

4,340

5,741

8,161

9,622
2,000

0
As a wholly-owned subsidiary of Public Bank, Public Islamic
'05 '06 '07 '08 '09
continues to share its parent bank’s infrastructure and ICT
Year
platform and is able to leverage on Public Bank’s strong
reputation for prudent management, top ranking in corporate
governance, excellent service delivery, extensive branch
network and the strong PB brand. The Public Bank Group’s Islamic banking business registered
healthy growth in 2009 as evidenced by the growth of its
Islamic assets, financing and customer deposits. In 2009, total
Total gross Islamic financing
Islamic assets grew by 37.6% to RM22.86 billion from
16,000
RM16.61 billion as at the end of 2008. Public Islamic turned in
a profit before tax and zakat of RM468.9 million for 2009, up
14,000
37.3% as compared to RM341.4 million in 2008. With its lean
12,000
cost structure and healthy asset quality, Public Islamic achieved
RM’ million

10,000 pre-tax return on assets of 2.4% in 2009.

8,000
6,000 The Public Bank Group’s total gross Islamic financing expanded
4,000 from RM12.24 billion as at the end of 2008 to RM14.72 billion
10,594

12,238

14,717

as at the end of 2009, an increase of RM2.48 billion or 20.3%.

7,351

9,187

2,000
Islamic financing constitutes 10.7% of the Group’s total loans,
0
advances and financing. Vehicle financing remained at the core
'05 '06 '07 '08 '09
of Public Islamic’s financing portfolio, representing 56.8% of its
Year
financing base as at the end of 2009. However, the highest
rate of growth in 2009 came from BAE Personal Financing-i
Profit before tax and zakat which expanded by 51.9% and contributed to 33.9% of Public
Islamic’s total financing growth. Public Islamic’s market share
500 of Islamic financing stood at 10.8% as at the end of November
2009.
400
RM’ million

Public Islamic’s asset quality remained healthy in 2009. Its net

300
non-performing financing (“NPF”) ratio of 0.8% as at the end
200 of 2009 was an improvement from 1.0% as at the end of 2008,
and was significantly lower than the industry ratio of 2.6% as
100 at the end of November 2009.
293

300

330

341

469

0
'05 '06 '07 '08 '09
Year

Public Islamic’s customer deposits increased by 35.9% or
RM3.45 billion from RM9.62 billion as at the end of 2008 to
RM13.07 billion as at the end of 2009, and accounted for
7.6% of the Public Bank Group’s total customer deposits. Low
cost Wadiah Savings Account-i and Wadiah Current Account-i
constituted 42.8% of Public Islamic’s customer deposits.
Public Islamic’s capital remained healthy as reflected by its
risk-weighted capital ratio and core capital ratio of 13.4% and
11.6% respectively.
Public Islamic continues to enhance staff competencies through
structured in-house training and external courses. Currently, 11
staff are sponsored to pursue the Chartered Islamic Finance
Professional programme conducted by the International Centre
for Education in Islamic Finance. Public Islamic, jointly with the
International Islamic University of Malaysia, had during the year
structured a tailor-made certification programme in Islamic
Law. A total of 57 staff from Public Islamic and Public Bank
obtained certification under this programme.
In October 2009, Rating Agency Malaysia reaffirmed Public
Islamic’s long- and short-term financial institution ratings at
AAA and P1 respectively. The reaffirmation of the ratings
reflects Public Islamic’s highly integrated operating model with
its parent, Public Bank, its healthy retail-denominated
receivables profile and strong capital base that is supportive of
future asset expansion.
Public Islamic will continue to focus on growing Islamic
financing by expanding its core business of retail-based
financing such as Al-Ijarah Thamma Al-Bai’ Hire Purchase-i,
Al-Bai’ Bithaman Ajil House Financing-i and Bai’-Al-Einah
Personal Financing-i. Recruitment of more marketing executives
will continue in order to optimise Public Islamic’s marketing
reach.
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
Chairman’s Review 159
Moving forward, Public Islamic plans to set up an International
Business Currency Unit in 2010 to facilitate expansion of
Islamic banking products and services in foreign currencies. To
further enhance its visibility and presence, Public Islamic plans
to set up its first Islamic banking branch in 2010.
R ole a n d A ut h ority of t h e S h aria h
Committee
The Shariah Committee’s (“SC”) main duty and responsibility is
to oversee Public Islamic’s activities and operations, investments
and product development to ensure compliance with Shariah
principles. Public Islamic works closely with its SC through
regular meetings and timely consultations.
The roles of the SC in the activities of Public Islamic
include:-
k Advising the Board of Directors of Public Islamic on Shariah
matters in its business operations
k Endorsing Shariah compliance manuals which specify the
manner in which a submission or request for advice is to
be made to the SC, the conduct of meetings of the SC and
the manner of compliance with any Shariah decision
k Endorsing Public Islamic’s products and services and
validating relevant Islamic banking documentation to comply
with Shariah principles
k Assisting relevant parties such as legal advisors, auditors
or consultants that require advice on Shariah matters
k Advising on matters to be referred to the Shariah Advisory
Council of Bank Negara Malaysia
k Providing written Shariah opinions on operational matters
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
160 Chairman’s Review
In compliance with BNM’s Guidelines on the Governance of
Shariah Committee for Islamic Financial Institutions (BNM/
GPS1), the following Shariah scholars were appointed to Public
Islamic’s Shariah Committee:
The Shariah Committee members and details of attendance
of each member at Committee meetings held during 2009
Number of
Composition of Shariah Committee Meetings
Committee Held Attended
Professor Dato’ Dr. Mahmood
Zuhdi Bin Haji Ab Majid 9 9
Associate Professor Mohd
Ridzuan Bin Awang 9 9
Assistant Professor Dr. Mohd
Afandi Bin Awang Hamat 9 9
Compliance with Shariah principles is an integral feature in
Islamic banking and finance. In line with BNM guidelines,
Public Islamic has put in place a Shariah Compliance Framework
that provides the guiding principle in Shariah compliance in the
conduct of Public Islamic’s transactions and business
operations.
Profile of Group Shariah Committee
Members
Professor Dato’ Dr. Mahmood Zuhdi Bin Haji Ab Majid
Professor Dato’ Dr. Mahmood Zuhdi Bin Haji Ab Majid, aged
63, has been the Chairman of the Public Bank Group’s Shariah
Committee since 1 April 2005.
He holds a Masters Degree in Shariah from Al-Azhar University,
Cairo, a Masters Degree in Philosophy from Kent University in
the United Kingdom and a Doctorate from University of Malaya.
He is currently the Deputy Director at the International Institute
of Islamic Thought and Civilization. Previously, he had served
as a Senior Fellow at the Department of Fiqh and Usul Fiqh of
the International Islamic University Malaysia. He spent more
than 20 years at University of Malaya as the Dean of its
Shariah Faculty and later as a Director of the Islamic Studies
Academy. He is a regular speaker and writer on Islamic Fiqh.
He also serves on other Shariah supervisory boards, including
the Majlis Fatwa Negeri Kelantan. In previous years, he had
been involved in various capacities relating to Islamic studies
in several government bodies and Islamic colleges.
Associate Professor Mohd Ridzuan Bin Awang
Associate Professor Mohd Ridzuan Bin Awang, aged 59, was
appointed a member of the Public Bank Group’s Shariah
Committee on 1 April 2005.
He has a degree in Islamic Studies from Universiti Kebangsaan
Malaysia (“UKM”) and a Masters Degree in Comparative Law
from University of Malaya. His core specialisation is in Faraid
and he is a frequent contributor to academic journals and
books in this field.
He is currently attached with the Shariah Department, Faculty
of Islamic Studies at UKM. He is also the Chief Editor of
Al-Shariah journal and is an editor for the Malayan Law News.
In addition, he is involved with the Malaysian Examination
Council as the Chief Examiner for a Shariah paper. Previously,
he had served as a member of the Shariah Panel of the
Securities Commission.
Assistant Professor Dr. Mohd Afandi Bin Awang Hamat
Assistant Professor Dr. Mohd Afandi Bin Awang Hamat, aged
39, was appointed a member of the Public Bank Group’s
Shariah Committee on 1 April 2005.
He holds a Doctorate in Fiqh and Usul Fiqh from the
International Islamic University Malaysia (“IIUM”) and specialises
in Muamalat. He is currently the Head Academic Advisor at
Fiqh and Usul Fiqh Department at IIUM. He has conducted
various research projects in the field of Usul Fiqh and published
several academic papers.
Zakat Obligations
For its 2008 operations, Public Islamic paid a higher zakat of
RM190,000 as compared to RM175,000 in respect of its 2007
operations. The zakat was paid to eight zakat collection
centres and three orphanage homes.
Zakat payment is calculated using the Profit and Loss method
at a zakat rate of 2.5% and is based on the percentage of
estimated Muslim individual shareholders of Public Bank.
 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
International Operations Chairman’s Review 161

At a glance
2009 2008 Increase/
(Decrease)
%
Total overseas operations
Operating revenue RM1,437.4 mil RM1,160.7 mil 23.8
Profit before tax RM239.9 mil RM321.0 mil (25.3)
Profit before tax
Public Financial Holdings Group HKD308.5 mil HKD388.4 mil (20.6)
Cambodian Public Bank Plc USD16.5 mil USD38.0 mil (56.7)
VID Public Bank USD9.2 mil USD9.7 mil (5.2)
Gross loans, advances and financing
Public Bank (Hong Kong) Limited HKD20,313.6 mil HKD20,123.9 mil 0.9
Public Finance Limited HKD4,195.0 mil HKD4,246.3 mil (1.2)
Cambodian Public Bank Plc USD606.5 mil USD643.9 mil (5.8)
Deposits from customers
Public Bank (Hong Kong) Limited HKD26,057.3 mil HKD21,671.4 mil 20.2
Public Finance Limited HKD3,448.6 mil HKD3,755.1 mil (8.2)
Cambodian Public Bank Plc USD612.9 mil USD372.6 mil 64.3
Net NPL ratio (%)
Public Bank (Hong Kong) Limited 0.8 0.3 0.5
Public Finance Limited 3.3 1.8 1.5
Cambodian Public Bank Plc 4.6 Nil 4.6
Risk-weighted capital ratio (%)
Public Bank (Hong Kong) Limited* 15.9 15.3 0.6
Public Finance Limited* 32.2 21.8 10.4
Cambodian Public Bank Plc** 20.3 21.1 (0.8)

* presented in accordance with the Banking (Capital) Rules under Section 98A of the Banking Ordinance issued by the Hong Kong Monetary Authority
** represent the Solvency Ratio of Cambodian Public Bank Plc, which is the nearest equivalent local regulatory compliance ratio

The Public Bank Group has overseas presence in five countries, with branches in Sri Lanka and Laos, subsidiaries in Hong Kong
and Cambodia and a joint venture bank in Vietnam. In 2009, these countries were adversely impacted by the global financial
crisis. The Hong Kong economy was in recession, with a forecast full year contraction of GDP by 3.3%. Against this backdrop,
the Group’s earnings from international operations declined by 25.3% to RM239.9 million in 2009 and contributed to a lower 7.2%
of the Group’s profit before tax as compared to 9.5% in the previous year. Nevertheless, growth plans for the Group’s international
operations continues to be pursued as the Group takes a long term view of the future potential market reach and opportunities
in the region.
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
162 Chairman’s Review
Hong Kong
The Public Bank Group’s operations in Hong Kong comprise
three main businesses: (i) retail and commercial banking and
lending (ii) wealth management services and stockbroking and
(iii) other businesses including taxi trading and leasing of
taxis.
In 2009, the economic conditions in Hong Kong were
challenging, characterised by tight credit markets, rising
unemployment rate which rose from 4.1% as at the end of
2008 to 5.0% as at the end of 2009, declining retail sales and
exports and an increase in personal bankruptcy petitions. The
operating environment was also challenging in the face of
intense competition for customers and deteriorating credit
quality.
The retail and commercial banking activities are mainly
undertaken by Public Bank (Hong Kong) Limited. Total loans
and advances for Public Bank (Hong Kong) Limited increased
by HKD189.7 million or 0.9% to HKD20.31 billion for 2009
attributed to the growth in retail loans which partially offset the
drop in syndicated loans.
Public Finance Limited primarily provides personal loans
targeted at the lower-to-middle income group and overseas
contract workers. In the light of weak consumer spending,
increasing unemployment rate and high bankruptcies in Hong
Kong, Public Finance Limited adopted a more conservative
approach in granting personal loans. As a result, personal
loans declined by HKD60.4 million or 1.6% in 2009 whilst
higher impairment allowances were made by Public Finance
Limited.
Despite the tough economic conditions, Public Finance
Limited’s Overseas Contract Workers Loans (“OCWL”) grew by
4.5% in 2009 from the successful implementation of various
promotions namely the Customer-Get-Customer Programme,
Welcome Gift and Instant Gift Promotion for OCWL and
Discount Item Promotion for OCWL.
To retain good customers, Public Finance Limited introduced a
customer campaign called “Instant Cash Bonus for Fully Paid
Personal Loans” which invited those customers with good
repayment track record who had fully paid their personal loans
to take up another personal loan, with a cash bonus incentive
of 1% of the loan amount.
Financing for the payment of taxes continued to be in demand
in Hong Kong especially during the current difficult times. The
Public Bank Group continued to provide tax loans for both
corporate and individual customers, with attractive interest
rates and flexible terms in 2009. These measures were
complemented by instant loan approvals from the Phone
Application Centre and through the Outsource Telemarketing
Operations Centre to solicit new personal consumer loans.
To further expand the personal consumer loan business in
Hong Kong, Public Finance Limited had initiated several key
measures such as implementation of customer acquisition
campaigns, expansion of its direct sales team, enhancement of
existing loan product features and introduction of new products.
The Public Financial Holdings Group also stepped up
promotional activities in brand building and product awareness
by putting up new advertisements in the print and electronic
media including new television commercials. In addition, the
Public Financial Holdings Group will continue to expand its
branch network in Hong Kong to widen its market reach for
the personal consumer financing business.
The Public Bank Group’s deposit taking business in Hong
Kong recorded a much better performance in 2009. The
customer deposits of Public Bank (Hong Kong) Limited grew
by HKD4,385.9 million or 20.2% to HKD26.06 billion as at the
end of 2009. Public Finance Limited commanded a significant
market share of 53.1% for deposits amongst deposit-taking
companies in Hong Kong as at the end of 2009, despite a
8.2% decline in its customer deposits.
Public Financial Holdings Group turned in a pre-tax profit of
HKD308.5 million or a 20.6% decline over the previous year as
a result of higher impairment allowances in Public Bank (Hong
Kong) Limited and Public Finance Limited as well as higher
overheads from the continued expansion of branch network
and enlarged sales force. In addition, included in the previous
year was an amount of HKD47.2 million non-recurring goodwill
payment in respect of the 10-year exclusive bancassurance
tie-up with the ING Group.
 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
Chairman’s Review 163

Cambodia
On 18 September 2009, Cambodian Public
Bank Plc (“Campu Bank”) relocated its Head
Office and Phnom Penh Main Branch to a
12½ storey new corporate building known as
“Campu Bank Building.” This marked a
significant event for the Public Bank Group
in Cambodia as Campu Bank, which started
its operations 17 years ago in two humble
single-storey bungalow villas, now occupies
one of the landmark buildings in Phnom
Penh. This event also reaffirmed the Public
Bank Group’s long term commitment in
Cambodia and its continuous efforts to
improve customer service.
During the year, the Public Financial Holdings Group continued with its brand
building initiatives through the opening of new branches, launching of new Campu Bank expanded its branch network
promotions and marketing activities, in addition to continued advertising in in 2009 to 15 branches with the opening of
various forms of the mass media. Focusing on more secured lending and stable 3 new branches. Another 11 branches are
retail deposit business, Public Bank (Hong Kong) Limited expanded its direct targeted to be opened in 2010 to widen
mortgage sales team to target consumer and commercial customers which was Campu Bank’s market reach and to tap new
also aimed at reducing the dependence on large depositors and large corporate business opportunities in these new
loans. locations.

Arising from the strategic alliance with the ING Group, both Public Bank (Hong
Kong) Limited and Public Finance Limited began selling life and investment linked
insurance products to enhance the non-interest income revenue stream of the
Group’s business in Hong Kong.
In 2009, Public Bank (Hong Kong) opened 2 new branches and Winton Financial
Limited opened 5 new branches. As at the end of 2009, the Public Financial
Holdings Group in Hong Kong has a combined branch network of 83 branches,
including 3 branches in Shenzen in the People’s Republic of China (“PRC”) and
also has a representative office each in Shanghai and Shenyang in the PRC and
in Taipei, Taiwan. To streamline the Group’s operations in Hong Kong for better
operational and cost efficiency, Public Bank’s Hong Kong branch closed at the
end of the year with the voluntary surrender of its banking licence to the Hong
Kong Monetary Authority.
Cambodia’s main economic sectors covering
garments, tourism, construction and
agriculture were adversely affected by the
global economic recession in 2009. This in
turn affected Campu Bank’s earnings and
asset quality. Profit before tax declined by
56.7% to USD16.5 million in 2009 due mainly
to higher specific allowances made for loan
impairment brought about by the weaker
economic conditions as well as thinning net
interest margins and higher overheads due
to the expansion of Campu Bank’s branch
network and relocation of its headquarters.
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
164 Chairman’s Review
In view of the challenging economic conditions in 2009, Campu
Bank was more cautious in its lending business and realigned
its business focus to deposit mobilisation. Customer deposits
recorded a strong surge by 64.3% to USD612.9 million as at
the end of 2009 against USD372.6 million as at the end of
2008 despite the tighter liquidity conditions in Cambodia.
Campu Bank maintained its leading position as the largest
lender and the highest capitalised bank in Cambodia in 2009.
Campu Bank is the largest bank in Cambodia by total assets
as at the end of 2009.
Due to its outstanding financial performance, Campu Bank was
again honoured for the 2nd consecutive year with the “Bank of
the Year in Cambodia” award for 2009 by The Banker magazine.
This is the seventh time that Campu Bank has won this
illustrious award since 2001.
To better serve its customers, Campu Bank joined in the
EasyCash Network, a shared ATM network in Cambodia,
allowing its cardholders to perform ATM transactions at more
than 130 ATMs in Cambodia. Capitalising on its strong
branding, Campu Bank secured the exclusive right to install
ATMs within Phnom Penh International Airport and Siem Reap
International Airport. Its ATM network, which now stands at 31
ATMs, continue to be expanded to further improve customer
accessibility and convenience. Other initiatives to deliver
enhanced banking products and services were the launch of
Internet banking, the introduction of the “OneCard” which
incorporates the features of an ATM card with a Visa debit
card, and the offering of the Western Union Money Transfer
Service.
Campu Bank’s insurance subsidiary, CampuBank Lonpac
Insurance Plc (“CLIP”) continued to capitalise on the synergy
with Campu Bank’s extended branch network and strong
brand name. CLIP’s initiatives to create greater awareness and
recognition as a provider of non-life insurance through
advertising and promotions was successful as gross premiums
increased by 82.0% to USD1.0 million and profit before tax
grew by 54.5% in 2009.
Vietnam
The Public Bank Group’s joint venture bank in Vietnam, VID
Public Bank (“VPB”) reported lower profit before tax of
USD9.2 million for 2009 as compared to USD9.7 million for
2008 mainly due to thinning net interest margins. However,
VPB achieved commendable business growth in 2009 despite
Vietnam’s economic recession. VPB’s total loans increased by
USD52.4 million or 30.3% to USD225.3 million on the back of
the Vietnamese Government’s measures to stimulate the
economy. Customer deposits also increased significantly by
USD42.4 million reflecting a growth rate of 21.3% to
USD241.1 million.
Laos
Public Bank’s Laos branches’ operations recorded all round
improved performance in 2009, with an increase in profit
before tax by 74.0% to USD4.7 million, and growth in loans
and customer deposits by 12.6% and 15.5% respectively. ATM
services were introduced in all 3 branches in Laos in November
2009 to provide greater convenience to customers. Public
Bank is the first bank in Laos to use smart chip technology
embedded in the ATM card for enhanced security features.
Sri Lanka
Although the civil war in Sri Lanka has ended and the political
arena has become more stable, the business environment in
Sri Lanka remained challenging as a result of declining exports
and the slowing down of foreign direct investments. Public
Bank’s Colombo branch however managed to achieve positive
results with loan growth of 4.1% in contrast to the industry’s
contraction of loans during the year, while customer deposits
grew by 23.2% as compared to industry growth of 17.1% as
at the end of November 2009. The Bank’s Colombo branch
continued to be profitable, with a higher profit before tax of
LKR163.3 million or an increase of 117.7% in 2009 as compared
to 2008.

Serving the Customer
CUSTOMER SERVICE
In the Public Bank Group, excellence in
customer service forms the bedrock of the
Group’s corporate culture. Understanding
customer needs is pursued through surveys
and listening to customers’ feedback and
complaints. Service Ambassadors are placed
at the banking halls of branches to attend to
customers’ enquiries and solicit feedback on
further areas for improvement. Such feedback
are discussed in the branches’ Customer
Service Focus Groups which meet regularly
to discuss customer service issues. Measures
which can be addressed at branches are
implemented immediately, while issues which
require Head Office’s decision on policies
and changes in procedures are escalated
upwards. At Head Office, the feedback are
promptly reviewed and measures for
improvements identified and implemented
expeditiously.
One of the cornerstones of the Public Bank
Group’s customer service excellence is Public
Bank’s Queue Management System at the
front-line counters of branches where the
customers’ waiting time to be served is
constantly monitored. Over the years, the
Standard Waiting Time (“SWT”) has been
progressively brought down and is currently
benchmarked at 2 minutes. Compliance
to the 2-minute SWT is high with 78.0% of
the Bank’s branches meeting the SWT
benchmarks.
Excellence in customer service is approached
on a wide front and encompasses a number
of initiatives:
k The deployment of Service Ambassadors
at branches who act as the first touch
point with customers. The Service
Ambassadors have been well received
and play an effective role in advising and
educating customers on matters such as
completing the transaction slips before
performing their banking transactions at
the branch counters. This has resulted in
faster and more efficient branch counter
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
Chairman’s Review 165
service. The Service Ambassadors also ensure the smooth flow of customers
at the banking hall including redirecting and helping customers to use the
Self-Service Terminals (“SSTs”) at branches.
k Adoption of a 2-prong approach to customer service. At Public Bank,
customers are not just persuaded and redirected from the front-line service
counters to the SSTs. The Bank takes a holistic approach to waiting times
and this extends to waiting time at the SSTs as well. Should queues build
up at the SSTs, customers will be redirected back to the Bank’s front-line
counters for faster customer service. The Bank’s customers have the choice
of selecting the mode of conducting their transactions, either to be served by
our friendly front-line tellers or through the increasing number of SSTs at
branches.
k Post mortem reviews are conducted for branches which fall behind in their
SWT benchmarks. Branch managers and senior officers responsible for
customer service are required to attend post mortem reviews at Head Office
to deliberate on the issues and constraints faced by their branches in
delivering customer service. Solutions are explored and remedial measures
are identified and implemented immediately to improve the SWT. A total of
49 such customer service post mortem reviews were conducted in 2009.
k Conducting briefing and feedback sessions on customer service with
branches in their respective regions. Branch managers and assistant branch
managers participate in these sessions where customer service issues are
extensively discussed.
k Regular on-site visits by relief branch managers to assess and improve
customer service at branches. During such visits, relief branch managers
conduct on-site assessment of the branch’s customer service standards and
provide guidance for improvements. A total of 139 visits were conducted by
relief branch managers in 2009.
k Monthly briefings and discussions on branches’ customer service and SWT
performance are held with the Regional Managers at Head Office. Information
on individual branch’s performance and feedback for improvements are
disseminated for the Regional Managers’ follow up. These feedback will be
carried back by the Regional Managers to be discussed in their respective
regional meetings with the branches.
To further bolster the level of customer service, the Public Bank Group continues
to improve on its customer service infrastructure with initiatives such as:-
k Investing in equipment to speed up the processing time of transactions,
thereby improving the efficiency of service delivery. A total of 1,050 desktop
friction note counting machines and 241 heavy duty note processing machines
have been installed at a total cost of over RM11.9 million to assist Public
Bank’s front-line tellers in the processing of cash transactions. These
machines have automated the time consuming manual process of detecting
forged currency notes and vastly improved the speed of handling cash
transactions. The processing time for cash transactions has been reduced by
as much as 60%.
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
166 Chairman’s Review
k Continuing to invest heavily in other self-service delivery
channels in 2009. These self-service delivery channels
include ATMs, Cash Deposit Terminals (“CDTs”), Cheque
Deposit Machines (“CDMs”), Internet Banking and
Telebanking which offer banking convenience to the Public
Bank Group’s customers during banking hours and non-
banking hours. An additional 9 ATMs, 48 CDTs and 13
CDMs were deployed during the year. In addition, 60 units
of older ATMs were decommissioned and replaced with the
latest and more efficient ATMs to provide better service to
the Group’s customers. The deployment of additional
machines and replacement of older models involved an
investment of over RM7 million by the Group. As at the
end of 2009, the Group’s network of self-service machines
includes 459 ATMs, 407 CDTs and 442 CDMs.
To ensure bank-wide consistency in the operating procedures
and standards in customer service delivery, Public Bank
continued to have an external independent certification of its
processes and procedures. Since 2000, the Bank’s front-line
customer service has been certified by SIRIM based on the
ISO 9001:2008 standard while the provision of customer
service in Loan Service Delivery has been certified by SIRIM
since 2002. To maintain the ISO certification, the Bank is
subjected to yearly surveillance audits and a three-year re-
certification audit by SIRIM.
In 2009, Public Bank implemented a Branch Assessment and
Training programme in its branches to further improve the
maintenance and delivery of the Quality Management System.
Periodic visits were conducted at selected branches to assess
staff knowledge and their compliance with the Bank’s Quality
Management System. On-site training is provided to key
service personnel and ISO coordinators at these branches to
improve their Quality Management System to achieve a higher
compliance level. At the end of such visits, branches are
provided a score sheet which details the areas of weakness to
be dealt with and improved.
Loan Service Delivery
Public Bank has implemented standard operating procedures,
continuous work process improvement and compliance with a
Standard Turnaround Time (“STT”) for processes from loan
approval to loan documentation and loan disbursement which
is certified by the ISO 9001:2008 standard. Currently, the
certification covers retail and corporate loans, credit cards and
trade financing transactions.
To ensure that Public Bank achieves its STT benchmarks for
loan approval, loan documentation and loan disbursement, an
internally developed electronic loan delivery system (“eLDS”)
has been implemented. The eLDS was developed as a loan
origination system which facilitates creation of loan origination,
processing and evaluation as well as submission for approval.
The whole process is routed electronically from one user to
another on a real-time basis. Similarly, decisions in respect of
the loan applications, which are routed to Head Office for
consideration, are also routed electronically back to branches
to be conveyed to customers.
To improve the effectiveness of the eLDS, several modules
have been developed and implemented such as eDTS, eCCRIS,
eReview and eSIBC. Some of the modules were developed as
a natural extension of the development of eLDS. eDTS was
developed to enable tracking of loan documentation and loan
disbursement STT, eReview as an extension of loan origination
which requires periodical review to be conducted, and eCCRIS
is to facilitate extraction of credit reports.
The eLDS has been extended to cover loan processing and
approval in the Public Bank Group’s overseas subsidiaries and
branches such as in Cambodia and Laos, and will be made
available in Hong Kong in 2010. Public Bank is looking at
extending the eLDS platform to cover all aspects of credit-
related activities domestically and internationally and to use the
eLDS as its primary source of data and information. The
ongoing enhancements to the eLDS are in line with the spirit
of the ISO standards for continuous work improvement.
With the assistance of the eLDS, Public Bank has consistently
achieved a 90% conformance of the STT for loan approval for
consumer loans of 1 to 3 working days and commercial loans
of 5 to 7 working days, depending on the approving level at
branches or in Head Office. The achievement is particularly
significant in view of the continued growth of the Public Bank
Group’s lending business at twice the industry rate of loan
growth. In 2009, the number of loan applications processed
through the eLDS numbered more than 155,000.
As part of the continuous work process improvement, the
eLDS was enhanced through interfacing with other systems.
One of the major system integration implemented in 2009 was
to facilitate loan disbursement straight through processing
which directly triggers loan release in the Bank’s main operating
system. The benefit of this enhancement is to reduce human
intervention and ensure data integrity and consistency from the
point of origination to disbursement.

Information &
Communication Technology
The Public Bank Group continued to leverage
on Information and Communication Technology
(“ICT”) in 2009 as a key enabler to attain a
higher level of operational efficiency and
service excellence. In the recessionary
conditions during the year, where the tendency
would be to reduce cost, the Group’s ICT
spending not only remained undiminished but
ICT investments were accelerated. The
Group’s underlying ICT infrastructure was
consolidated and refreshed with new
technologies to further improve systems
reliability, performance, security and agility.
Business processes were also streamlined
and augmented to improve productivity.
To elevate operational efficiency to a higher
level and enhance customer service, the
Public Bank Group embarked on a programme
for greater automation, virtualisation and
heightened security management of its data
centres. RM7.9 million was invested in setting
up a Storage Area Network disk and tape
backup infrastructure to consolidate the
diverse computer servers for better
management and greater agility in the
deployment of data storage resources.
Manually operated and incompatible tape
backup systems were standardised to
automated tape libraries and LTO4 media
format. The LTO4 standard enables tape
encryption in addition to lowering the
operating cost of data storage through tape
consolidation and reduced backup tapes
inventory. A blueprint for server consolidation
and virtualisation using blade technology
encompassing multi-platform task scheduling
and automation was instituted, thus laying
the foundation of a world class data storage
infrastructure as well as incorporating
emerging green technologies.
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
Chairman’s Review 167
In 2009, the Public Bank Group spent RM66.6 million in boosting the performance
of its mission-critical mainframe computers, networks and self-service delivery
channels. This included RM30.0 million on the IBM z10 Enterprise Class
mainframe computers which run the Retail Banking System. A software metering
technology called Workload License Charges provides unparalleled on-demand
performance at reduced cost per million instructions per second (“MIPS”). The
IBM z10 mainframe also features special-purpose cryptographic coprocessors
and zIIP specialty processors. These were exploited to implement tape storage
encryption and IP security for tightening customer data security.
Public Bank’s Unisys Libra 690 mainframe which runs the Bank’s card systems
was upgraded from 85 to 160 MIPS to cater for both credit and debit card
business expansion. The software metering technology in the Libra 690 enabled
the capacity to be upgraded using software keys. As no additional hardware was
involved, the entire upgrade was carried out seamlessly with no risk and at
significant cost savings. To support the growing base of card merchants, the
Point-of-Sales (“POS”) network was upgraded with the latest Hypercom IEN
gateways. A toll-free “1-300” service with a larger pool of lines was also
commissioned for faster approval of card transactions. Such transformation has
further improved customer service delivery at POS, in particular for merchants in
remote localities.
Complementing the increase in host performance, Internet links were scaled up
at least two-fold to 36 Megabits per second. Analogue leased lines were also
migrated to digital circuits for off-branch ATMs. Additionally, new NCR SelfServe
ATMs were purchased to replace old models while a greater number of CDMs
and CDTs were deployed to provide more convenience and ease of use by
customers.
The revamp of the legacy OS/2-based Branch Delivery System (“BDS”) to run
under Windows was a key undertaking for the Public Bank Group in its pursuit
for unrivaled quality in over-the-counter (“OTC”) services. In 2009, all core BDS
modules were converted to run under Windows and were successfully piloted.
Nationwide roll-out has commenced and is expected to be completed by June
2010. Transaction processing times at branch counters have significantly
improved, which further reinforced the Group’s hallmark 2-minute SWT for
counter service. The greatly enhanced level of automation affords the branch
staff force the freedom to focus on engaging and serving the customers better.
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
168 Chairman’s Review
To enhance transaction security and integrity and provide
greater customer peace of mind, biometric authentication
devices were introduced to scan and verify thumbprints against
MyKad information to prevent fraud in OTC transactions such
as cheque encashment and cash withdrawals. Behind the
scene, access to customer data was further tightened through
point-to-point encryption using Microsoft’s proven Windows
Communication Foundation. The extensive audit trails enforced
also promotes accountability. To realise the new Windows
BDS, the Public Bank Group has to date spent RM48.9 million
on new servers, personal computers, peripherals, security
control, software, Metro-e network bandwidth and professional
services.
The past few years have seen usage of Internet banking
mushroom. To maintain consistent high performance, the
Public Bank Group’s Internet banking servers were upgraded
to the latest enterprise-class models with multifold increase in
computing capacity. Specialised web application firewalls were
installed to fortify the security defence against attacks that
exploit vulnerabilities within all web applications. The Group
also launched its own PBe-Mall as an online outlet for credit
card merchants to increase sales and introduced support for
multi-currency transactions to the existing 3D Secure compliant
e-commerce payment gateway. The Group unveiled its first
Visa combo card, the PB Day2Day card, that combines a
MEPS compatible ATM card and a Visa debit card application
into a single chip card. The new card offers all the features of
a standard ATM card with support for MEPS e-Debit
transactions locally while allowing purchases to be carried out
overseas using the Visa debit card function.
The Public Bank Group also intensified efforts to implement a
robust data management framework with stronger risk
management oversight to ensure stringent regulatory compliance
and adherence to good corporate governance. Application
systems were enhanced in tandem with the expansion of the
enterprise data warehouse to cater for the future implementation
of the Basel II Internal Ratings Based (“IRB”) approach. All
lacunae identified during gap analysis were addressed and
storage of online historical records was extended from three to
at least seven years to allow analytics at the required level of
comprehensiveness and granularity. The Group also embarked
on the implementation of a new Financial Management System,
which provides more dynamic management reporting capabilities
as well as more flexible and indepth performance analyses.
Further enhancements were also made to the Customer
Relationship Management system to provide better
understanding of the Group’s customers.
To support the Public Bank Group’s strong growth in its
lending business, the workhorse electronic Loan Delivery
System (“eLDS”) was enhanced with new functionalities and
straight-through integration to the back-end systems for
consumer and commercial loans. Upon approval of the loan
application, all documentation, such as the Letter of Offer/
Instructions and Legal Notice of Demand/Recall, are system
generated and tracked electronically. Credit reviews are
scheduled and monitored by the eLDS based on risk rating
and pre-set criteria. In addition, risk assessment is conducted
with greater accuracy and timeliness using system generated
score sheets gleaned from borrowers’ historical data such as
their borrowing and repayment patterns, the availability of
collateral and the extent of their liabilities. Such enhanced risk
management capabilities ensures better credit quality and
management of loans.
 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
Branch Performance – Chairman’s Review 169
KPis and Awards

Branch Key Performance

Indices
In pursuit of the effective execution of the
Public Bank Group’s business strategies and
to ensure effective management of the
Group’s resources, Public Bank evaluates the
performance of its branches by way of Key
Performance Indices (“KPIs”). These KPIs
incorporate all the key performance factors
which are crucial in determining branch
performance, such as profitability, loan and
deposit performance, asset quality, service
delivery and staff productivity and efficiency.

Apart from being measures to assess branch

performance, these KPIs also form the basis The KPIs included in the performance measurement of branches, branch
for appraising the performance of branch managers and other key staff of branches are set out below:
managers and other staff of branches,
effectively linking their remuneration with KPI Criteria for measurement
clearly identifiable deliverables. The KPIs are A. Profitability
dynamic, reviewed annually and adjusted or i) Retail Profit k Achievement of incremental profit targets
changed where appropriate to adapt to
k Incremental profit per staff
changes in the operating environment as well
k Profit contribution compared to peer group of
as business strategies of the Bank. Such
branches
adjustments and changes include the
ii) Return on Equity k Actual ROE vs budgeted ROE
introduction of new performance parameters
(“ROE”) k Improvement in ROE from the previous year
and changes to the weightages used for
specific performance factors. iii)  on-Interest
N k A
 chievement of non-interest income target and
Income improvement from the previous year
Challenging targets are set for the KPIs and k Achievement of targets for fee-based income
these are communicated to branches at the products
beginning of each year. The performance of B. Loan
branches in meeting their KPIs is monitored Performance
on a monthly basis so that corrective i) Retail Loans k Achievement of retail loan growth targets
measures can be taken early to assist k Growth in % and quantum from the previous
underperforming branches. Information on the year compared to peer group of branches
performance and ranking of peer branches
ii) Hire Purchase k Achievement of hire purchase financing growth
are also disseminated on a quarterly basis, to
Financing targets
enable the branches to benchmark themselves
k Growth in % and quantum from the previous
with their peer branches. The practice of
year compared to peer group of branches
regular and close monitoring of branches’
KPIs by Head Office has been demonstrated C. Deposits
to be effective in motivating and driving Performance
branches to meet and surpass their KPIs and i) Demand, Savings k A
 chievement of demand, savings and fixed
to strive for excellence in their branches’ and Fixed deposits targets
performance. Deposits k Growth in % and quantum from the previous
year compared to peer group of branches
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
170 Chairman’s Review

financing, Islamic banking business and sale

KPI Criteria for measurement
of specific non-interest income products. For
D. Asset Quality
cost and risk management, branches are
i) Credit Control k Reduction in non-performing loans assessed on credit risk management, branch
k Achievement of recovery targets internal controls and cost income management
k Increase in new delinquent accounts whilst for customer service, branches are
E. Productivity/ assessed on frontline and loan service delivery
Efficiency and channel management performance. Each
i) Customer Service k A
 chievement of benchmark for standard waiting branch is rated against other branches within
in frontline time the same peer group according to branch
delivery k Number of counter transactions and productivity size. The performance measures are calculated
per teller based on target growth rates and on a per
ii) Loan Service staff basis.
k A
 chievement of benchmark for loan processing
Delivery turnaround time
The Branch Performance Awards for 2009
k Volume of loans processed compared to peer
comprised 16 Special Awards, 9 Best Branch
group of branches
Awards and the coveted Founder and
iii) Cost Efficiency k Actual cost to income ratio vs target cost to Chairman’s Award for the overall Best Branch
income ratio of the branch for the year.
k Improvement in cost to income ratio from the
previous year The winners of the Best Branch Awards for
iv) Product Holding k Achievement of targeted product holding per 2009 for domestic and overseas business
(Cross-selling) customer units were as follows:-
k Improvement in average product holding from
Domestic Branches
the previous year
F. Leadership and Group 1 SS2 Branch
Resourcefulness Group 2 Skudai Branch
Group 3 Donggongon Branch
i) Controls & k Internal controls and general management of the
Group 4 Inanam Branch
Compliance branch
Group 5 Pekan Nenas Branch
Group 6 Jalan Tun Sambanthan Branch

Branch Performance Awards Overseas Business Units

Over the past decade, Public Bank has accorded recognition to top performing Campu Bank Phnom Penh Main
branches in the form of the annual Branch Performance Awards. These Branch
performance awards, which come with substantial monetary prizes, are also Public Finance Ltd Mongkok Branch
granted to inspire branches to achieve superior business performance as well as Public Bank (HK) Ltd Kwun Tong Branch
higher productivity and efficiency.
The coveted Founder and Chairman’s Award
The various categories of the Branch Performance awards are reviewed annually for 2009 which carried a cash prize of
to ensure that they are aligned to the business objectives of the Public Bank RM50,000 and a gold crafted challenge
Group. To determine the winners of the Branch Performance Awards, each trophy went to SS2 Branch. A total of
branch is assessed on very stringent criteria in the key areas of business 96 awards with cash prizes totalling
performance, cost and risk management, loan asset quality and customer service RM1.0 million were awarded to the winners
delivery. In the area of business performance, branches are assessed on specific of the Branch Performance Awards for 2009.
measures in terms of profitability, retail loans and deposits, hire purchase
 PUBLIC BANK BERHAD
ANNUAL REPORT 2009

outlook for 2010 Chairman’s Review 171

Outlook for the Banking Industry

The banking industry is expected to remain healthy in 2010 as the Malaysian
economy continues to build on the growth momentum which is projected
for the fourth quarter of 2009. As inflation is expected to remain low due to
the large output gap, interest rates are forecast to remain stable. The
profitability, capitalisation and asset quality of the banking system are
expected to remain healthy.

Competition will continue to be keen due to the presence of strong

domestic players, a more liberal operating environment and excess liquidity
in the banking system. The potential new bank entrants in 2009 to 2011 will
add to the competitive landscape. As product pricing will remain competitive,
net interest margins are likely to remain under pressure.

Loan growth is likely to be sustained at current levels based on the

expected recovery in private spending and investment, amid low lending
rates and progressive implementation of government fiscal stimulus. The
export sector is expected to improve in line with the recovery in the global
economy. Both consumers and SMEs will remain key drivers of loan
growth.
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
172 Chairman’s Review
Deposit growth is forecast to strengthen in 2010, supported by
the expected economic recovery and higher incomes. In light
of the experience of the global financial crisis, banks will likely
step up competition for customer deposits to ensure a stable
funding base.
Asset quality of the banking system is expected to remain
healthy. Coupled with low borrowing costs and improved
labour market conditions, the preemptive measures to ensure
steady access to financing by households and businesses and
proactive loan restructuring and rescheduling by banks to
assist borrowers will continue to support strong asset quality.
Corporates are expected to remain healthy.
Expectations and Opportunities
As competition continues to intensify, domestic banks are
expected to further build their capability and capacity to
compete, differentiate their business strategies and focus on
the development of new products and services. Banks are also
expected to intensify their focus on relationship banking. As
bank customers continue to be empowered by Internet
technology, consumer education and greater transparency by
banks, they will become more demanding and discerning,
expecting personalised and high valued-added services from
banks.
As the economy improves in 2010, the Public Bank Group
expects greater opportunities to tap on the consumer and SME
markets. Both consumers and SMEs in Malaysia have continued
to maintain healthy gearing levels. Other than residential
mortgages and passenger vehicle hire purchase financing,
consumers have not leveraged up for conspicuous consumption.
They also look for more opportunities to better manage their
wealth and maximise return on their assets, thus giving rise to
opportunities to further develop the wealth management
business in Malaysia.
Based on improved employment conditions and consumer
sentiment, consumer demand for houses and cars are expected
to improve next year. SMEs will continue to access the banking
system mainly for working capital and for the purchase of non-
residential properties for their operating premises.
On corporate lending, the Public Bank Group expects
corporates will continue to disintermediate bank lending by
accessing the corporate bond market. Some corporates will
access the banking system for short-term working capital loans
rather than for major expansion, due to continuing excess
capacity.
The Public Bank Group also expects more opportunities in
Islamic banking. In the midst of the ongoing financial crisis,
Islamic banking has demonstrated its resilience. To boost its
Islamic banking business, the Group will establish dedicated
Islamic banking branches from time to time. The Group’s
wholly-owned subsidiary, Public Islamic Bank, will also develop
its Islamic banking business in foreign currencies using its
approved International Currency Business Unit.
The recent further liberalisation of Islamic banking will help
position Malaysia as an international Islamic financial hub.
While these measures will diversify Islamic banking products
and services, it will also enhance the economic linkages
between Malaysia and other economies. International Islamic
banks are expected to bring expertise in Islamic banking to
Malaysia.
Based on various discussions on the need for financial reforms
by banking regulators such as the Basel Committee of Banking
Supervision, domestic banks will enter 2010 with an element of
uncertainty. To ensure sustainable growth in this challenging
environment, a comprehensive risk management framework
and good corporate governance will remain the key areas of
focus of domestic banks.
Strategies
The Public Bank Group will continue to grow its market share
in its core businesses of lending to consumers, particularly in
home mortgages and passenger vehicle hire purchase financing,
and lending to SMEs. Public Bank will leverage on its strong
lending and deposit-taking franchise to expand its business
aggressively by providing innovative and competitive products
and services with superior delivery standards.
To mitigate pressures on net interest margins, the Public Bank
Group will also continue to focus on developing fee-based or
non-interest income activities, such as unit trust funds,
bancassurance products, structured investment products,

remittance services, trade finance and treasury activities. The
Group’s unit trust sales agency force and distribution channels
for fee-based businesses will continue to be expanded and
new products will be launched to meet the diverse needs of
customers.
While the global economy and the Malaysian economy are
gradually recovering, the Public Bank Group will remain vigilant
on the asset quality of its loan portfolio. The Group will
continue to allocate significant resources to ensure that it
identifies potentially higher risk customers early and take
proactive measures to avoid such customers becoming non-
performing.
The Public Bank Group remains committed to its overseas
businesses in Hong Kong and China, Cambodia, Vietnam, Laos
and Sri Lanka. In addition to developing new competitive
products and effective marketing strategies, the Group will
continue to transfer its banking experiences and best practices
in Malaysia to accelerate its business growth in its overseas
operations.
The global financial crisis in the major financial centres around
the world reinforces the need for financial institutions to have
an effective risk management framework. In this regard, the
Public Bank Group will continue to enhance its credit skills and
risk management infrastructure.
To sustain its strong business growth, the Public Bank Group
will continue to improve further its superior customer service
and service delivery standards and infrastructure. The Group
continuously seeks to sustain its customer service at branch
counters and in loan delivery under the ISO 9001:2008
certifications. Backed by customer analytics, the Group will
continue to develop a thorough understanding of customer
needs and meet them efficiently.
Public Bank will remain focused on exceeding customer
expectations by serving them through multiple delivery channels
including face-to-face interactions, convenient self-service
machines and remote channels such as Internet banking and
mobile banking.
19 January 2010
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
Chairman’s Review 173
Outlook for the Malaysian Economy
Despite the recession in 2009, Malaysia’s economic
fundamentals remain intact. Based on improved economic
conditions in the second half of 2009, the Malaysian economy
is projected to grow by 2% to 3% in 2010, on the back of the
Government’s fiscal stimulus, accommodative monetary policy
and the expected recovery in world trade. The steady rise in
the Leading Index for the Malaysian economy and improved
consumer and business sentiment in recent months support
the positive outlook for the economy in 2010.
Inflation is projected to remain low in 2010 due to the large
output gap and the strong Ringgit.
On the demand side, aggregate domestic demand is expected
to strengthen due to improved labour market conditions which
will lead to higher private consumption and investment.
Measures taken in the Budget 2010 such as the reduction in
the maximum personal income tax rate and increased personal
relief will raise disposable income and boost private
consumption. Private sector activity is expected to improve
following signs of recovery in the second half of 2009, enabling
the Government to consolidate its fiscal position in 2010 and
beyond.
On the supply side, whilst growth will be broad-based, it will
be led by the services sector. The Government remains
committed to make this sector a key driver of growth. Coupled
with the liberalisation of the 27 services sub-sectors, the
liberalisation of the financial services sector in 2009 to 2011
will support growth in the services sector. The construction
sector will continue to benefit from the economic recovery and
fiscal stimulus by the Government. Manufacturing is expected
to register positive growth on the back of improved trade
flows. The agriculture sector is also expected to improve in
2010.
Despite the positive outlook, there remains some downside
risks, particularly from the external sector. The on-going
recovery in the developed economies may remain slow due to
impaired financial systems and household balance sheets as
well as persisting high unemployment rates.
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
174
Corporate Responsibility
Corporate Responsibility (“CR”) is increasingly being embraced by
corporates and businesses as their stakeholders demand increasingly
higher levels of accountability, transparency, ethics and integrity in
the conduct of business as well as increasing awareness of the
impact of the business on the environment. There is also a growing
recognition by corporates that good CR makes good business sense.

There are varying definitions of CR which
can be summarised as integrating
responsible and ethical practices in all
aspects of a corporation’s activities,
including its business, and deals with the
issues of ethics, governance, the
environment and society at large. In
Bursa Securities’ Corporate Social
Responsibility Framework, corporate
social responsibility is defined as “open
and transparent business practices that
are based on ethical values and respect
for the community, employees, the
environment, shareholders and other
stakeholders. It is designed to deliver
sustainable value to society at large.” CR
encompasses a wider scope of what a
corporate does and how it goes about
doing its business, how it behaves and
how it affects the environment, in addition
to the social issues focus of corporate
social responsibility.
When the business of a corporate is
conducted responsibly, the reputation
and standing of the corporate is enhanced
and the high level of stakeholders
engagement in the corporate could lead
to greater competitiveness and higher
stock market valuations of a listed
corporation.
Good CR is also an indication of good
management which is expected to deliver
long-term superior performance of the
corporate in an ethical manner and with
integrity. These are key ingredients that
are noticeably absent in some of the
failures of large global corporates in
recent years, whose failures could be laid
at the door step of corporate misconduct,
ethical failure, inadequacy in risk
management and outright fraud.
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
Corporate Responsibility 175
CR can also be equated to the corporate version of the national agenda on the
creation of a competitive nation and a moral, ethical, caring and economically just
society.
Although not expressedly referred to as CR and well before it became part of the
corporate vocabulary, the Public Bank Group had already subscribed to the notion
of conducting its business in an ethically, socially and environmentally sustainable
manner which is encapsulated in its long-held Corporate Philosophy which states
that:
Public Bank Cares...
For its Customers
k By providing the most courteous and efficient service in every aspect of its
business
k By being innovative in the development of new banking products and services
For its Employees
k By promoting the well-being of its staff through attractive remuneration and fringe
benefits
k By promoting good staff morale through proper staff training and development
and provision of opportunities for career advancement
For its Shareholders
k By forging ahead and consolidating its position as a stable and progressive
financial institution
k By generating profits and a fair return on their investment
For the Community it Serves
k By assuming its role as a socially responsible corporate citizen in a tangible
manner
k By adhering closely to national policies and objectives thereby contributing
towards the progress of the nation
...With Integrity
As a leading financial institution deeply rooted in the economy and in the community
that it serves in Malaysia and in the region, the Public Bank Group clearly and
constantly seeks to fulfil its corporate responsibilities. The Group fully subscribes to
the notion that in the conduct of its business and in the delivery of its corporate and
social responsibilities, the Group is creating value for all its stakeholders and
enhancing the long-term sustainability of the Group.
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
176 Corporate Responsibility
The Corporate Responsibility initiatives of the Public Bank
Group are focused on:
• Nation building
• Enhancement of the market place
• Promotion of the work place
• Customer care
• Building the future through education
• Support of the community
• Greening the environment
CR in Nation Building
With total assets of RM217 billion and a market capitalisation
of RM40 billion, which makes Public Bank the 2nd largest non-
government linked corporation listed on Bursa Securities, the
Public Bank Group forms an integral and vital part of the
financial system of Malaysia. With its strong balance sheet and
its unbroken 43-year profitability track record, the Group
continues to play its role in promoting the stability and integrity
of Malaysia’s financial system, particularly in the aftermath of
the global financial crisis which saw the failure or government
recapitalisation of some global banks. As a strong and stable
financial system is a necessary pre-requisite to the early return
to the economic growth path and healthy long-term growth of
the economy, the Public Bank Group has played, and continues
to play, a key role in the recovery process and the healthy
progress of the long-term economic development of Malaysia
and in contributing to nation building.
Supporting Home Ownership
One of the core lending business of the Public Bank Group is
the financing of home purchasers with over 27.6% of the
Group’s total loan portfolio comprising residential mortgages.
In particular, the Group continued to support the financing of
mass market housing with 34.0% of residential mortgages
approved in 2009 being for the purchase of properties costing
between RM100,000 and RM250,000. A further 4.5% of
residential mortgages approved in 2009 was for properties
costing less than RM100,000. Public Bank also consistently
exceeds the minimum commitment levels for the financing of
low-cost housing required by Bank Negara Malaysia, with the
Bank’s commitment to financing over 3,800 low-cost houses in
2008 and 2009. The Group is therefore helping Malaysians,
particularly the average man in the street and low income
families, in owning their own homes and generally promoting
the level of home ownership in the country.
Support of SMEs and Micro Enterprises
A key area of focus of the Public Bank Group’s commercial
lending business is the provision of financing to SMEs. In
2009, Public Bank approved a total of RM10.29 billion of loans
to SMEs. In addition, Public Bank also approved a total of
RM192.1 million of loans under the Government’s Working
Capital Guarantee Scheme which ensured that business
enterprises, particularly SMEs, continued to have access to
bank financing in the more economically challenging environment
in 2009. Public Bank also approved RM265.1 million of loans
under the SME Assistance Guarantee Scheme (“SAGS”)
whereby SMEs faced with tight working capital cash flows can
access bank credit facilities with the assistance of a guarantee
by the Credit Guarantee Corporation.
Public Bank continued to promote PB MicroFinance, which
provides access to financing for micro enterprises to expand.
The focus of the commercial lending business of the Group in
helping SMEs and micro enterprises to ride out the current
economic slowdown and to expand when the economic
recovery kicks in will in the medium- to longer-term benefit the
country through higher tax revenues and the creation of
employment opportunities for Malaysians.
Significant Tax Payer
The strong and rising profitability of the Public Bank Group
mean that the Group has been a significant contributor to the
fiscal revenue of the country. With total tax payments made of
RM3.61 billion in the 5 years since 2004, Public Bank has
contributed significantly to the financing of the Government’s
budgets and to the financial well-being and development of
Malaysia over the long-term.
CR in the Market Place
Commitment to Corporate Governance
Public Bank was awarded the Overall Excellence Award and
the Best AGM Conducted in 2009 Award by the Minority
Shareholder Watchdog Group (“MSWG”) in recognition of its
top performance, amongst public listed companies on the
Malaysian Corporate Governance Index 2009. Previously,
Public Bank was ranked No. 1 for corporate governance in the
Corporate Governance Survey Report by MSWG in a joint
collaboration with the Nottingham University Business School
for four consecutive years from 2005 to 2008. These awards
attest to Public Bank’s excellent corporate governance track
record. The award of the Malaysian Business-CIMA Enterprise

Governance Awards 2009 by Malaysian Business to Public
Bank as the Overall Winner for the 2nd consecutive year and
for Best Returns to Shareholders and Best Corporate Social
Responsibility, together with topping of several corporate
governance polls by international publications, reaffirms the
commitment of Public Bank to the highest levels of corporate
governance. Being a key player in the financial services sector
of the economy, where public trust is vital particularly in an
environment of economic uncertainty, Public Bank with its
excellent track record of corporate governance combined with
its high level of transparency, is contributing to the stability
and integrity of the market place.
Ethical Business Culture
The creation and proactive management of a culture of integrity,
ethical behaviour and honesty that is pervasive throughout the
Public Bank Group, and a zero tolerance of fraud and unethical
conduct means that the way in which the Group behaves in
making its profits is just as important as the profits that it
makes. The promotion of the strong ethical business culture by
the Group will also help promote a healthy market place.
Development of the Malaysian Capital Markets
The extensive engagement of shareholders and investors
through the various channels of communication such as the
high level of investor relations activities, well attended general
meetings of shareholders, regular financial results briefings of
the investor community and the media, and participation in
international road shows ensure that the Public Bank Group
remains at the forefront of the investing public, including global
institutional investors, thereby contributing to the promotion of
investments in, and the development of the capital markets of
Malaysia at a time when there is stiff competition regionally
and globally for international investors’ money.
Professional Development
The Public Bank Group continues to support the development
of the market place with its contribution to a broad spectrum
of professional development activities which will benefit the
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
Corporate Responsibility 177
market place in the long-term. Public Bank, in collaboration
with the Malaysian Institute of Management, supports the
MIM-Public Bank “Manager of the Year Award”. This
programme, which is in its 3rd year, seeks to recognise
exemplary managers and to promote the development of
excellent managers and excellence in management practices in
the country, with Public Bank committing to a total funding of
RM300,000 for this 5-year programme.
Public Bank continued to support the National Award for
Management Accounting (“NAfMA”), jointly organised by the
Malaysian Institute of Accountants and the Chartered Institute
of Management Accountants Malaysia Division, as the main
sponsor of the NAfMA 2009, with a RM60,000 contribution for
the 6th consecutive year.
Public Bank supported the Chartered Institute of Management
Accountants in its efforts to organise the World Accountants
Conference in Kuala Lumpur in 2010 as an Official Partner of
the conference with a sponsorship of RM30,000 towards the
organisation of this World Accountants Conference.
Public Bank was also privileged to be the luncheon host of the
Honourable Prime Minister’s Keynote Address of the Asian
Strategy and Leadership Institute’s 13th Malaysia Banking
Summit 2009 with a contribution of RM50,000 for the event.
CR in the Work Place
Steadfast in its belief that its human capital remains its most
valuable asset, the Public Bank Group continues to invest
significant resources to fulfil its corporate responsibilities as a
caring employer. The Group, which has over 17,160 employees
all over Malaysia and in its regional operations, underpins its
philosophy of caring for its employees by:
• Providing a fair and equitable remuneration to employees;
• Ensuring that employees’ well-being are well taken care of;
• Providing growth and progression opportunities for all
employees;
• Providing a safe, secure, healthy and conducive work
environment.
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
178 Corporate Responsibility
The activities and initiatives undertaken to put into practice the
Public Bank Group’s philosophy of caring for its employees
and effectively discharging its corporate responsibilities in the
workplace cover the areas of human capital development, fair
and competitive remuneration, employee engagement, quality
of life, health and safety and labour rights.
Skills and Competencies
The Public Bank Group invests substantial resources in the
development of a competent and motivated work force,
particularly in the training of employees to enhance their skills
and competencies. With a purpose-built, dedicated Knowledge
and Learning Centre located in Bangi and staffed by 18 full
time trainers and Public Bank’s policy of mandatory training for
all levels of staff, over 26,000 man-days of classroom training
were conducted in 2009, with the equivalent of 3 man-days of
classroom training per employee achieved in 2009. In addition,
more than 59,000 participants completed interactive e-learning
courses on its E-platform in 2009. The Group continues to
enhance the skills and competency of its workforce to enable
employees to properly discharge their duties as well as prepare
employees for progression up the structured career path that
the Group offers to all employees.
Career Development
The promotion of employees from within the Public Bank
Group has always been a priority of the Group to accord
upward opportunities to performing employees. In 2009, 1,286
staff were promoted to assume higher positions within Public
Bank. As at the end of 2009, more than 90% of the Group’s
managerial staff were appointed from within. In addition, to
promote professional development of employees, the Group
sponsors staff for various relevant certification programmes
and provide incentives to staff to pursue work-related
qualifications. At the other end of the service scale, the
Group’s graduate employment initiatives provide the opportunity
for young people just embarking on their career to develop
with an award-winning and caring banking group. In 2009, the
Group offered career employment opportunities to 819 fresh
graduates.
Fair and Competitive Remuneration
The Public Bank Group constantly keeps abreast with market
developments on compensation and benefits in the financial
services industry as well as in the wider market place in
general. The Group participated in 2 annual total rewards
surveys as well as several quarterly pulse surveys in 2009 to
benchmark its remuneration package to that of the market
place so as to provide all employees with a competitive
remuneration that commensurates fairly with their contribution
to the Group.
In 2009, despite the recessionary economic conditions, the
Public Bank Group continued to reward performing staff with
handsome bonuses and generous increments based on their
contribution to the Group’s performance in 2008. A sum of
RM106 million was paid in performance bonuses to all levels
of staff with top performers being paid bonuses of up to 23
months of salary. Branches were also awarded generous cash
prizes, besides being recognised with various top performing
awards, for delivery of outstanding performance in selected
KPIs.
Employee Engagement
In its mission to achieve an excellent workforce, the Public
Bank Group spares no effort in getting its employees on-board
and engaged in a long and rewarding career. Upon joining the
Group, employees undergo a series of induction programmes
to orientate new employees to the Public Bank culture.
To further promote employee engagement, a management
seminar was held in 2009 involving over 1,400 managerial and
marketing employees, including those from the Public Bank
Group’s regional operations. With significant levels of input
from employees, these management seminars provide the
platform and the opportunity for employee involvement in
shaping the strategic business direction of the Group, as well
as aligning delivery expectations of employees with the goals
and strategies of the Group. In addition, by continuing to
uphold a high level of transparency and the adherence to high
ethical standards, the Group continues to instill in all its
employees the core values of the Group as a trusted leading
financial institution.
Engaged employees remain committed to their employers for
the long-term. The Public Bank Group takes pride in having an
engaged workforce that stay loyal and grow with the Group.
Long service with the Group is recognised tangibly by long

service gold medallions awards. In 2009, 1,142 employees
were recognised with long service award medallions with a
total value of RM2.7 million.
Enhancing Quality of Life
Over the longer term, the Public Bank Group continues to
enhance the quality of life of its employees. The 43-year
unbroken track record of profitability and strong financial
performance provide the backdrop to long-term stable
employment for employees who choose a career with the
Public Bank Group. With competitive remuneration packages
and employees well-being looked after through attractive
benefits such as medical benefits and insurance coverage, the
provision of low interest or interest-free loans for housing and
the purchase of cars and motorcycles, as well as other forms
of financial assistance, the Group seeks to provide a high and
sustainable quality of life to its employees. In addition, to
promote healthy work and lifestyle balance amongst its
employees, the Group organises various sporting competitions
and activities in addition to social gatherings and annual
dinners to promote cohesiveness and build team spirit amongst
the workforce.
The Public Bank Group’s care for its employees extends
beyond their tenure of employment with the Group. The Group
provides a defined benefits retirement plan to officers of the
Group, in addition to the EPF mandatory contribution scheme.
This long-term benefit provides employees with the social
safety net and the ability to sustain a good quality of life after
they retire from the Group.
Health and Safety
Public Bank adopts a proactive role to promote a safe and
healthy working environment for all its employees. The
formulation and enforcement of the Bank’s Safety and Health
Policy ensures that all employees are aware of their roles and
responsibilities in respect of the safety and health aspects of
the work place.
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
Corporate Responsibility 179
The 82 Safety and Health Committees, comprising
representatives of management and employees in head office
and branches continue to play their role in reviewing safety
and health issues at the workplace on a quarterly basis. Such
periodic reviews serve to foster joint ownership and create a
safe work environment for employees and customers. Periodic
in-house safety and health audits are also conducted to ensure
compliance with the Bank’s Safety Rules and Regulations.
Members of the Safety and Health Committees also participate
in relevant training seminars and workshops to enhance their
skills and knowledge in safety and health.
All employees are encouraged to attend biannual medical
check-ups at Public Bank’s panel clinics or hospitals, at the
Bank’s expense, to facilitate early detection and treatment of
any serious illness. The Public Bank Group also provides a
comprehensive medical benefit scheme for staff and their
immediate family. To create awareness on health issues and to
promote a healthy lifestyle amongst staff, the Group regularly
coordinates with health service providers and specialist
hospitals to conduct health talks and forums for staff on a
wide range of health related topics that may help promote a
healthy lifestyle amongst staff.
In 2009, during the height of the H1N1 pandemic, the Public
Bank Group, as a responsible employer and corporate citizen,
acted swiftly to help curb the spread of the virus through the
following initiatives:
• Circulated advisory notes regularly to alert staff on the
spread of the H1N1 virus and ways to prevent the spread
of the virus.
• Monitored the websites of World Health Organisation and
the Ministry of Health for the list of countries affected by
the H1N1 virus for circulation to staff to facilitate their
planning of overseas travel so that they would take the
necessary precautions or consider changing their travel
plans.
• Invoked internal guidelines on home quarantine of staff who
are deemed vulnerable.
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
180 Corporate Responsibility

• Temporary closure of branch premises PERFORMANCE DATA

and business centres for disinfection
and sanitation upon the detection of 2009 2008
infected cases among the staff % %
members. HUMAN RESOURCE
• Set-up hotlines to attend to enquiries Malaysia
for staff on home-quarantine. Supervisory 57.1 55.8
Non-supervisory 42.9 44.2
• Providing face masks to all staff and
hand sanitizers and hand wash for Female 58.9 56.2
use in the office. Male 41.1 43.8
Union members 25.5 26.8
Non-union members 74.5 73.2
Equal Opportunity and Meritocracy
Age group: < 30 41.5 40.7
The promotion of labour rights by the 30 to < 40 38.0 39.4
Public Bank Group involves the 40 to < 50 16.5 16.4
employment of staff under fair and 50 and above 4.0 3.5
equitable terms and an equal opportunity
for career advancement based on merit. Diversity: Malay 38.7 40.0
Employee remuneration and benefits Chinese 53.9 52.3
packages are monitored and regularly Indian 7.1 7.3
reviewed to ensure they remain Others 0.3 0.4
competitive in the labour market. A well Women in management 33.3 32.0
established and highly quantitative Women in top management 39.1 37.5
performance appraisal system, which is
very transparent to employees, provides Employee turnover rates:
the basis of both a performance related Supervisory 9.5 7.1
remuneration structure and a meritocracy Non-supervisory 7.7 9.4
based career path progression. Public Service in the Group: < 1 year 10.8 14.7
Bank also maintains cordial relationships 1 to < 5 years 25.7 20.3
with the various bank employee unions
5 to < 15 years 33.6 37.0
and adheres closely to the Code of
15 years and above 29.9 28.0
Conduct for Industrial Harmony to
promote a harmonious labour environment STAFF DEVELOPMENT
and adopts an open door policy where
Employee participation in training:
employees are provided with access to
Classroom (headcount) 26,304 24,481
appropriate channels of communication
E-learning (headcount) 59,380 23,832
for feedback and grievance resolution.
Average no of participants per training
The Public Bank Group strongly believes programme (headcount) 23 22
that it is its people who will define the Average training budget per employee RM1,728 RM1,730
Group. It has therefore, right at the onset,
Total hours of training per employee 22 hours 24 hours
sought to create a fulfilling, conducive
and caring environment for its employees EMPLOYEE WELFARE
and be their “Employer of Choice”.
Benefits paid under the Group’s protection
insurance policies:
i) Personal Accident Insurance (RM’000) RM453 RM121
ii) Group Term Life Insurance (RM’000) RM726 RM1,322

CR to Customers
The Public Bank Group is fully committed to providing the best
to its customers. The Group is not stopping at just providing
a comprehensive and competitive range of products and
services and a delivery infrastructure that is benchmarked to
international ISO standards. The Group is also conscious of its
corporate responsibilities to ensure the highest level of
transparency of the terms and conditions of its products and
services for customers to make informed decisions on the use
of the Group’s products and services. In addition, the Group
is also keenly aware of its responsibilities to assist borrowers
who may face difficulties in meeting their financial obligations
in the prevailing challenging economic environment.
Customer Transparency
Public Bank ensures that customers are provided with adequate
information on products, pricing and services to enable
customers to make informed decisions. Such information is
available on the Bank’s e-Banking platform and from brochures
placed at all the Bank’s branches. Customer Service
Representatives at the Bank’s branches are also on hand to
assist customers on all banking matters and to attend to
customers’ queries.
As part of its corporate responsibility to its customers in
treating customers fairly, the Public Bank Group has established
an efficient complaint resolution system. Public Bank has set a
maximum number of days for all customer complaints –
whether related to customer service, product or fraud – to be
acknowledged, resolved and notified to the customer promptly.
In 2009, Public Bank handled all cases of customers’ complaints
well within the maximum number of days set.
Extending Assistance to Borrowers
Public Bank has taken various proactive steps to assist
borrowers to meet their repayment obligations, including
extension of loan tenor and EPF withdrawals for housing loan
repayments to ease customers’ increased financial burden in
the current challenging economic environment. The Bank is
actively engaging with customers who encounter financial
difficulties in servicing their loans to restructure and reschedule
their loans such that their commitments are matched by their
reduced capacity to service their loans as a result of economic
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
Corporate Responsibility 181
distress or temporary unemployment, thus avoiding foreclosure
of the properties pledged as the security for their loans.
In 2009, Public Bank restructured and rescheduled over 16,900
loans totalling RM1.76 billion, of which RM1.07 billion were in
respect of residential mortgages.
CR in the Community
Building the Future through Education
The Public Bank Group continues to support the building of
the foundation for the nation’s future with the Group’s initiatives
in supporting the education of the nation’s youth.
Public Bank, a firm believer of the importance of quality
education, contributed RM1.25 million to Universiti Tunku
Abdul Rahman (“Universiti TAR”) for the establishment of the
Tan Sri Dato’ Sri Dr. Teh Hong Piow Chair in Banking and
Finance which will see the appointment of a distinguished
professor to hold the Chair and conduct applied research in
the field of banking and finance.
The Tan Sri Dato’ Sri Dr. Teh Hong Piow Chair in Banking and
Finance will be established at the Faculty of Business and
Finance in Univesiti TAR Perak Campus in Kampar to promote
exchange of technical expertise between industry and academia,
develop and achieve excellence in research and development
relating to banking and financial products and services, facilitate
and organise activities in advancing the banking and finance
industry as well as to establish a strong pool of experts
consisting of both academia and industry representatives to
provide financial consultancy.
Universiti TAR and TAR College students continue to benefit
from the RM2.0 million “UTAR-Tan Sri Dato’ Sri Dr. Teh Hong
Piow Student Loan Fund” and the RM1.5 million “TARC-Tan
Sri Dato’ Sri Dr. Teh Hong Piow Student Loan Fund” established
in 2007 to support Malaysian youths who have the capacity
and intellect but lack the means to pursue a higher
education.
Corporate Social Responsibility (“CSR”)
In fulfilling its corporate responsibilities to society and the
community that it serves, the Public Bank Group had in 2009
focused on CSR initiatives and activities in the areas of:
k Healthcare and the physically challenged
k Youth and community activities
k Support of the underprivileged
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
182 Corporate Responsibility
The efforts of the Public Bank Group in fulfilling its corporate
social responsibilities and its CSR initiatives was recognised in
2009 with the award of the Malaysian Business-CIMA Enterprise
Governance 2009 Award for Corporate Social Responsibility by
the Malaysian Business.
Healthcare
Public Bank donated RM30,000 to the Institut Jantung Negara
(“IJN”) Foundation in support of the IJN Foundation’s effort to
raise funds for poor and needy children undergoing treatment
at the IJN. The Bank also hosted a two-day sale for its 2,000
staff in its head office to promote the IJN Foundation’s
“Heartthrob Biri”, a children’s charity sales project of a line of
children wear consisting of more than 20 designs of clothes
and hand-painted shoes for children ranging from 2 to 12
years. Public Bank also distributed hampers and duit raya to
60 children who were undergoing surgical procedures or were
recuperating in the intensive care units of the IJN.
Youth and Community Activities
Public Bank continues to recognise the contribution of the
country’s police force by supporting the activities of police
associations with donations of RM50,000 each to the Kelab
Polis Trafik Bukit Aman and Kelab Polis Trafik Kuala Lumpur in
support of the welfare of policemen and their families.
In 2009, the Boys’ Brigade Malaysia continued to receive
financial support from Public Bank to assist with the Brigade’s
activities with donations of RM12,500 and RM10,000 to the
Brigade’s 2nd Company, Kampar and 1st Company, Johor
Bahru respectively.
In support of the National Association of Women Entrepreneurs
of Malaysia’s (“NAWEM”) objective of promoting, developing
and enhancing the efforts and activities of women entrepreneurs,
especially among single-mothers to be self-reliant economically,
Public Bank contributed RM7,000 to the launch of NAWEM’s
first affiliate office in Pulau Pinang.
Public Bank participated in Bank Negara Malaysia’s Financial
Awareness Week Exhibition 2009 with a sponsorship of
RM25,000. The exhibition was held in Kuala Terengganu from
22 to 24 October 2009 and sought to provide a platform to
increase the financial knowledge and awareness among the
consumers in the East coast states.
Support of the Underprivileged
Public Bank committed a total donation of RM500,000
comprising an annual grant of RM100,000 for a period of 5
years as financial assistance to cover the cost of the operating
and maintaining a halfway house facility for families of poor
and needy heart patients of the Institut Jantung Negara
(“IJN”).
This halfway house facility being set up by the IJN hospital in
a newly completed addition to the IJN hospital will provide a
total of 20 beds. The halfway house will provide free
accommodation to the families of needy patients undergoing
treatment at the IJN so that the close family support will
provide comfort to such patients and promote a faster recovery
from their heart treatment.
In 2009, Public Mutual Berhad channelled a total of over
RM484,000 of non-permissible income of its Islamic unit trust
funds to the Majlis Kanser National (“MAKNA”), the Malaysian
Medical Relief Society (“Mercy”) and 10 other charitable
organisations.
Environmental CSR
The increasing frequency of unseasonal and unusual climatic
changes and the regular occurrence of floods, hurricanes,
melting glaciers and raging bush fires around the world is a
constant reminder of the devastation and havoc wrecked by
the effects of environmental changes and global warming.
There is a clear and urgent need for everyone to address the
issue of the sustainability of the environment. There is also a
growing movement of investors that attach significant weightage
to environmental issues in their investment decision making
process.
The Public Bank Group, as a long-term partner with the
Government in nation building and as a responsible corporate,
is mindful of its role in helping to sustain and improve the
environment as its corporate responsibility to the future
generations of Malaysians and the citizens of the world. By
playing its part in both promoting environmental awareness
and in the conservation of the environment, as well as direct
participation in climate change initiatives, the Group continues
to play an active part in environmental CSR.

Public Bank – MNS Tree Planting – Climate Change
Programme
The Public Bank Group, together with its partner, the Malaysian
Nature Society (“MNS”) and in collaboration with the Ministry
of Natural Resources and Environment is involved in a multi-
year tree-planting project that will have a positive long-lasting
effect on the environment.
Public Bank is committed to working with the MNS to plant
20,000 trees on a 45-acre site owned by the Drainage and
Irrigation Department. The site is called the Kolam Takungan
Banjir Seri Johor in Cheras, Kuala Lumpur and is a flood
retention pond which forms part of the Kuala Lumpur city flood
management system. The planting of suitable species of
indigenous trees and the employment of appropriate planting
techniques will significantly enhance the flood retention
capabilities of the Kolam Takungan Banjir Seri Johor site. The
Public Bank-MNS Tree Planting-Climate Change Programme is
supported by Public Bank’s initial contribution of RM1.0 million
for the cost of planting 20,000 trees.
A total of 5,000 trees have been planted in the first phase of
this tree-planting project in 2008. A further 6,800 trees
comprising 55 species were planted in the second phase of
this project with the third phase targetting another 5,000 trees,
which started in September 2009.
As a carbon offset programme, the project has an annual
carbon absorption rate of 450,000 kg upon the maturity of the
targeted 20,000 trees to be planted, on the basis of a single
mature tree having a carbon absorption rate of 22.5 kg per
annum. At the same time, the planting of the trees will
significantly enhance the flood retention capabilities of the site
and improve the flood management system of Kuala Lumpur.
Besides establishing a green lung in the midst of an urban
landscape, the project would also provide the local community
with an amenity to enjoy nature with the flora and fauna of the
site as the trees mature. The Public Bank Group is also
committed to the subsequent maintenance of the site in
collaboration with the local authorities and with the assistance
of the MNS.
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
Corporate Responsibility 183
Green Building
Public Mutual Berhad, a wholly-owned subsidiary of Public
Bank, is in the process of planning for the building of a multi-
storey office building in the central business district of Kuala
Lumpur as its head office. This new building is designed for a
Leadership in Energy and Environmental Design (“LEED”)
Green Building Rating System certification by the US Green
Building Council, with the target of achieving a Gold LEED
rating. The LEED environmental rating system was selected for
the new head office building of Public Mutual Berhad due to
its worldwide recognition and stringent criteria and is the
recognised standard for measuring building sustainability in the
United States and a number of other countries.
In undertaking the green building certification, the LEED
categories that need to be addressed relate to sustainability of
the site, water efficiency, energy and atmosphere, materials
and resources, indoor environmental quality, as well as
innovation and design processes. Some of the specific
environmentally friendly design and construction features
include stringent construction erosion and sediment controls,
stormwater management, energy efficiency with the new head
office of Public Mutual Berhad targeted to be 40% more
energy efficient than a comparable conventional high-rise
commercial building and the use of environmental friendly
materials, including recycled content and wood from sustainably
managed forests.
Upon its completion, the new head office building of Public
Mutual Berhad will be one of the first “Green Building” in
Malaysia.
Raising Awareness of Environmental Change
In an effort to promote environmental awareness, Menara
Public Bank joined many other landmark buildings in the Kuala
Lumpur cityscape in the Earth Hour 2009 initiative by turning
off its external lighting and other non-essential lights for one
hour on 28 March 2009. The effort initiated by the World
Wildlife Fund yielded a significant result in Malaysia with
domestic electricity consumption dipping by some 550 MW
during the Earth Hour 2009.
The Public Bank Group continued with its tradition of promoting
environmental conservation with its annual corporate gifts. The
theme for the Group’s corporate diaries and desktop calendars
continued to promote environmental awareness with the 2010
theme featuring flora and fauna subjects.
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
184
Human Capital Development
It’s About the People,
Always!
In today’s global markets, it is
often said that everything being
equal, the only differentiating
factor that companies have in
the future is their human
capital. This being the case,
the Public Bank Group
continuously seeks a staff force
which is competent, confident,
competitive and disciplined.
The Public Bank Group’s Core Human
Resource Development Values
k Customer Centricity
k Creating Sales Opportunities
k Sense of Ownership
k Commitment to Life Long Learning
Often recognised as the bedrock of an organisation’s
corporate culture, these four core human resource
development values are aimed at moulding the
behaviour and actions of the Group’s 17,169
employees. Indeed, they have guided the organisation
and become the common language amongst the
employees of our organisation.
The People of the Public Bank Group
To accelerate our business growth, total Group staff
strength expanded to 17,169 as at the end of 2009,
an increase of 6.2% from a year ago. The increase is
a reflection of the Group’s commitment to organic
growth strategies whilst encompassing partnerships
with best expertise and expansion of business
scope.

Key C ha l l enges o f H u man C apita l
Management
Despite the global recessionary economic conditions, the
Public Bank Group still stands out as one of the most robust
and profitable financial services group. This is in no small
part a result of the personal commitment of each and every
employee, day after day, in the pursuit of the Group’s
goals.
Talent retention represents a perennial challenge. As a
competitive business enterprise, the Public Bank Group
remains attentive to each person’s expectations and attempts
to respond to them by adapting its human resource policies
and management practices. A major thrust in retaining the
Group’s talent is to ensure transparency in both their
developmental paths and key performance indicators
(“KPIs”).
Adapting to development and change
Growth strategies work only if they are supported by the
appropriate human resource who are able to helm key
positions and produce the desired results. It is therefore
important that the Public Bank Group continuously forecast
and anticipate employees needs by charting the effects of
organic growth and business expansion, as well as the age
pyramid of the Group’s staff.
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
Human Capital Development 185
The Group’s human resource division regularly gives talks at
universities and schools to position the Group as a brand-
name employer among graduates and students so as to
ensure a regular pipeline of candidates for recruitment.
Profiling tools are then used to ensure that recruitment
activities meet the specific needs of each business unit.
Developing the Skills of Employees and
Teams
Training as a solution for today’s and tomorrow’s
business
With the rapid pace of change and transformation in
businesses and organisations, training and development has
become increasingly critical as a means to:
k raise the performance levels of staff
k enhance their employability and mobility within the
organisation
k recognise the value of staff and develop their loyalty
Whilst training is a mechanism to foster exchange of
knowledge and a platform to share experiences as well as
to learn from each other, it is also the melting pot where the
Public Bank Group’s staff get to be better acquainted with
the Group and the environment and regulations that cover
banking activities.
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
186 Human Capital Development

Raising employees’ performance levels

Employees need to be equipped with the competencies and
expertise of their respective fields in order that they can fulfill
their responsibilities to achieve business effectiveness. The
Public Bank Group’s training curriculum therefore combines
professional training for the various business streams for in-
depth knowledge with cross-functional input to provide
employees with the big picture. In addition, each employee is
required to fulfill a mandatory three day training with key
drivers averaging 7 to 10 training days.

Modelled along the lines of classroom training, e-learning and
on-site mentoring, the Public Bank Group’s training is designed
to capture a wide audience in a timely manner. For 2009, a
total of 26,304 staff were trained in over 2,493 classroom
training days while another 59,380 employees were able to
upscale themselves via the e-learning platform, which is the
equivalent of a further 1,549 training days.
The Public Bank Group’s training approach is supplemented by
competency checks at various timelines to ensure that
appropriate knowledge is being imparted and retained. These
include mastery tests which require a mandatory passing rate
as one of the key criteria for promotion onto the next level of
the corporate ladder.
Valuing, Motivating and Building Loyalty
Managing career dynamics and mobility
The Public Bank Group’s career management policy is first and
foremost to ensure long-term succession for the purpose of
sustainability of the Group. High potential executives are
continuously being identified and groomed so that they could
in future take over key positions within the Group.
The developmental paths for junior staff positions are also
equally transparent. Clerical staff joining the Public Bank Group
know up-front that they can move up into junior supervisory
positions; thus making them motivated to challenge themselves
to contribute to the Group and to stay loyal to it.

As the Public Bank Group’s staff continue to progress in their
career, the Group is also challenged to prioritise their individual
ability and aspirations to move from one business line within
the Group to another as well as to move up the corporate
ladder. As support measures, specific training paths are drawn
up for different job streams. An employee who started off his
career in sales can opt to move on to the business stream
through re-training and up-scaling which includes completion
of identified mandatory programmes by heads of the various
business units. The Group also sponsor staff for various
certification programmes. Incentives are also awarded to staff
upon attainment of specific work-related qualifications.
Inducting of new employees
Induction programmes play a crucial role in enabling all new
recruits to learn about the Public Bank Group and to understand
how the business or support units where they work fit into the
whole. Through these programmes, the staff are also provided
an occasion to build their first network of acquaintances within
the Group. Programmes focusing on the Group’s values and
business principles are also offered as an integral effort to
create a sense of belonging.
Other initiatives to promote employee engagement and loyalty
include Management Seminars and Sales Conventions which
provide a platform for staff to participate in the strategic
business direction of the Public Bank Group and to align their
delivery to the expectations of the Group.
Career mobility is not only a competitive advantage for the
Public Bank Group in its efforts at talent retention but is also
a preferred means of adapting the Group’s human resources
to the development of its business streams; even at inter-
company level and at different geographic locations. It also
allows employees to enhance their professional experience and
move ahead in their careers. This is complemented by a highly
quantitative and transparent appraisal system that forms the
basis of a performance-based reward structure and a structured
career path progression.
In recognition of employee engagement and their loyal service
with the Public Bank Group, specially minted silver and gold
medallions are awarded to employees with 10 years of service
and above. In 2009, 1,142 employees were awarded with
medallions with a value totalling RM2.7 million.

Remunerating Work Performance
Whilst the Public Bank Group pays its staff based on a
structured system reflecting skills and levels of responsibility,
its remuneration package also recognises exceptional work
performance and achievement of set objectives. To ensure that
its remuneration package commensurate with market norm, the
Group participated in 2 annual total rewards surveys as well as
several quarterly pulse surveys.
In 2009, despite the global economic recession, the Public
Bank Group rewarded performing staff with handsome bonuses
and generous increments. RM106 million was paid in
performance bonuses to all levels of staff with top performers
being paid bonuses of up to 23 months of salary.
A range of extensive benefits are also offered which includes
medical benefits, staff housing and car loan rates which start
as low as zero percent, preferential rates for employee savings
and waiver of management fees for purchase of investment
products. Loyal employees can also look forward to payments
from a retirement fund set up to reward such loyal
employees.
To encourage team work performance, branches were also
given generous cash awards for emerging top in their league
in selected KPIs.
Employee Health Matters!
Employee health is a serious matter to the Public Bank Group.
A total of 82 Safety and Health Committees comprising
representatives of management and employees are set up at
both Head Office and in branches to provide a safe and
healthy working environment. Periodic in-house safety and
health audits are also conducted to ensure compliance of the
Group’s Safety Rules and Regulations.
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
Human Capital Development 187
All staff enjoy a standard of comprehensive medical care
including specialist treatment reflective of a caring employer
which is also extended to their immediate family members. In
addition, all supervisory staff are encouraged to undergo
biennial medical check-ups.
To reinforce the Public Bank Group’s philosophy that “Public
Bank Cares for Its Employees”, staff of all levels can attend
health and wellness as well as stress management programmes
where they are exposed to a wholistic approach on health
care. Talks on health encompassing contemporary issues such
as H1N1 and health risk issues such as cardiovascular diseases
and cancer are organised together with health service providers
and specialist hospitals to promote a healthy lifestyle and
create awareness of health issues among a wider circle of
staff.
In a year where the fear of a H1N1 pandemic is rife, the Public
Bank Group acted swiftly to help curb the spread of the virus.
Among the initiatives taken to protect the Group’s employees
are advising them on the prevention and management of the
spread of the virus as well as circulation of the list of the
countries affected by the virus. The Group also provided face
masks and hand sanitizers and hand wash to its staff. De-
sanitisation of premises as well as quarantine of staff are also
invoked immediately upon confirmation of the possibility of
H1N1 virus for the safety of the Group’s employees, customers
and the public in general.
Sustaining a harmonious industrial climate
The Public Bank Group is committed to create a conducive
and pervasive industrial climate for its employees. As such, the
Group takes proactive measures to maintain a cordial
relationship with the various Bank Employee Unions while
adhering closely to the Code of Conduct for Industrial Harmony.
The Group also adopts an open door policy to allow employees
access to appropriate channels of communication for feedback
and grievance resolution.
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
188 Calendar of Significant Events 2009

Corporate

9 February Public Bank (Hong Kong) Limited

The Founder and Chairman relocated its North Point Branch to
19 January

Tan Sri Dato’ Sri Dr. Teh new premises at Two Chinachem
Hong Piow setting out the Exchange Square, North Point,
strategic direction of the Hong Kong.
group’s business at the 5th
National Sales Convention
2009 held at Sunway Lagoon
Resort Hotel with 1,300
Winton (B.V.I.) Limited, a wholly-owned subsidiary
10 February
marketing personnel, regional
managers and overseas of Public Financial Holdings Limited, Hong Kong,
marketing staff in continued its business expansion drive with the
attendance. opening of To Kwa Wan branch, its 4th branch in
Hong Kong.

Public Islamic Bank, a wholly- Winton (B.V.I.) Limited

3 March

9 March

owned subsidiary of Public opened its 5th branch in

Bank, was officially launched by Hong Kong with its Sham
Y.Bhg. Tan Sri Dato’ Sri Dr. Zeti Shui Po branch.
Akhtar Aziz, the Governor of
Bank Negara Malaysia. The new
subsidiary will contribute to Bank
Negara Malaysia’s long-term
goal of creating a viable, sound
The Founder and Chairman Tan
25 February

and competitive Islamic financial

Sri Dato’ Sri Dr. Teh Hong Piow system in the country.
presented a comprehensive
review of the Public Bank
Group’s 2008 performance at
Public Bank’s 43rd Annual
General Meeting.
 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
Calendar of Significant Events 2009 189

Over 1,400 participants from Malaysia, Founder and Chairman Tan

14 March

14 April
Hong Kong, Cambodia, Vietnam, Laos Sri Dato’ Sri Dr. Teh Hong
and Sri Lanka attended the 2009 Piow received a courtesy
Management Seminar at Sunway visit from the new Federal
Lagoon Resort Hotel. With the theme Police Chief of Traffic, SAC
“Challenging Limits to Surpass II Dato’ Abdul Aziz Yusof,
Expectations”, Tan Sri Teh urged all his and his team of traffic
key business drivers to be aggressive Public Bank (Hong Kong) policemen from Bukit Aman.
23 March

on the multiple fronts of the group’s Limited opened a new branch

funded business interest as well as its at Quarry Bay, Hong Kong,
non-interest income business whilst bringing its branch network
exercising the group’s traditional to 32 branches.
prudence in its lending business.

Campu Bank reached Public Bank issued RM1.2

28 May

1 June

5 June

another milestone with the billion of stapled securities

opening of its 13th Branch in to enhance its capital
Phnom Penh Special adequacy ratios. The stapled
Economic Zone (PEZ), Kandal securities comprised non-
Province. cumulative perpetual capital
securities of RM1.2 billion
issued by Public Bank, and
an equivalent nominal value
Winton (B.V.I.) Limited opened of subordinated notes issued
its 6th branch in Hong Kong by Public Bank’s wholly-
with its Tuen Mun branch. owned subsidiary, PBFIN
Berhad.
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
190 Calendar of Significant Events 2009

Public Bank launched its

15 June

15 July
Renminbi Trade Settlement
Service, in collaboration with
Bank of China (Malaysia) Berhad,
making Public Bank the first
bank to offer this service in
Malaysia.

Public Bank (Hong Kong) A delegation of HR Development staff from Vietinbank

7 August

Limited opened its newest (Vietnam Bank for Industry and Trade) paid a visit to
branch in Shatin, Hong Kong Public Bank’s Knowledge & Learning Centre in Bangi to
bringing its branch network gain insights into the training and development programs
to 33 branches. of one of the most established banks in Malaysia.

Public Bank’s Li Hua branch,

10 July

the 19th branch in Sarawak

and the 243rd branch in
Malaysia opened its door for
business.

Winton (B.V.I.) Financial

13 August

26 August

Limited opened its 7th

branch in Yuen Long in
Hong Kong.

Public Bank joined CIMB Bank Berhad

and Affin Bank Berhad to provide a
RM315 million syndicated banking
Jalan Pantai Branch was The biography on Founder
21 August

26 August

facility to fund the development of Setia

officially opened for business and Chairman Tan Sri Dato’
City Mall, a retail mall in Setia Alam,
in Kota Kinabalu. This is Sri Dr. Teh Hong Piow
Shah Alam.
Public Bank’s 14th branch in entitled ‘Teh Hong Piow – A
Sabah and its 244th branch Banking Thoroughbred’ was
in Malaysia. nominated for POPULAR –
The Star Readers’ Choice
Awards 2009 at the Kuala
Lumpur Convention Centre.
 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
Calendar of Significant Events 2009 191

Public Bank opened its 19th Public Bank’s 20th branch in

10 September

branch in Kelantan – Wakaf 2 October Sarawak – Stutong branch

Siku branch. This marked opened its door to customers.
the Bank’s 245th branch in This is Public Bank’s 246th
Malaysia. branch in Malaysia.

Dato’ Muhammad Ibrahim, the Assistant Governor of

9 October

Bank Negara Malaysia (BNM) and Ms. Yap Lai Kuen, the
Cambodian Public Bank
18 September

BNM Director of Insurance and Takaful Insurance who

relocated its Head Office were in Laos for the 12th ASEAN Insurance Regulators
and Phnom Penh Main Meeting, paid a courtesy visit to our Sikhai Branch in
Branch to a 12½ storey new Laos.
office building strategically
located in the main financial
district of Phnom Penh,
Cambodia.

Executive Director Dato’ Lee Kong Lam Medan Sentral branch in

24 October

26 November

was conferred the “Darjah Kebesaran Sultan Bintulu, the 21st branch in
Ahmad Shah Pahang Yang Amat Mulia – Sarawak was officially
Peringkat Pertama Sri Sultan Ahmad Shah opened for business. It is
Pahang (SSAP)” which carries the title the Bank’s 247th branch in
“Dato’ Sri” by His Royal Highness Sultan Malaysia.
Haji Ahmad Shah Al-Mustain Billah Ibni
Al-Marhum Sultan Abu Bakar Ri’ayatuddin
Al-Mu’adzam Shah, the Sultan of Pahang,
in conjuction with his Highness’ 79th
birthday at the Istana Abu Bakar, Pekan A convoy of five of the latest Multi-
24 November

Pahang. Purpose Vehicle (MPV) named

Perodua Alza made a one-hour stop
over at Menara Public Bank as part
of Perodua’s promotional activities
to introduce the national car’s new
MPV into the market.
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
192 Calendar of Significant Events 2009

CORPORATE SOCIAL RESPONSIBILITY

Public Bank donated 200 tickets to orphans Public Bank joined many other
30 January

28 March
from eight ophanages to see and enjoy the landmark buildings in Kuala
musical Puteri Gunung Ledang: the Musical Lumpur by turning off its external
(Season 3) as part of the Bank’s commitment and non-essential lightings for
to help the underpriviledged. one hour in conjunction with
Earth Hour 2009.

Public Bank was one of the

12 January

main sponsors of the

inaugural Malaysian Chinese
Association ICT Resource
Centre’s Micro Financing
Expo at the Chinese Chamber
of Commerce and Industry,
Kuala Lumpur.

Public Bank was the

16 April

11 May

Luncheon Host of the Prime

Founder and Chairman Tan
Sri Dato’ Sri Dr. Teh Hong
Minister, Dato’ Seri Mohd.
Najib Tun Razak’s Keynote
Address at the Asian Strategy
and Leadership Institute’s
13th Malaysian Banking
Summit held at the Mandarin
Oriental Kuala Lumpur.
The Boys’ Brigade 2nd Company
12 May

Piow presented Public Kampar received RM12,500 of

Bank’s sponsorship to the financial assistance from Public
Malaysian Institute of Bank in support of their activities.
Management (“MIM”) in
support of the “MIM-Public
Bank Manager of the Year”
award programme, being its
2009 contribution to this
five-year programme.
 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
Calendar of Significant Events 2009 193

Public Bank contributed RM1.25 million to Universiti Tunku

14 May

Abdul Rahman for the establishment of the Tan Sri Dato’ Sri
Dr. Teh Hong Piow Chair in Banking and Finance.

Public Bank continued its commitment to uphold the highest

ethical and professional standards in the promotion of
The Head office staff of Public

4 July
management accounting excellence with a contribution of
Islamic Bank organised a beach
RM60,000 in support of the National Award for Management
cleaning campaign along 10th mile,
Accounting “NAfMA” for the 6th year.
Port Dickson as part of their family
day activities and contribution
The Chartered Institute of Management Accounts “CIMA”
towards a cleaner environment.
received RM30,000 in support of its CIMA World Conference
2009 which was hosted in Kuala Lumpur for the first time.

The Boys’ Brigade 1st A two-day sales promotion was

7 August

14 & 15 September

Company Johor Bahru held at Menara Public Bank for

received a RM10,000 Institut Jantung Negara (“IJN”)
donation from Public Bank Foundation’s newly launched
to assist in the expansion of range of children’s wear called
the Boys’ Brigade brass Heartthrob Biri. A total of
band. RM5,606 was raised to help pay
for the treatment of poor and
The Kelab Polis Trafik Kuala
16 September

needy child heart patients at

IJN. Lumpur received a festive
donation of RM50,000 from
Public Bank for the welfare
of traffic policemen and their
families.
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
194 Calendar of Significant Events 2009
6 October
21 October
Institute Jantung Negara
(“IJN”) Foundation received
a donation of RM30,000
from Public Bank to assist
poor and needy children
undergo heart treatment in
IJN.
Approximately 200 Public
5 November
Bank staff and members of
the public gave support
towards a Blood Donation
Drive at Menara Public Bank
to help replenish blood
supply of the National Blood
Centre.
RM40,000 worth of a special Public Bank donated
21 October
publication entitled ‘Amanat RM50,000 towards a newly
Presiden UMNO 1946-2009’ was set-up Kelab Polis Trafik
purchased by Public Bank. The Bukit Aman to assist with
publication which was launched the social and recreational
by the Deputy Prime Minister, activities of the Bukit Aman
Y.A.B. Tan Sri Muhyiddin Bin Traffic Police contingent.
Yassin, is a compilation of
speeches by six past UMNO
Presidents.
Public Bank sponsored RM30,000
9 November
for the 6th MICPA-Bursa Malaysia
Business Forum 2009 organised by
the Malaysian Institute of Certified
Public Accountants.
25 Marketing Managers and Executives of
7 November
Public Islamic Bank participated in a
community service project entitiled ‘Sehari
Bersama Warga Rumah Titian Kasih’.
Located at Tasik Titiwangsa Kuala lumpur,
Rumah Titian Kasih is a home for 85
orphans and 20 underpriviledged mothers.

awards & accolades
21 January
26 February
Public Bank was named the
“Best Retail Bank in
Malaysia” by Asian Banking
& Finance at a presentation
ceremony held at Shangri-La
Hotel, Singapore.
11 April
5 May
Public Bank was accorded
four prestigious awards: Best
Retail Bank in Asia Pacific,
Best Retail Bank in Malaysia,
Best Deposits/Product
Campaign and Excellence in
Automobile Lending by The
Asian Banker.
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
Calendar of Significant Events 2009 195
Public Bank was named the
5 March
winner of “The 4th Asia
Pacific Super Excellent Brand
2008 – Elite Award” by the
Asia Entrepreneur Alliance
Worldwide in recognition of
For the fifth time, Public Bank swept the Bank’s top leadership
five awards in leading Hong Kong- brand in products and
based financial publication Asiamoney’s services.
2008 Corporate Governance Poll for
Overall Best Company for Corporate
Governance in Malaysia, Best Disclosure
and Transparency, Best Responsibilities
of Management and the Board of
Directors, Best for Shareholders’ Rights
and Equitable Treatment and the Overall
Best Managed Company in Malaysia –
Large Cap.
FinanceAsia, a leading Hong Kong-
20 June
based financial publication, awarded
Public Bank the ‘Best Bank in
Malaysia’ and the ‘Best Managed
Company in Malaysia’ awards and
accorded its inaugural ‘Best CEO in
Malaysia’ award to Founder and
Chairman, Tan Sri Dato’ Sri Dr. Teh
Hong Piow.
For the 6th consecutive year
since 2004, Public Bank was
voted the Reader’s Digest
Trusted Brand in the banking
category for Malaysia in the
publication’s Trusted Brands
Survey 2009.
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
196 Calendar of Significant Events 2009

30 July Public Bank received the

‘ B e s t B a n k i n M al a y s i a
Award’ by Alpha South East
Asia, a Hong Kong-based
institutional investment
magazine at the Mandarin

3 November
Oriental, Kuala Lumpur.
Public Bank was named the winner
25 June

of the Frost & Sullivan Award for

‘Automotive Finance Company of
the Year (Malaysia)’ for the 2nd
time.

Public Bank was adjudged the

winner of the ‘Banking Institutions
Language Award (Commercial
Bank Category) 2009’ by Dewan
Bahasa dan Pustaka in
conjunction with the National
Language Month in October
2009.

The Asset financial magazine

19 November

accorded Public Bank the

‘Best Domestic Bank in
Malaysia 2009’ award for the
8th consecutive year since
2002.

Public Bank was the Overall Winner

6 November

The Association of Accredited

20 November

of the Malaysian Business-CIMA

Advertising Agents Malaysia and The
Enterprise Governance Award 2009
Edge ranked Public Bank, Malaysia’s
for the 2nd consecutive year. The
second most valuable brand at the
Bank also received the Best Return
inaugural Malaysia’s Most Valuable
to Shareholders and Corporate
Brands Award 2009 presentation
Social Responsibility category
ceremony held at the Mandarin Oriental
awards at the presentation ceremony
Kuala Lumpur.
held at Crowne Plaza Mutiara, Kuala
Lumpur.
 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
Calendar of Significant Events 2009 197

3 December The Banker, a UK-based

financial publication, declared
Public Bank as the ‘Bank of
the Year in Malaysia 2009’
for the fourth time.

Public Bank secured three platinum

2 December

awards namely ‘Most Outstanding

Annual Report – Overall Excellence’
(third consecutive time and ninth
time since 1990), ‘Industry Excellence The Minority Shareholders

10 December
For The Finance Sector’ (13th Watchdog Group (MSWG)
consecutive time) and ‘Best Annual accorded Public Bank with
Report in Bahasa Malaysia’ (sixth the ‘Overall Excellence
consecutive time) at the National Award’ and ‘Best AGM
Annual Corporate Reports Award Conducted in 2009 Award’
(NACRA) 2009. during MSWG’s unveiling of
the Malaysian Corporate
Governance Index.

Products & Services

Public Bank presented to three PB Manchester

February

United MasterCard Cardmembers the “One

Red Day” prize which covered a return flight to
The electronic clearing of
12 February

Manchester, United Kingdom, a tour of the Old

cheques under the Cheque
Trafford Stadium, Red Museum and the
Truncation and Conversion
Manchester United Training Centre in
System was implemented at
Carrington, RM2,000 spending money and the
all branches nationwide to
chance to catch a home match live at the
provide an image based
Theatre of Dreams.
cheque clearing system
which reduces the outstation
cheques clearing to just one
day as compared to five to
eight business days
previously.
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
198 Calendar of Significant Events 2009

Public Bank forged a strategic alliance with

8 May Miri Port Authority to provide the Financial
Processing Exchange collection service to
Miri Port’s customers via www.e.Maritime.
com. This online payment service is the
first of its kind to be provided by any port
authority in the country.
The “PB Lifestyle – Live Up Your
30 March

Life with PB Cards” campaign

was launched and ran from
1 April 2009 to 31 July 2009.

A new Public Bank children’s

26 May
savings account, PB Bright
Star, was launched to
inculcate the savings habit
amongst the young and to
nurture them to save for the
future.

Public Bank launched the PB Public Bank and ING Insurance

1 July

13 July

Templeton Global Asian Focus Berhad launched the PB-ING Asian

Fund, a close-end structured Jewels Plan to further fortify their
investment product managed by 10-year regional strategic alliance
The PB Day 2 Day Visa card Templeton Asset Management and provide more value-added
8 June

was launched to strengthen
Public Bank’s foothold in the
Malaysian payment card
business. This new card
functions both as a Visa
Debit Card and an ATM
Card.
Limited which enables investors to
take advantage of worldwide bond
opportunities with the Templeton
Global Fund and at the same time
gain exposure to emerging
economies in Asia with the
Templeton Asian Growth Fund which
invests in equities in Asia.
products to Public Bank’s customers.
The PB-ING Asian Jewels Plan is a
five-year single premium unit-linked
plan specially designed to enable
customers to invest in selected
Asian markets.
 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
Calendar of Significant Events 2009 199
17 July

The Manchester United MasterCard was relaunched Public Bank and AmBank Berhad
28 October

after being introduced in 2004 under an affinity collaborated with ING Funds to
partnership with Barclaycard International. Public offer a new structured income
Bank will continue to be the exclusive issuer of product known as the ING
Manchester United credit cards in Malaysia under Structured Income Fund, which
a new partnership with AIG Consumer Finance offers fixed annual payout in
Group Inc. Ringgit Malaysia, potential
additional variable returns and
return of invested capital.

Staff Relations
14 March

Founder and Chairman Tan Sri Dato’

27 January

Sri Dr. Teh Hong Piow hosted a

Special Chinese New Year Dinner
for staff members at Shangri-La
Hotel, Kuala Lumpur.

86 Special Awards were presented

to winning branches of the 2008
Branch Performance Awards,
including the most prestigious
Founder and Chairman’s Award for
the Overall Best Branch which was
won by SS2 branch.
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
200 Calendar of Significant Events 2009

Public Bank’s various regions in In conjunction with the Hari

April – December

16 September
Malaysia and its subsidiaries celebrated Raya festival, Kuala Lumpur
the 43rd Anniversary of the Public Bank Traffic Police gave Public
Group with dinner events, which were Bank’s staff a talk on “Road
graced by Founder and Chairman, Tan Safety during Festive
Sri Dato’ Sri Dr. Teh Hong Piow. Seasons” at Bunga Raya
Auditorium in Menara Public
Bank.

A total of 322 staff of

11 May

Campu Bank and

CampuBank Lonpac
Insurance were rewarded
with a trip to Beijing for
their contributions to the
performance of Campu
Bank in the year 2008.

Our staff, En. Muhammad Ruzzaimei Public Bank’s table tennis team
3 November

13-15 November

Bin Azhar, was the champion of emerged the undefeated champion

the inaugural Governor’s Cup Inter- for 20 years in a row in the Inter-
Financial Institutions’ National Financial Institutions Table Tennis
Language Public Speaking Contest Tournament 2009 organised by the
organised by Bank Negara Malaysia National Bank’s Sports Council,
and Dewan Bahasa dan Pustaka. Malaysia at the Petronas Training
Centre, Bangi, Selangor.
 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
 201

financials
202 Analysis of The Financial Statements •
205 Statement of Responsibility by Directors

Financial Statements 2009

206 Directors’ Report • 215 Statement by Directors •
215 Statutory Declaration • 216 Independent Auditors’ Report •
218 Balance Sheets • 220 Income Statements •
222 Consolidated Statement of Changes in Equity •
224 Statement of Changes in Equity • 225 Cash Flow Statements •
228 Notes to The Financial Statements
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
202 Analysis of The Financial Statements
ANALYSIS OF THE INCOME STATEMENT
Net Interest Income
The Public Bank Group’s net interest income improved by
8.3% or RM309.1 million to RM4,036.4 million for 2009 as
compared to RM3,727.3 million for 2008. The increase in net
interest income was mainly attributed to strong loan growth of
14.4%, which more than offset the negative impact on net
interest margin resulting from the 3 consecutive cuts in
Overnight Policy Rate (“OPR”) between November 2008 and
February 2009.
Net interest margin on interest-bearing assets (excluding funds
from wholesale deposits) in 2009 remained stable at 3.2%.
Net interest income is the main source of revenue for the
Public Bank Group, contributing 65.9% of the total net income
of the Group in 2009 as compared to 65.0% in 2008.
Net Income from Islamic Banking Business
The Public Bank Group’s Islamic banking business continued
to flourish in 2009 with an increase in net income by
RM133.2 million or 23.8% to RM691.6 million from
RM558.4 million in 2008. This was mainly due to higher net
financing income of RM126.2 million arising from lower cost of
fund due to the drop in OPR, coupled with the growth in
Islamic financing and deposit. In 2009, the Group’s Islamic
banking business accounted for 11.3% of the Group’s total net
income, as compared to 9.7% in 2008.
Other Operating Income
In 2008, the Public Bank Group’s other operating income
included a significant one-off goodwill income of
RM200.0 million in respect of the bancassurance distribution
alliance with ING Asia/Pacific Limited. Excluding this one-off
income, the Group’s other operating income increased by
11.4% or RM143.4 million to RM1,396.9 million. The increase
was primarily due to higher income from the Group’s fund
management activities, higher brokerage and commission
income from stock-broking activities and higher investment
and trading income as a result of improved market conditions
in the Malaysian equities and bonds market.
Total income from the fund management activities increased
by RM46.2 million or 11.7% to RM442.7 million in 2009. This
comprises unit trust management fees which increased by
12.7% to RM373.8 million and fee on sale of trust units which
increased by 6.2% to RM68.9 million. These were contributed
by exceptional growth in net asset value of unit trust funds
under management of 52.6% to a record RM35.58 billion as at
the end of 2009.
Net brokerage and commissions from stock-broking activities
also grew by RM17.5 million or 25.2% to RM87.0 million in
2009 as a result of higher volumes on Bursa Securities.
Investment and trading income increased significantly by
RM83.6 million or 109.4% due mainly to increased investment
and trading activities arising from improved market conditions.
In 2009, the Public Bank Group’s other operating income
accounted for 22.8% of the Group’s total income as compared
to 25.3% in 2008.
Other Operating Expenses
The Public Bank Group’s other operating expenses increased
by 17.8% to RM2,109.9 million for 2009 as compared to
RM1,791.1 million for 2008, mainly due to higher personnel
costs.
Personnel cost increased by RM207.6 million or 19.6% to
RM1,269.3 million in 2009 and accounted for 60.2% of the
Group’s other operating expenses. The increase was due to
annual salary increments, increased staff strength as well as a
non-recurring recognition of actuarial gain on employee
retirement fund of RM41.9 million in the previous year. The
number of employees of the Group increased from 16,160 as
at the end of 2008 to 17,169 as at the end of 2009.
Marketing expenses rose by RM33.5 million or 15.0% to
RM257.4 million in 2009. The increase in marketing expenses
was primarily due to higher sales commission, marketing and
promotional expenses incurred as a result of the increased
business volume of the fund management business.
Establishment costs and administration and general expenses,
which accounted for 27.6% of total other operating expenses,
increased by 10.6% and 25.0% respectively in 2009.
The Public Bank Group remains the most cost efficient amongst
domestic banking groups with a cost to income ratio of 34.4%
in 2009 as a result of the Group’s continued focus on improving
efficiency and productivity.
Allowance for Losses on Loans, Advances and
Financing
The Public Bank Group’s allowance for losses on loans,
advances and financing increased by RM142.4 million or
26.0% to RM691.0 million in 2009 as compared to
RM548.6 million in 2008. This was primarily due to higher
specific allowance of RM79.7 million, higher general allowance
of RM61.5 million as a result of the Group’s strong loan growth
and lower recoveries of bad debts and financing of
RM1.2 million. The increase in specific allowance was primarily
due to additional specific allowances made for impaired loans
of the Group’s overseas operations as a result of worsening

economic conditions in 2009, partially offset by a decline in
specific allowance of RM75.4 million for the Group’s domestic
operations.
Impairment Loss
The Public Bank Group made an impairment charge of
RM15.1 million in 2009 as compared to a charge of
RM32.9 million in 2008. The decline was mainly due to lower
impairment loss on investment securities as market conditions
for equity and bond market improved in 2009.
Tax Expenses and Zakat
The Public Bank Group’s tax expense for 2009 increased by
RM13.4 million or 1.8% due mainly to prior years’ over provision
of tax expenses which was written back in the previous year.
The Group’s effective tax rate was 23.2% in 2009, lower than
the statutory tax rate of 25.0% mainly due to certain income
not subject to tax and the effects of lower tax rates in
jurisdictions outside Malaysia.
ANALYSIS OF THE BALANCE SHEET
Total Assets
The Public Bank Group’s total assets stood at RM217.14
billion as at 31 December 2009, an increase of 10.7% over the
previous financial year. Total asset growth in 2009 was driven
mainly by the increase in deposit placements by customers
and the issuance of non-innovative Tier 1 stapled securities
and subordinated notes, which were channelled to fund the
continued strong growth in loans, advances and financing.
At the end of December 2009, net loans, advances and
financing represented 62.3% of total Group assets and the
proportion of interest-bearing assets to total assets was 94.5%
compared to 93.1% in 2008.
Cash and Short Term Funds and Interbank
Placements
Excess liquidity in the Group was mainly held as interbank
placements with financial institutions and Bank Negara Malaysia.
As at 31 December, Cash and Short Term Funds and interbank
placements with maturities above one month increased by
RM6.88 billion and RM1.24 billion respectively.
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
Analysis of The Financial Statements 203
Investments in Securities
The Group holds investments in securities mainly for yield and
liquidity purposes. Holdings of trading book positions are
classified under Securities Held-for-Trading. The Group’s
trading book position has decreased by RM3.39 billion, mainly
due to the liquidation of its holdings of Cagamas bonds. The
Group’s banking book positions are held under its Securities
Available-for-Sale and Securities Held-to-Maturity portfolios.
Securities Available-for-Sale, which are held for liquidity and
yield purposes, saw a sharp increase of RM6.54 billion whereas
securities held for yield purposes under Securities Held-to-
Maturity reduced by RM1.67 billion in 2009. The increase in
Securities Available-for-Sale was mainly attributable to higher
holdings of Malaysian government securities and investment
issues which offered opportunities for yield enhancement and
money market unit trust funds which offered a steady return at
minimal risk.
Loans, Advances and Financing
Despite the slowdown in economic growth across the region,
the Group was able to maintain its strong growth momentum
by expanding its loan base by 14.4% to RM137.61 billion in
2009. Over the past decade, the Group’s loans growth has
consistently outpaced that of the Malaysian banking industry,
resulting in an enlarged domestic loan market share of 15.9%
as at November 2009 as compared to only 5.2% in 2000.
The Group’s lending has remained focused on the retail sector,
where there was continued demand for financing of residential
properties and passenger vehicles and commercial lending to
small- and medium-sized business enterprises. Collectively, the
retail sector loans grew by RM13.60 billion or 13.1% and
accounted for 85.3% of the Group’s loan portfolio as at end
2009. Lending to the corporate sector also experienced
encouraging growth of RM3.34 billion or 19.8% despite the
challenging economic environment, as many corporate clients
turned to financial institutions for their financing needs due to
the lacklustre corporate bond market.
Loan Asset Quality
The Public Bank Group’s non-performing loans (“NPL”)
remained stable as compared to the previous year. During the
year, NPLs increased slightly by RM0.11 billion to RM1.32
billion despite a RM17.29 billion growth in the loan base during
the same period. The gross NPL ratio remained stable at 1.0%
and the net NPL ratio improved to 0.8% from 0.9% a year
ago. The net NPL ratio is less than half of the banking system’s
net NPL ratio of 1.9% as at November 2009. The Group’s
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
204 Analysis of The Financial Statements
consistent strong asset quality is the result of its prudent credit
culture, which is complemented by strong credit risk
management and pro-active recovery processes. The Group
maintained a high level of loan loss coverage for its NPLs at
172.4% as at 31 December 2009 as compared to 92.3% for
the banking industry as at November 2009.
Statutory Deposits with Central Banks
The Public Bank Group’s statutory deposits with Central Banks
dropped by RM1.61 billion in 2009, due to a reduction in the
Statutory Reserve Ratio requirement from 3.5% to 1.0% as a
result of monetary easing by Bank Negara Malaysia and the
use of government securities to partially meet this requirement
as permitted by Bank Negara Malaysia.
Total Liabilities and Shareholders’ Equity
The Public Bank Group’s total liabilities grew by
RM19.49 billion in 2009, mainly from an increase in deposits
from customers, deposits and placements of banks and other
financial institutions and debt issuances.
The Public Bank Group’s shareholders’ funds remained strong
at RM11.02 billion even after the payment of dividends of
RM1.41 billion during the year. This is due to the strong net
profit after tax and minority interests registered for 2009 of
RM2.52 billion.
Deposits from Customers
The Public Bank Group’s deposits from customers grew by
13.0% in 2009 to RM170.89 billion. The Group achieved strong
growth in its core customer deposits, registering broad-based
growth across all product groups, with savings account,
current accounts and fixed deposit accounts growing at
20.1%, 20.5% and 12.3% respectively, as compared to the
growth in the banking industry of 8.7%, 12.3%, and 4.7%
respectively. The growth was mainly supported by the Group’s
extensive branch network, its high standards of customer
service delivery and the expansion of its product offerings.
Deposits from individuals, a stable source of funds, continued
to be the Group’s main source of deposits, accounting for
approximately 61.1% of the Group’s core customer deposits.
Wholesale deposits in the form of Money Market Deposits and
Negotiable Instruments of Deposit rose by RM3.37 billion due
to efforts to expand the corporate customer deposit base.
The Group’s net loan to deposit ratio remained healthy at
79.2% as at 31 December 2009 as compared to 78.3% a year
ago.
Deposits and Placements of Banks and Other Financial
Institutions
Deposits and placements of banks and other financial
institutions mainly consist of interbank money market
borrowings. The increase of RM5.93 billion to RM22.61 billion
represents movements due to the Group’s normal funding and
gapping activities.
Recourse Obligations on Loans Sold to Cagamas
Recourse obligations on loans sold to Cagamas decreased by
RM4.52 billion due to repayment to Cagamas.
Debt Instruments Issued
The Group’s debt instruments consist of issuances of
subordinated notes, innovative Tier I capital securities and non-
innovative Tier I stapled securities.
During the year, the Group redeemed its USD350 million
subordinated notes on its call date on 22 September 2009.
Subsequently, there were a further three issuances under its
RM5.0 billion Subordinated Medium Term Note Programme
totalling RM473 million, comprising a second tranche of
RM200 million on 6 November 2009, a third tranche of
RM223 million on 10 December 2009 and a fourth tranche of
RM50 million on 31 December 2009.
During the year, the Group made its initial issuances of
stapled securities under its RM5.0 billion Non-Innovative Tier I
Stapled Securities Programme, which was approved earlier in
the year. The issuances consisted of two tranches of non-
innovative Tier I stapled securities, comprising an issuance
of RM1.2 billion on 5 June 2009 and a further issuance of
RM888 million on 13 November 2009.
Besides funding the expansion of its balance sheet, these
issuances have also strengthened the Group’s capital position
and improved its return on equity.
Off-Balance Sheet Exposures
Off-balance sheet exposures increased by RM8.57 billion to
RM61.44 billion mainly due to higher credit-related exposures
and foreign exchange-related contracts. There was a marked
increase in commitments to extend credit of RM5.27 billion, in
line with the strong loan growth momentum.
 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
Statement of Responsibility by Directors 205
In respect of the preparation of the annual audited financial statements

The Directors are responsible for ensuring that the annual audited financial statements of the
Group and the Bank are drawn up in accordance with the requirements of the Financial
Reporting Standards in Malaysia as modified by Bank Negara Malaysia Guidelines, the
provisions of the Companies Act, 1965 and the Listing Requirements of Bursa Malaysia
Securities Berhad.

The Directors are also responsible for ensuring that the annual audited financial statements of
the Group and the Bank are prepared with reasonable accuracy from the accounting records
of the Group and the Bank so as to give a true and fair view of the financial position of the
Group and the Bank as of 31 December 2009 and of their financial performance and cash
flows for the year then ended.

In preparing the annual audited financial statements, the Directors have:

a. applied the appropriate and relevant accounting policies on a consistent basis;

b. made judgments and estimates that are reasonable and prudent; and

c. prepared the annual audited financial statements on a going concern basis.

The Directors are also responsible for taking reasonable steps to safeguard the assets of the
Group and the Bank to prevent and detect fraud and other irregularities.
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
206 Directors’ Report
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2009

The Directors have pleasure in presenting to the members their report together with the audited financial statements of the Group
and of the Bank for the financial year ended 31 December 2009.

PRINCIPAL ACTIVITIES
The Bank is principally engaged in all aspects of banking and finance company businesses and the provision of related financial
services.

The principal activities of the subsidiary and associated companies are as disclosed in Notes 14 and 15 to the financial statements
respectively.

There have been no significant changes to these principal activities during the financial year.

FINANCIAL RESULTS

Group Bank
RM’000 RM’000

Profit before tax expense and zakat 3,321,433 2,789,170

Tax expense and zakat (769,893) (607,505)

Profit for the year 2,551,540 2,181,665


Attributable to:
Equity holders of the Bank 2,517,302 2,181,665
Minority interests 34,238 —

Profit for the year 2,551,540 2,181,665

DIVIDENDS
The amount of dividends paid by the Bank since 31 December 2008 were as follows:

Cash dividend: RM’000

In respect of financial year ended 31 December 2008 as approved by the shareholders:

Final dividend of 25% on 3,355,619,034 ordinary shares of RM1.00 each,
less 25% tax, paid on 11 March 2009 629,178
In respect of financial year ended 31 December 2009:
First interim dividend of 30% on 3,451,448,666 ordinary shares of RM1.00 each,
less 25% tax, paid on 13 August 2009 776,577

1,405,755

The final dividend in respect of the financial year ended 31 December 2008 also included a share dividend distribution of
95,834,632 treasury shares on the basis of one (1) Public Bank Berhad (“PBB”) treasury share listed and quoted as “Local” on
the Main Market of Bursa Malaysia Securities Berhad (“Bursa Malaysia”) for every thirty-five (35) ordinary shares of RM1.00 each
held in PBB on 11 March 2009.
 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
Directors’ Report 207

DIVIDENDS (Continued)
Subsequent to the financial year end, on 19 January 2010, the Directors declared a second interim cash dividend of 25% less
25% tax, amounting to approximately RM647,146,625 (representing 18.8 sen net per share) and the distribution of share dividend
on the basis of one (1) PBB treasury share listed and quoted as “Local” on the Main Market of Bursa Malaysia for every sixty-
eight (68) ordinary shares of RM1.00 each held in PBB, fractions of treasury shares to be disregarded, in respect of the current
financial year. This is computed based on the issued and paid-up capital as at 31 December 2009, excluding treasury shares held
by the Bank, of 3,451,448,666 ordinary shares of RM1.00 each, to be paid and distributed to shareholders whose names appear
in the Record of Depositors at the close of business on 5 February 2010. The financial statements for the current financial year
do not reflect these dividends. Upon declaration, the cash dividend payment will be accounted for in equity as an appropriation
of retained earnings and the share dividend distributed will be accounted for as a transfer of reserves, during the financial year
ending 31 December 2010. The Directors do not propose any final dividend for the financial year ended 31 December 2009.

ISSUE OF SHARES
There were no changes to the authorised, issued and paid-up capital of the Bank during the financial year.

SHARE BUY-BACK
On 25 February 2009, the shareholders of the Bank renewed their approval for the Bank to buy-back its own shares. During the
financial year, the Bank bought back from the open market, 10,000 PBB Shares listed and quoted as “Local” and 5,000 PBB
shares listed and quoted as “Foreign” on the Main Market of Bursa Malaysia at an average buy-back price of RM9.27 per share.
The total consideration paid for the share buy-back of PBB Shares by the Bank during the financial year, including transaction
costs, was RM139,494 and was financed by internally generated funds. The PBB Shares bought back are held as treasury shares
in accordance with Section 67A Subsection 3(A)(b) of the Companies Act, 1965. None of the treasury shares held were resold or
cancelled during the financial year.

A total of 95,834,632 treasury shares were distributed as share dividend on 11 March 2009 on the basis of one (1) PBB treasury
share listed and quoted as “Local” on the Main Market of Bursa Malaysia for every thirty-five (35) ordinary shares of RM1.00 each
held in PBB.

As at 31 December 2009, the Bank held 80,477,168 PBB Shares as treasury shares out of its total issued and paid-up share
capital of 3,531,925,834 PBB Shares. Such treasury shares are held at a carrying amount of RM581,637,906. Further information
is disclosed in Note 32 to the financial statements.

Subsequent to the financial year ended 31 December 2009, a total of approximately 50,756,598 treasury shares were declared by
the Directors on 19 January 2010 to be distributed to the shareholders as share dividend for the financial year ended 31 December
2009, on the basis of one (1) treasury share for every sixty-eight (68) ordinary shares of RM1.00 each held in PBB, fractions of
treasury shares to be disregarded. Subsequent to the distribution of the share dividend, the treasury shares balance will be
approximately 29,720,570 PBB shares at a carrying amount of RM214,801,422.

RESERVES, PROVISIONS AND ALLOWANCES

There were no material transfers to or from reserves or provisions or allowances during the year other than those disclosed in
Note 9, Note 11 and Note 33 to the financial statements.
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
208 Directors’ Report

BAD AND DOUBTFUL DEBTS AND FINANCING

Before the income statements and balance sheets of the Group and the Bank were made out, the Directors took reasonable steps
to ascertain that actions had been taken in relation to the writing off of bad debts and financing and the making of allowance for
doubtful debts and financing, and satisfied themselves that all known bad debts and financing had been written off and adequate
allowance had been made for doubtful debts and financing.

At the date of this report, the Directors are not aware of any circumstances which would render the amount written off for bad
debts and financing, or the amount of the allowance for doubtful debts and financing in the financial statements of the Group
and the Bank, inadequate to any substantial extent.

CURRENT ASSETS
Before the income statements and balance sheets of the Group and the Bank were made out, the Directors took reasonable steps
to ensure that current assets, other than debts and financing, which were unlikely to be realised in the ordinary course of business
at their values as shown in the accounting records of the Group and the Bank have been written down to an amount which they
might be expected to realise.

At the date of this report, the Directors are not aware of any circumstances which would render the values attributed to the current
assets in the financial statements of the Group and the Bank misleading.

VALUATION METHODS
At the date of this report, the Directors are not aware of any circumstances which have arisen which would render adherence to
the existing methods of valuation of assets and liabilities in the financial statements of the Group and the Bank misleading or
inappropriate.

CONTINGENT AND OTHER LIABILITIES

At the date of this report, there does not exist:

(a) any charge on the assets of the Group or the Bank which has arisen since the end of the financial year which secures the
liabilities of any other person; or

(b) any contingent liability in respect of the Group or the Bank that has arisen since the end of the financial year other than
those incurred in the ordinary course of business.

No contingent or other liability of the Group and the Bank has become enforceable, or is likely to become enforceable, within the
period of twelve months after the end of the financial year which, in the opinion of the Directors, will or may substantially affect
the ability of the Group or the Bank to meet their obligations as and when they fall due.

CHANGE OF CIRCUMSTANCES

At the date of this report, the Directors are not aware of any circumstances, not otherwise dealt with in this report or the financial
statements of the Group and the Bank, which would render any amount stated in the financial statements misleading.
 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
Directors’ Report 209

ITEMS OF UNUSUAL NATURE

The results of the operations of the Group and the Bank during the financial year were not, in the opinion of the Directors,
substantially affected by any item, transaction or event of a material and unusual nature.

There has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or
event of a material and unusual nature likely, in the opinion of the Directors, to affect substantially the results of the operations
of the Group and the Bank for the current financial year in which this report is made.

SIGNIFICANT EVENTS DURING THE YEAR

The significant events during the financial year are as disclosed in Note 55 to the financial statements.

SUBSEQUENT EVENTS
There were no material events subsequent to the balance sheet date that require disclosure or adjustments to the financial
statements.

DIRECTORS OF THE BANK

The Directors who served since the date of the last report are:

Tan Sri Dato’ Sri Dr. Teh Hong Piow

Tan Sri Dato’ Thong Yaw Hong
Tan Sri Dato’ Sri Tay Ah Lek
Dato’ Sri Lee Kong Lam
Dato’ Yeoh Chin Kee
Y.A.M. Tengku Abdul Rahman Ibni Sultan Haji Ahmad Shah Al-Mustain Billah
Dato’ Haji Abdul Aziz bin Omar
Dato’ Dr. Haji Mohamed Ishak bin Haji Mohamed Ariff
Quah Poh Keat

In accordance with Article 111 of the Bank’s Articles of Association, Dato’ Yeoh Chin Kee and Y.A.M. Tengku Abdul Rahman Ibni
Sultan Haji Ahmad Shah Al-Mustain Billah retire by rotation at the forthcoming Annual General Meeting and, being eligible, offer
themselves for re-election.

Tan Sri Dato’ Sri Dr. Teh Hong Piow, Tan Sri Dato’ Thong Yaw Hong and Dato’ Dr. Haji Mohamed Ishak bin Haji Mohamed Ariff
retire pursuant to Section 129 of the Companies Act, 1965 at the forthcoming Annual General Meeting and offer themselves for
re-appointment in accordance with Section 129 of the Companies Act, 1965 to hold office until the conclusion of the next Annual
General Meeting of the Bank.
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
210 Directors’ Report

DIRECTORS’ INTERESTS
According to the Register of Directors’ Shareholdings, the interests of the Directors in office at the end of the financial year in
shares of the Bank, and in shares and in options of its subsidiary company during the financial year were as follows:

Shares Held in the Bank

Number of Ordinary Shares of RM1.00 Each

Balance at Share + Balance at
1.1.2009 Acquired Disposed Dividend 31.12.2009

Direct interests:
Tan Sri Dato’ Sri Dr. Teh Hong Piow 21,524,250 — — 614,978 22,139,228
Tan Sri Dato’ Thong Yaw Hong 7,313,750 — — 208,964 7,522,714
Tan Sri Dato’ Sri Tay Ah Lek 8,610,109 — 2,000,000 188,859 6,798,968
Dato’ Sri Lee Kong Lam 1,079,921 — 715,000 10,426 375,347
Dato’ Yeoh Chin Kee 200,000 — — 5,714 205,714
Dato’ Haji Abdul Aziz bin Omar 750,000 — 50,000 21,428 721,428
Dato’ Dr. Haji Mohamed Ishak
bin Haji Mohamed Ariff 350,000 — — 10,000 360,000

Number of Ordinary Shares of RM1.00 Each

Balance at Share + Balance at
1.1.2009 Acquired Disposed Dividend 31.12.2009

Indirect interests:
Tan Sri Dato’ Sri Dr. Teh Hong Piow 786,468,596 — — 22,470,522 808,939,118
Tan Sri Dato’ Thong Yaw Hong 821,875 — — 23,481 845,356
Tan Sri Dato’ Sri Tay Ah Lek 339,482 — — 9,699 349,181
Dato’ Sri Lee Kong Lam 800,000 — — 22,857 822,857
Dato’ Yeoh Chin Kee 300,000 — — 8,571 308,571

+ Arising from the distribution by Public Bank Berhad (“PBB”) of a share dividend on the basis of one (1) PBB treasury share
listed and quoted as “Local” on the Main Market of Bursa Malaysia Securities Berhad for every thirty-five (35) ordinary shares
of RM1.00 each held in PBB, fractions of treasury shares disregarded.

Shares Held in a Subsidiary Company

– Shares Held in Public Financial Holdings Limited (“PFHL”)

Number of Ordinary Shares of HKD0.10 Each

Balance at Balance at
1.1.2009 Acquired Disposed 31.12.2009

Direct interests:
Tan Sri Dato’ Sri Tay Ah Lek 350,000 — — 350,000
Dato’ Yeoh Chin Kee 150,000 — — 150,000
 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
Directors’ Report 211

DIRECTORS’ INTERESTS (Continued)

Share Options Held in a Subsidiary Company
– Share Options Held under the PFHL Employees’ Share Option Scheme (“PFHL Share Options”)

Number of PFHL Share Options

Option
Price Balance at Balance at
HKD 1.1.2009 Granted Exercised Lapsed 31.12.2009

Tan Sri Dato’ Sri Tay Ah Lek 6.35 1,230,000 — — — 1,230,000

Dato’ Yeoh Chin Kee 6.35 550,000 — — 550,000 * —

* Lapsed on 16 July 2009 as Dato’ Yeoh Chin Kee did not exercise the share options within a period of six months following
his resignation as Director of PFHL on 15 January 2009.

Other than as disclosed above, none of the Directors in office at the end of the financial year had any interest in shares in the
Bank or its related corporations during the financial year.

Tan Sri Dato’ Sri Dr. Teh Hong Piow, by virtue of his total direct and indirect interests of 831,078,346 shares in the Bank, and
pursuant to Section 6A(4)(c) of the Companies Act, 1965, is deemed interested in the shares in all of the Bank’s subsidiary and
associated companies to the extent that the Bank has interests.

DIRECTORS’ BENEFITS
During and at the end of the financial year, no arrangements subsisted to which the Bank or its subsidiary companies is a party
with the object of enabling Directors of the Bank to acquire benefits by means of the acquisition of shares in or debentures of
the Bank or any other body corporate, other than the PFHL Share Options.

Since the end of the previous financial year, no Director of the Bank has received or become entitled to receive any benefit (other
than benefits included in the aggregate amount of emoluments received or due and receivable by the Directors or the fixed salary
of a full time employee of the Bank as disclosed in Note 39 to the financial statements) by reason of a contract made by the
Bank or a related corporation with the Director or with a firm of which he is a member, or with a company in which he has
substantial financial interest except for those transactions arising in the ordinary course of business as disclosed in Note 45(a) to
the financial statements.

REMUNERATION COMMITTEE
The Remuneration Committee carries out the annual review of the overall remuneration policy for Directors, the Chief Executive
Officer and key Senior Management Officers whereupon recommendations are made to the Board of Directors for approval.

The members of the Remuneration Committee comprising of all the Independent Non-Executive Directors of the Bank are:

Tan Sri Dato’ Thong Yaw Hong

Dato’ Yeoh Chin Kee
Y.A.M. Tengku Abdul Rahman Ibni Sultan Haji Ahmad Shah Al-Mustain Billah
Dato’ Haji Abdul Aziz bin Omar
Dato’ Dr. Haji Mohamed Ishak bin Haji Mohamed Ariff
Quah Poh Keat
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
212 Directors’ Report

BUSINESS REVIEW 2009

The business operating environment in Malaysia was challenging, particularly in the first quarter of 2009 when the Malaysian
economy contracted sharply by 6.2%. Malaysia’s external sector contracted mostly due to contraction in demand in its major
trading partners such as the United States. However, “green shoots” which were emerging in the second quarter of this year had
become more visible in the second half of 2009.

Despite the sharp economic contraction, the Malaysian banking industry remained resilient with strong capitalisation and strong
asset quality. Banks continued to compete in retail space for market share, partly due to the ample liquidity in the banking system.
Demand for loans continued to remain steady due to healthy household and corporate balance sheets. Core customer deposits
continued to grow steadily.

During the year, the Public Bank Group continued to sustain a satisfactory performance, underpinned by continued strong growth
in loans and deposits and sustained strong asset quality. The Group continued to focus on its core businesses of lending to
consumers, particularly in home mortgages, passenger vehicle hire purchase financing and in retail commercial lending to small-
and medium-sized enterprises (“SMEs”). Public Bank revised its lending rates down in line with the drop in the Overnight Policy
Rate (“OPR”). Public Bank had actively promoted funds for SMEs and also the Government’s guarantee schemes for SMEs to
support viable SMEs.

To sustain its strong asset quality, the Public Bank Group continued to observe its prudent credit appraisal and approval process
and strong credit risk culture. The Group took proactive measures to assist customers to restructure and reschedule their loans
to improve their cash flows on a need basis.

On deposit-taking business, the Public Bank Group continued to expand the range and the competitiveness of its deposit
products, including foreign currency deposits and structured deposit products. The Group’s strong growth in deposits was
supported by the high growth in core customer deposits.

The Public Bank Group accelerated its efforts to expand fee-based activities by expanding the distribution channels for unit trust
funds, introducing new unit trust funds, promoting foreign currency deposit accounts and investment-linked products, expanding
sales force for bancassurance products and promoting other businesses such as remittance, trade finance and credit card
business. In 2009, the Bank and ING jointly launched 8 bancassurance products. Public Mutual, a wholly-owned subsidiary
company of Public Bank, delivered strong performance, exhibiting high growth in its net asset value of funds under
management.

During the year, the Public Bank Group further expanded its delivery channels to better serve its customers. Public Bank opened
6 new domestic branches in 2009, increasing the number of Public Bank branches in Malaysia to 248 branches. Domestically,
Public Bank put in place 459 ATMs, 442 Cheque Deposit Machines and 407 Cash Deposit Terminals as at 31 December 2009.
The Group also expanded its Internet banking and mobile banking services for greater banking access by its customers.

The Group continued to stay committed to its overseas operations. To grow its business overseas, the Public Bank Group had
expanded its regional network to 109 branches from 70 branches in 2006, comprising 80 branches in Hong Kong, 3 branches in
the People’s Republic of China, 15 branches in Cambodia, 7 branches in Vietnam, 3 branches in Laos and 1 branch in Sri Lanka.
The Group’s other key delivery channels such as ATMs and self-service machines in its overseas operations had also been further
expanded.

During the year, the Bank continued to implement its Corporate Social Responsibility programmes in key areas such as nation
building, enhancement of the market place, promotion of the work place, promotion of education, support of the community,
greening the environment and customer care.
 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
Directors’ Report 213

ECONOMIC OUTLOOK AND PROSPECTS FOR 2010

The Malaysian economy is expected to further improve in 2010, on the back of the Government’s fiscal stimulus, accommodative
monetary policy and the expected recovery in major developed economies. The “green shoots” such as industrial production and
exports which have emerged since the second quarter of 2009 are expected to become more visible in 2010. Both the services
and construction sectors are expected to lead growth in 2010. The steady upward trend in the Leading Index for the Malaysian
economy and improved consumer and business sentiment in recent months support the positive outlook for the economy in
2010.

In 2010, gross domestic product is expected to increase by 3% from a contraction of 2.5% in 2009. Like other Asian economies,
Malaysia is well placed to recover early because of credible macro policies and healthy corporate, household and bank balance
sheets. In addition to the large fiscal stimulus, recent trends in inventory restocking, fiscal impulse from the aggressive
countercyclical response and healthy intra-regional trade will support the Malaysian economy.

As domestic economic conditions strengthen, inflation in Malaysia is projected to turn positive in 2010. However, in the absence
of unanticipated price adjustments and rapid rise in global commodity prices, inflation is expected to remain modest. Furthermore,
the current large output gap in Malaysia and the strong Ringgit exchange rate will keep inflation in check.

In the growth process, private consumption and private investment are expected to further strengthen due to improved labour
market conditions, low interest rates and large fiscal stimulus. Specific measures in the Budget 2010, such as the reduction in
the maximum personal income tax rate and increased personal relief, will result in higher household disposable income which in
turn will support private consumption.

On the supply side, growth will remain broad-based and led by the services sector. The recent liberalisation of 27 services sub-
sectors and the financial services sector will support investment growth. The construction sector will continue to benefit from the
economic recovery and fiscal stimulus by the Government. Manufacturing – in particular export-oriented industries – is expected
to slowly improve in line with the global recovery. As the economic growth gains further traction in 2010, the Malaysian
Government will have room to consolidate its fiscal position. The economy too will continue to enjoy high sovereign ratings,
reflecting Malaysia’s strong external liquidity, robust balance of payments and strong financial sector.

BUSINESS OUTLOOK FOR 2010

The business operating environment is expected to improve in 2010 as the Malaysian economy is projected to grow by 3% due
to higher private consumption and public spending. The external sector is expected to improve based on the expected recovery
in the United States and healthy growth in Asia. As the external environment is expected to remain fragile, the Public Bank Group
will remain vigilant.

The banking industry in Malaysia is expected to remain healthy in 2010. Competition, however, will continue to intensify due to
strong domestic players, liberal operating environment, the potential of new entrants and ample liquidity. Domestic banks are
expected to further build their capacity and capability to compete, differentiate their business strategies and focus on new
products and services. Product pricing will remain competitive. Retail lending and retail deposit-taking businesses are expected
to further improve next year, based on the positive outlook for the Malaysian economy, low interest rates, high public spending,
healthy labour market condition, and improved consumer and business sentiment. Corporate lending is expected to increase but
remain soft as they continue to access the capital market for their funding and investment requirements.

Based on the positive economic outlook, Public Bank will continue to grow its market share in its core business of consumer
financing (mainly home mortgages, passenger vehicle hire purchase financing and personal financing) and lending to viable SMEs
across economic sectors. The Group will remain prudent and take proactive measures to ensure that its strong asset quality
continues to be maintained.

On liability management, the Public Bank Group will continue to promote retail low cost deposits, foreign currency deposits and
structured deposit products. To supplement its core retail customer deposits, the Group will also promote wholesale deposits.
Based on its strong deposit franchise, the Group is expected to sustain its healthy loan-deposit ratio in 2010.
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
214 Directors’ Report

BUSINESS OUTLOOK FOR 2010 (Continued)

As a long-term business strategy, the Public Bank Group will also continue to promote its fee-based activities such as sales of
unit trust funds, fund management, sales of general insurance and bancassurance products, credit card business, trade finance,
cash management and remittance business. The Group’s unit trust sales agency force and key distribution channels and dedicated
sales teams for fee-based businesses will continue to be expanded, while new products will be launched.

The Public Bank Group will continue to grow its overseas business by expanding its retail loans and deposits and maintaining a
healthy loan-deposit ratio. In addition to new lending and deposits products, the Group will continue to strengthen its marketing
force and strategies to grow its market share, particularly in the Indo-china market. The process of transferring the Group’s best
banking practices in Malaysia to accelerate its business growth overseas will continue.

To sustain its strong business growth, the Group will continue to focus on improving its superior delivery standards and
infrastructure, cost efficiency, customer analytics and marketing strategy. In addition, the Group will continue to tap on its
extensive branch network and strong franchise, wide array of innovative products and packages, and multiple delivery channels
such as Internet banking, mobile banking, ATMs, cheque deposit machines and cash deposit terminals to pull in new customers
and retain the existing ones. The Group will continue to enhance its risk management capabilities and uphold its strong corporate
governance culture and practices.

AUDITORS
The retiring auditors, Messrs. KPMG, have indicated their willingness to accept re-appointment.

Signed in accordance with a resolution of the Directors:

TAN SRI DATO’ SRI DR. TEH HONG PIOW

Director

TAN SRI DATO’ THONG YAW HONG

Director

Kuala Lumpur,
Dated: 19 January 2010
 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
STATEMENT BY DIRECTORS 215

We, TAN SRI DATO’ SRI DR. TEH HONG PIOW and TAN SRI DATO’ THONG YAW HONG, being two of the Directors of
PUBLIC BANK BERHAD, do hereby state that, in the opinion of the Directors, the financial statements set out on pages
218 to 397 are properly drawn up in accordance with the provisions of the Companies Act, 1965 and Financial Reporting
Standards in Malaysia as modified by Bank Negara Malaysia Guidelines so as to give a true and fair view of the financial position
of the Group and of the Bank as of 31 December 2009 and of their financial performance and cash flows for the year then
ended.

Signed in accordance with a resolution of the Directors:

TAN SRI DATO’ SRI DR. TEH HONG PIOW

Director

TAN SRI DATO’ THONG YAW HONG

Director

Kuala Lumpur,
Dated: 19 January 2010

STATUTORY DECLARATION

I, CHANG SIEW YEN, being the officer primarily responsible for the financial management of PUBLIC BANK BERHAD, do solemnly
and sincerely declare that the financial statements set out on pages 218 to 397, are to the best of my knowledge and belief,
correct and I make this solemn declaration conscientiously believing the same to be true, and by virtue of the provisions of the
Statutory Declarations Act, 1960.

Subscribed and solemnly declared by the abovenamed CHANG SIEW YEN

at KUALA LUMPUR in WILAYAH PERSEKUTUAN this 19 January 2010.

BEFORE ME:

Commissioner for Oaths

Kuala Lumpur
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
216 INDEPENDENT AUDITORS’ REPORT
TO THE MEMBERS OF PUBLIC BANK BERHAD

Report on the Financial Statements

We have audited the financial statements of Public Bank Berhad, which comprise the balance sheets as at 31 December 2009
of the Group and of the Bank, and the income statements, statements of changes in equity and cash flow statements of the
Group and of the Bank for the year then ended, and a summary of significant accounting policies and other explanatory notes,
as set out on pages 218 to 397.

Directors’ Responsibility for the Financial Statements

The Directors of the Bank are responsible for the preparation and fair presentation of these financial statements in accordance
with the Companies Act, 1965 and Financial Reporting Standards in Malaysia as modified by Bank Negara Malaysia Guidelines.
This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair
presentation of financial statements that are free from material misstatement, whether due to fraud or error, selecting and applying
appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditors’ Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in
accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements
and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material
misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements.
The procedures selected depend on our judgment, including the assessment of risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the Bank’s
preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Bank’s internal control. An audit also
includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the
Directors, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion
In our opinion, the financial statements have been properly drawn up in accordance with the Companies Act, 1965 and Financial
Reporting Standards in Malaysia as modified by Bank Negara Malaysia Guidelines so as to give a true and fair view of the financial
position of the Group and of the Bank as of 31 December 2009 and of their financial performance and cash flows for the year
then ended.
 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
INDEPENDENT AUDITORS’ REPORT 217

Report on Other Legal and Regulatory Requirements

In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report the following:

(a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Bank and its
subsidiary companies of which we have acted as auditors have been properly kept in accordance with the provisions of the
Act.

(b) We have considered the accounts and the auditors’ reports of all the subsidiary companies of which we have not acted as
auditors, which are indicated in Note 14 to the financial statements.

(c) We are satisfied that the accounts of the subsidiary companies that have been consolidated with the Bank’s financial
statements are in form and content appropriate and proper for the purposes of the preparation of the financial statements
of the Group and we have received satisfactory information and explanations required by us for those purposes.

(d) The audit reports on the accounts of the subsidiary companies did not contain any qualification or any adverse comment
made under Section 174(3) of the Act.

Other Matters
This report is made solely to the members of the Bank, as a body, in accordance with Section 174 of the Companies Act, 1965
in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.

KPMG
Firm Number: AF 0758
Chartered Accountants

Adrian Lee Lye Wang

Partner
Approval Number: 2679/11/11(J)
Chartered Accountant

Petaling Jaya
Dated: 19 January 2010
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
218 BALANCE SHEETS
AS AT 31 DECEMBER 2009

Group Bank

2009 2008 2009 2008

Note RM’000 RM’000 RM’000 RM’000

ASSETS
Cash and short-term funds 3 43,480,452 36,597,027 31,868,626 29,564,959
Deposits and placements with banks
and other financial institutions 4 3,182,704 1,941,445 3,115,967 3,834,326
Securities purchased under resale agreements 5 1,200,243 5,141,746 — 4,762,407
Securities held-for-trading 6 7,957,275 11,349,842 7,655,815 10,846,741
Securities available-for-sale 7 12,165,777 5,626,372 10,458,159 4,914,144
Securities held-to-maturity 8 6,620,207 8,286,719 7,637,258 9,564,579
Loans, advances and financing 9 135,335,784 118,386,295 107,962,807 93,174,291
Derivative financial assets 10 310,311 590,229 302,861 589,715
Other assets 11 1,758,578 1,548,674 1,453,540 2,197,184
Statutory deposits with Central Banks 12 1,022,181 2,636,708 588,362 1,998,200
Deferred tax assets 13 506,607 488,855 390,826 387,572
Investment in subsidiary companies 14 — — 3,694,681 3,419,681
Investment in associated companies 15 128,318 127,802 101,325 101,325
Investment properties 16 69,327 66,012 — —
Prepaid land lease payments 17 289,228 291,873 13 15
Property and equipment 18 1,051,551 1,011,489 650,968 648,322
Intangible assets 19 2,057,611 2,072,018 695,393 695,393

TOTAL ASSETS 217,136,154 196,163,106 176,576,601 166,698,854

LIABILITIES
Deposits from customers 20 170,891,589 151,185,298 135,387,490 124,090,859
Deposits and placements of banks
and other financial institutions 21 22,614,300 16,684,145 20,783,929 17,092,906
Bills and acceptances payable 22 612,730 3,062,374 612,730 3,062,374
Recourse obligations on loans sold to Cagamas 23 21,763 4,537,277 21,763 4,537,277
Derivative financial liabilities 10 270,056 495,146 243,396 442,654
Other liabilities 24 2,511,757 2,422,817 1,399,378 1,503,433
Borrowings 26 653,101 860,234 — —
Subordinated notes 27 3,335,322 4,178,195 3,355,539 4,198,220
Innovative Tier I capital securities 28 1,972,333 2,124,484 1,972,333 2,124,484
Non-innovative Tier I stapled securities 29 2,071,589 — 2,071,589 —
Provision for tax expense and zakat 30 464,290 382,454 286,242 254,818
Deferred tax liabilities 13 2,000 1,950 — —

TOTAL LIABILITIES 205,420,830 185,934,374 166,134,389 157,307,025

 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
BALANCE SHEETS 219

Group Bank

2009 2008 2009 2008

Note RM’000 RM’000 RM’000 RM’000

EQUITY
Share capital 31 3,531,926 3,531,926 3,531,926 3,531,926
Reserves 8,072,918 7,278,892 7,491,924 7,134,015
Treasury shares 32 (581,638) (1,274,112) (581,638) (1,274,112)

Equity attributable to equity holders
of the Bank 11,023,206 9,536,706 10,442,212 9,391,829
Minority interests 692,118 692,026 — —

TOTAL EQUITY 11,715,324 10,228,732 10,442,212 9,391,829

TOTAL LIABILITIES AND EQUITY 217,136,154 196,163,106 176,576,601 166,698,854

OFF-BALANCE SHEET EXPOSURES 51(e) 61,435,239 52,866,868 56,878,933 47,752,572

Net assets per share attributable to

ordinary equity holders of the Bank (RM) 3.19 2.84 3.03 2.80

The accompanying notes form an integral part of the financial statements

PUBLIC BANK BERHAD
ANNUAL REPORT 2009
220 INCOME STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2009

Group Bank

2009 2008 2009 2008

Note RM’000 RM’000 RM’000 RM’000

Operating revenue 2(x) 9,715,568 10,500,307 7,171,221 8,556,614

Interest income 35 7,353,051 8,289,708 6,391,787 7,313,616

Interest expense 36 (3,316,609) (4,562,396) (3,093,687) (4,185,840)

Net interest income 4,036,442 3,727,312 3,298,100 3,127,776
Net income from Islamic banking business 57 691,591 558,417 — 445,884

4,728,033 4,285,729 3,298,100 3,573,660
Other operating income 37 1,396,935 1,453,527 1,213,958 1,028,098

Net income 6,124,968 5,739,256 4,512,058 4,601,758
Other operating expenses 38 (2,109,913) (1,791,101) (1,392,115) (1,308,529)

Operating profit 4,015,055 3,948,155 3,119,943 3,293,229
Allowance for losses on loans,
advances and financing 40 (690,970) (548,562) (321,237) (394,189)

– General allowance (293,607) (232,101) (225,120) (232,437)

– Other loan loss allowances (397,363) (316,461) (96,117) (161,752)

Impairment loss 41 (15,079) (32,862) (9,536) (1,324)

3,309,006 3,366,731 2,789,170 2,897,716
Share of profit after tax of equity
accounted associated companies 12,427 12,457 — —

Profit before tax expense and zakat 3,321,433 3,379,188 2,789,170 2,897,716
Tax expense and zakat 42 (769,893) (756,528) (607,505) (624,980)

Profit for the year 2,551,540 2,622,660 2,181,665 2,272,736

 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
INCOME STATEMENTS 221

Group Bank

2009 2008 2009 2008

Note RM’000 RM’000 RM’000 RM’000

Attributable to:
Equity holders of the Bank 2,517,302 2,581,237 2,181,665 2,272,736
Minority interests 34,238 41,423 — —

Profit for the year 2,551,540 2,622,660 2,181,665 2,272,736

Earnings per RM1.00 share: 43

– basic (sen) 73.3 76.9
– diluted (sen) 73.3 76.9

Net dividends per RM1.00 share declared

for the financial year: 44
Cash dividends
– First interim dividend (sen) 22.5 22.2
– Second interim dividend (sen) 18.8 —
– Final dividend (sen) — 18.8

41.3 41.0

Share dividends (no. of shares) 1 for 68 1 for 35

The accompanying notes form an integral part of the financial statements

PUBLIC BANK BERHAD
ANNUAL REPORT 2009
222 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2009

<-------------------------- Attributable to Equity Holders of the Bank -------------------------->

Non-distributable Reserves Distributable Reserves Total
Share Share Other Retained Treasury Shareholders’ Minority Total
2009 Capital Premium Reserves Profits Shares Equity Interests Equity
Group Note RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

At 1 January 2009 3,531,926 2,132,499 3,243,735 1,902,658 (1,274,112) 9,536,706 692,026 10,228,732
Currency translation
differences in respect of
foreign operations — — (32,954) — — (32,954) (11,208) (44,162)
Currency translation
differences in respect of
net investment hedge — — 35,193 — — 35,193 — 35,193
Net gain on revaluation of
securities available-for-sale — — 378,905 — — 378,905 434 379,339
Net change in cash flow hedges — — (6,051) — — (6,051) — (6,051)

Net income/(expense)
recognised directly in equity — — 375,093 — — 375,093 (10,774) 364,319
Net profit for the year — — — 2,517,302 — 2,517,302 34,238 2,551,540

Total recognised income
for the year — — 375,093 2,517,302 — 2,892,395 23,464 2,915,859

Buy-back of shares 32 — — — — (140) (140) — (140)
Transfer to statutory reserves — — 133,961 (133,961) — — — —
Transfer to regulatory reserves — — 9,995 (9,995) — — — —
Dividends paid 44 — — — (1,405,755) — (1,405,755) (23,372) (1,429,127)
Share dividends — (692,614) — — 692,614 — — —

At 31 December 2009 3,531,926 1,439,885 3,762,784 2,870,249 (581,638) 11,023,206 692,118 11,715,324

Note 31 Note 33 Note 32

The accompanying notes form an integral part of the financial statements

 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 223

<----------------------------- Attributable to Equity Holders of the Bank ----------------------->

Non-distributable Reserves Distributable Reserves Total
Share Share Other Retained Treasury Shareholders’ Minority Total
2008 Capital Premium Reserves Profits Shares Equity Interests Equity
Group Note RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

At 1 January 2008 3,527,891 2,112,204 3,613,724 1,362,252 (1,273,897) 9,342,174 636,249 9,978,423

Currency translation
differences in respect of
foreign operations — — 145,173 — — 145,173 38,810 183,983
Currency translation
differences in respect
of net investment hedge — — (143,546) — — (143,546) — (143,546)
Net loss on revaluation of
securities available-for-sale — — (440,129) — — (440,129) (3,337) (443,466)
Net change in cash flow hedges — — 13,864 — — 13,864 — 13,864

Net (expense)/income recognised
directly in equity — — (424,638) — — (424,638) 35,473 (389,165)
Net profit for the year — — — 2,581,237 — 2,581,237 41,423 2,622,660

Total recognised (expense)/
income for the year — — (424,638) 2,581,237 — 2,156,599 76,896 2,233,495

Issue of shares pursuant to
the exercise of share options 4,035 20,295 — — — 24,330 — 24,330
Buy-back of shares 32 — — — — (215) (215) — (215)
Minority interests’ subscription
of shares of a subsidiary
company (net) — — — — — — 9,100 9,100
Transfer to statutory reserves — — 40,571 (40,571) — — — —
Transfer to regulatory reserves — — 14,078 (14,078) — — — —
Dividends paid 44 — — — (1,986,182) — (1,986,182) (30,219) (2,016,401)

At 31 December 2008 3,531,926 2,132,499 3,243,735 1,902,658 (1,274,112) 9,536,706 692,026 10,228,732

Note 31 Note 33 Note 32

The accompanying notes form an integral part of the financial statements

PUBLIC BANK BERHAD
ANNUAL REPORT 2009
224 STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2009

<------------------------- Attributable to Equity Holders of the Bank ------------------------->

Non-distributable Reserves Distributable Reserves
Share Share Other Retained Treasury
2009 Capital Premium Reserves Profits Shares Total
Bank Note RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

At 1 January 2009 3,531,926 2,132,499 3,239,059 1,762,457 (1,274,112) 9,391,829

Net gain on revaluation of

securities available-for-sale — — 280,664 — — 280,664
Net change in cash flow hedges — — (6,051) — — (6,051)

Net income recognised
directly in equity — — 274,613 — — 274,613
Net profit for the year — — — 2,181,665 — 2,181,665

Total recognised income
for the year — — 274,613 2,181,665 — 2,456,278

Buy-back of shares 32 — — — — (140) (140)
Dividends paid 44 — — — (1,405,755) — (1,405,755)
Share dividends — (692,614) — — 692,614 —

At 31 December 2009 3,531,926 1,439,885 3,513,672 2,538,367 (581,638) 10,442,212

Note 31 Note 33 Note 34 Note 32

2008
Bank

At 1 January 2008 3,527,891 2,112,204 3,504,479 1,479,938 (1,273,897) 9,350,615

Net loss on revaluation of

securities available-for-sale — — (283,319) — — (283,319)
Net change in cash flow hedges — — 13,864 — — 13,864

Net expense recognised
directly in equity — — (269,455) — — (269,455)
Net profit for the year — — — 2,272,736 — 2,272,736

Total recognised (expense)/
income for the year — — (269,455) 2,272,736 — 2,003,281

Issue of shares pursuant to
the exercise of share options 4,035 20,295 — — — 24,330
Buy-back of shares 32 — — — — (215) (215)
Transfer to statutory reserves — — 4,035 (4,035) — —
Dividends paid 44 — — — (1,986,182) — (1,986,182)

At 31 December 2008 3,531,926 2,132,499 3,239,059 1,762,457 (1,274,112) 9,391,829

Note 31 Note 33 Note 34 Note 32

The accompanying notes form an integral part of the financial statements

 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
CASH FLOW STATEMENTS 225
FOR THE YEAR ENDED 31 DECEMBER 2009

Group Bank

2009 2008 2009 2008

RM’000 RM’000 RM’000 RM’000

Cash flows from operating activities

Profit before tax expense and zakat 3,321,433 3,379,188 2,789,170 2,897,716
Adjustments for:
Share of profit after tax of equity accounted
associated companies (12,427) (12,457) — —
Amortisation of prepaid land lease payments 3,449 2,737 2 2
Depreciation of property and equipment 130,046 116,122 104,119 92,518
Net (gain)/loss on disposal of property and equipment (1,159) 1,773 (864) 1,748
Net loss on disposal of foreclosed properties 3,144 8,652 3,304 8,812
Gain on disposal of prepaid land lease payments (12) — — —
Gain on disposal of investment properties (4) — — —
Allowance for bad and doubtful debts and financing 914,945 774,752 469,363 562,804
Write back of allowance for bad and doubtful debts
and financing (73,611) (74,660) (57,763) (70,419)
Net gain arising from sale of securities available-for-sale (46,113) (13,514) (33,354) (13,491)
Amortisation of premium less accretion of discount 39,362 6,777 43,352 12,685
Amortisation of cost and accretion of discount
relating to the issuance of the subordinated notes 3,408 3,745 3,408 3,745
Amortisation of cost relating to the issuance of
the Innovative Tier I capital securities 351 367 351 367
Amortisation of cost relating to the issuance
of the Non-innovative Tier I stapled securities 435 — 435 —
Unrealised gain on revaluation of securities
held-for-trading (14,946) (1,700) (15,273) (1,417)
Unrealised loss/(gain) on revaluation of
trading derivatives 9,047 3,815 (763) 37,036
Unrealised (gain)/loss on hedging derivatives (4,271) 44 (3,130) (190)
Pension costs – defined benefit plan 10,577 (41,943) 10,144 (41,063)
Transfer (from)/to profit equalisation reserves (22,908) 22,059 — 18,083
Dividends from securities available-for-sale (84,295) (47,345) (78,211) (43,215)
Dividends from securities held-to-maturity (7,644) (6,657) (7,488) (6,461)
Dividends from subsidiary companies — — (399,636) (354,026)
Dividends from associated companies — — (10,379) (5,130)
Property and equipment written off 1,437 4,243 862 4,238
Gain on revaluation of investment properties (8,396) (7,956) — —
Impairment loss on securities available-for-sale 5,572 — 129 —
Impairment loss on securities held-to-maturity — 29,197 — 145
Impairment loss on foreclosed properties 9,407 1,179 9,407 1,179
Impairment loss on property and equipment 67 — — —
Impairment loss on prepaid land lease payments 33 — — —
Impairment loss on intangible assets — 2,486 — —

Operating profit before working capital changes 4,176,927 4,150,904 2,827,185 3,105,666
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
226 CASH FLOW STATEMENTS

Group Bank

2009 2008 2009 2008

RM’000 RM’000 RM’000 RM’000

Cash flows from

operating activities (continued)
(Increase)/Decrease in operating assets:
Deposits and placements with banks
and other financial institutions (1,241,259) 742,328 718,359 (765,160)
Securities purchased under resale agreements 3,941,503 7,581,744 4,762,407 7,244,190
Securities held-for-trading 3,391,510 (3,304,644) 3,190,196 (2,883,596)
Loans, advances and financing (17,832,259) (19,808,401) (15,240,573) (15,684,262)
Derivative financial assets (21,153) (18,818) (21,153) (18,818)
Other assets (203,625) 287,712 884,174 (1,183,513)
Statutory deposits with Central Banks 1,614,527 (262,781) 1,409,838 273,800

Increase/(Decrease) in operating liabilities:

Deposits from customers 19,726,739 24,948,975 11,317,079 22,367,461
Deposits and placements of banks and
other financial institutions 5,930,155 (6,282,395) 3,691,023 (5,027,302)
Obligations on securities sold under
repurchase agreements — (2,279) — (2,279)
Bills and acceptances payable (2,449,644) (389,922) (2,449,644) (389,922)
Recourse obligations on loans sold to Cagamas (4,515,514) 580,873 (4,515,514) 580,873
Derivative financial liabilities 2,184 — 2,184 —
Other liabilities 99,130 108,441 (180,971) 1,419,266

Cash generated from operations 12,619,221 8,331,737 6,394,590 9,036,404
Income tax expense and zakat paid (805,189) (819,042) (645,557) (693,684)

Net cash generated from operating activities 11,814,032 7,512,695 5,749,033 8,342,720

Cash flows from investing activities

Purchase of property and equipment (174,282) (268,745) (108,583) (201,582)
Prepaid land lease payments made (637) (21,393) — —
Proceeds from disposal of property and equipment 3,385 2,590 1,774 2,561
Proceeds from disposal of foreclosed properties 22,604 15,978 22,438 15,813
Proceeds from disposal of prepaid land lease payments 60 — — —
Proceeds from disposal of investment properties 76 66 — —
Net purchase of securities (4,520,249) (6,266,306) (3,351,745) (9,340,366)
Additional investment in subsidiary companies — — (275,000) (1,065,920)
Additional investment in associated company — (72,860) — (72,860)
 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
CASH FLOW STATEMENTS 227

Group Bank

2009 2008 2009 2008

RM’000 RM’000 RM’000 RM’000

Cash flows from

investing activities (continued)
Dividends received from associated companies 10,379 5,130 10,379 5,130
Dividends received from securities available-for-sale 84,132 47,010 78,048 42,880
Dividends received from securities held-to-maturity 6,827 5,945 6,671 5,749
Purchase of share-broking trading rights (159) — — —
Net cash vested over to Public Islamic Bank Berhad — — — (463,141)
Dividends received from subsidiary companies — — 235,329 252,281

Net cash used in investing activities (4,567,864) (6,552,585) (3,380,689) (10,819,455)

Cash flows from financing activities

Exercise of share options of a subsidiary company
by minority shareholders — 9,100 — —
Proceeds from issuance of shares — 24,330 — 24,330
(Repayment)/Drawdown of borrowings (207,133) 510,504 — —
Dividends paid to equity holders of the Bank (1,405,755) (1,986,182) (1,405,755) (1,986,182)
Dividends paid to minority interests (23,372) (30,219) — —
Buy-back of shares (140) (215) (140) (215)
Net proceeds from issuance of subordinated notes 473,000 1,377,589 473,000 1,397,614
Redemption of subordinated notes (1,212,225) — (1,212,225) —
Net proceeds from issuance of
Non-innovative Tier I stapled securities 2,080,443 — 2,080,443 —

Net cash used in financing activities (295,182) (95,093) (64,677) (564,453)

Net increase/(decrease) in cash and cash equivalents 6,950,986 865,017 2,303,667 (3,041,188)
Cash and cash equivalents at beginning of year 36,597,027 35,548,788 29,564,959 32,606,147
Exchange differences on translation of opening balances (67,561) 183,222 — —

Cash and cash equivalents at end of year (Note 3) 43,480,452 36,597,027 31,868,626 29,564,959

The accompanying notes form an integral part of the financial statements

PUBLIC BANK BERHAD
ANNUAL REPORT 2009
228 NOTES TO THE FINANCIAL STATEMENTS
– 31 DECEMBER 2009

1. PRINCIPAL ACTIVITIES AND GENERAL INFORMATION

The Group is principally engaged in all aspects of banking, investment banking, financing, Islamic banking, stock-broking,
provision of finance to purchasers of licensed public vehicles, provision of related financial services, management of unit
trusts and sale of trust units, underwriting of general insurance and investment holding.

The Bank is principally engaged in all aspects of banking and finance company businesses and the provision of related
financial services.

There have been no significant changes to these principal activities during the financial year.

The Bank is a public limited liability company, incorporated and domiciled in Malaysia, and is listed on the Main Market of
Bursa Malaysia Securities Berhad. The registered office of the Bank is located at 27th Floor, Menara Public Bank, 146, Jalan
Ampang, 50450 Kuala Lumpur.

The financial statements were approved and authorised for issue by the Board of Directors on 19 January 2010.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accounting policies adopted by the Group and the Bank are consistent with those adopted in previous years.

The following are the Financial Reporting Standards (“FRS”), amendments to FRSs, IC Interpretations, Technical Release
(“TR”) and Statement of Principle (“SOP”) which have been issued by the Malaysian Accounting Standards Board (“MASB”)
as of the balance sheet date but are not yet effective for these financial statements:

FRS 8 Operating Segments

FRS 139 Financial Instruments: Recognition and Measurement
FRS 4 Insurance Contracts
FRS 7 Financial Instruments: Disclosures
FRS 123 Borrowing Costs
FRS 101 Presentation of Financial Statements
IC Interpretation9 Reassessment of Embedded Derivatives
IC Interpretation10 Interim Financial Reporting and Impairment
IC Interpretation11 FRS 2 – Group and Treasury Share Transactions
IC Interpretation13 Customer Loyalty Programmes
IC Interpretation14 FRS 119 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and Their
Interaction
Amendments to FRS 2 Share-based Payment: Vesting Conditions and Cancellations
Amendments to FRS 1 First-time Adoption of Financial Reporting Standards and FRS 127 Consolidated and Separate
Financial Statements: Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate
Amendments to FRS 132 Financial Instruments: Presentation and FRS 101 Presentation of Financial Statements – Puttable
Financial Instruments and Obligations Arising on Liquidation
Amendments to FRS 139 Financial Instruments: Recognition and Measurement, FRS 7 Financial Instruments: Disclosures and
IC Interpretation 9 Reassessment of Embedded Derivatives
Amendments to FRSs contained in the document entitled “Improvements to FRSs (2009)”
TR i-3 Presentation of Financial Statements of Islamic Financial Institutions
SOP i-1 Financial Reporting from an Islamic Perspective
 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
NOTES TO THE FINANCIAL STATEMENTS 229

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

All the new FRSs, amendments to FRSs, IC Interpretations, TR and SOP above are effective from 1 January 2010, with the
exception of FRS 8, which is effective from 1 July 2009. The Group and the Bank have early adopted FRS 8 in the previous
financial year and have chosen to early adopt the following FRSs, amendments to FRS, IC Interpretations and SOP in the
current financial year:

(i) FRS 123 Borrowing Costs – This standard replaces FRS 1232004, with the main difference being the removal of the
option to expense borrowing costs that are directly attributable to the acquisition, construction or production of a
qualifying asset, and instead requires an entity to capitalise all such borrowing costs as part of the cost of that asset.
In accordance with the transitional provisions, the Group and the Bank have elected to apply FRS 123 to borrowing
costs related to qualifying assets for which the commencement date of capitalisation is on or after 1 January 2009. The
adoption of this standard does not have any impact on the financial statements of the Group and the Bank, as there
were no qualifying assets acquired, constructed or produced during the year.

(ii) IC Interpretation 10 Interim Financial Reporting and Impairment – This interpretation clarifies that an entity shall not
reverse impairment losses on goodwill, investments in equity instruments or financial assets carried at cost recognised
in an interim period. In accordance with the transitional provisions, the Group and the Bank will apply this interpretation
prospectively from the date that the Group and the Bank first applied the measurement criteria of FRS 136 Impairment
of Assets. The adoption of this interpretation does not have any impact on the financial statements of the Group and
the Bank, as there have not been any such reversals of impairment losses recognised in interim periods.

(iii) IC Interpretation 11 FRS 2 – Group and Treasury Share Transactions – This interpretation clarifies how share-based
payment transactions involving an entity’s own or another entity’s equity instruments in the same group are to be
treated. The adoption of this IC interpretation does not have any impact on the financial statements of the Group and
the Bank, as there were no such share-based payment transactions during the year.

(iv) IC Interpretation 13 Customer Loyalty Programmes – This interpretation explains how entities that operate or grant
loyalty award points to their customers should account for their obligation to provide free or discounted goods or
services if and when the customers redeem the points. The adoption of this IC interpretation does not have any material
impact on the financial statements of the Group and the Bank.

(v) IC Interpretation 14 FRS 119 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their
Interaction – This interpretation provides guidance on how entities should determine the limit placed on the amount of
a surplus in a pension plan, which can be recognised as a defined benefit asset. This interpretation also addresses how
a minimum funding requirement affects that limit and when a minimum funding requirement creates an onerous
obligation that should be recognised as a liability in addition to that otherwise recognised under FRS 119. The adoption
of this IC interpretation does not have any impact on the financial statements of the Group and the Bank as the Group’s
and the Bank’s defined benefit assets are not in excess of the limits determined under this interpretation.

(vi) Amendments to FRS 2 Share-based Payment: Vesting Conditions and Cancellations – This amendment clarifies that
vesting conditions are limited to service conditions and performance conditions only and do not include other features
of a share-based payment, and that cancellations by parties other than the entity are to be treated in the same way as
cancellations by the entity. The adoption of this amendment does not have any impact on the financial statements of
the Group and the Bank, as there were no such share-based payment transactions during the year.
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
230 NOTES TO THE FINANCIAL STATEMENTS

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

(vii) Amendments to FRS 1 First-time Adoption of Financial Reporting Standards and FRS 127 Consolidated and Separate
Financial Statements: Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate – The amendment to
FRS 1 allows first-time adopters of the FRS framework to measure the initial cost of investments in subsidiaries, jointly
controlled entities and associated companies at fair value or the previous carrying amount, instead of having to adopt
the measurement requirements of FRS 127 retrospectively. The amendment to FRS 1 is not applicable to the Group and
the Bank as it is not adopting the FRS framework for the first time. The amendment to FRS 127 removes the requirement
for a parent entity to recognise dividends only to the extent that it represents distributions from profits of the investee
arising after the date of acquisition, with any excess dividends recognised as a reduction of the cost of investment. The
amendment to FRS 127 also deals with situations where a parent entity reorganises its group by establishing a new entity
as the parent, whereby the new parent measures the cost of its investment in the original parent at the carrying amount
of its share of the equity items shown in the separate financial statements of the original parent at the reorganisation
date. The adoption of the amendment to FRS 127 does not have any impact on the financial statements of the Group
and the Bank, as there were no such dividend distributions and group reorganisations during the year.

(viii) Amendments to FRS 132 Financial Instruments: Presentation and FRS 101 Presentation of Financial Statements –
Puttable Financial Instruments and Obligations Arising on Liquidation – This amendment requires that some financial
instruments that meet the definition of a liability are to be classified as equity, namely puttable financial instruments and
instruments or components of instruments that impose on the entity the obligation to deliver a pro rata share of the net
assets of the entity only on liquidation. The adoption of this amendment does not have any impact on the financial
statements of the Group and the Bank, as it has not issued any such financial instruments.

(ix) Amendments to FRSs contained in the document entitled “Improvements to FRSs (2009)” – This contains amendments
to 21 FRSs that result in changes in presentation, recognition or measurement. The adoption of these amendments to
FRSs do not have any material impact on the financial statements of the Group and the Bank.

(x) SOP i-1 Financial Reporting from an Islamic Perspective – This statement sets out the underlying principles on financial
reporting from an Islamic perspective. The statement complements, and is to be read in conjunction with the Framework
for the Preparation and Presentation of Financial Statements, with the main principle of this statement being that
Shariah-compliant transactions and events are to be accounted for in accordance with MASB approved accounting
standards, unless there is a Shariah prohibition. The Group has applied this statement in accounting for transactions of
its Islamic banking business.

The FRSs, amendments to FRSs, IC Interpretations and TR which have been issued but which the Group and the Bank have
not early adopted are as follows:

(i) FRS 139 Financial Instruments: Recognition and Measurement – This standard establishes the principles for the
recognition, derecognition and measurement of an entity’s financial instruments and for hedge accounting. The impact
of applying FRS 139 on the financial statements upon first adoption of this standard as required by paragraph 30(b) of
FRS 108 Accounting Policies, Changes in Accounting Estimates and Errors is not required to be disclosed by virtue of
exemptions provided under paragraph 103AB of FRS 139.

With effect from 1 January 2005, upon the Group’s and the Bank’s adoption of Bank Negara Malaysia’s (“BNM”) revised
BNM/GP8 – Guidelines on Financial Reporting for Licensed Institutions, certain principles in connection with the
recognition, derecognition and measurement of financial instruments and hedge accounting which are similar to those
prescribed by FRS 139 have been adopted by the Group and the Bank. These accounting policies are set out in Notes
2(e) and (f) to the financial statements.

On 8 January 2010, BNM issued the guidelines on Classification and Impairment Provisions for Loans/Financing which
is effective for annual periods beginning on and after 1 January 2010. The guidelines set out the minimum requirements
on classification of impaired loans/financing, provisioning for impaired loans/financing and expectations that must be
met by banking institutions with the adoption of FRS 139. With the issuance of the guidelines, the existing revised BNM/
GP3 which was issued on 7 August 2008 will be withdrawn and replaced with the requirements of the guidelines.

 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
NOTES TO THE FINANCIAL STATEMENTS 231

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

In accordance with the transitional provisions under the Amendments to FRS 139 Financial Instruments: Recognition
and Measurement, the Financial Services sector is granted a transitional period for the purpose of complying with the
collective assessment of impairment required under FRS 139. During the transitional period, banking institutions will be
required to comply with the requirements on collective assessment of impairment of loans and financing under the
BNM’s guidelines on Classification and Impairment Provisions for Loans/Financing. Banking institutions are required to
maintain collective impairment provisions of at least 1.5% of total outstanding loans/financing, net of individual
impairment provisions under the transitional provisions in the guidelines. Subject to the prior written approval from BNM,
banking institutions are allowed to maintain a lower collective impairment provision.

(ii) FRS 4 Insurance Contracts – This standard specifies the financial reporting requirements for insurance contracts by any
entity that issues such contracts (“insurers”). In particular, it requires disclosures that identify and explain the amounts
in an insurer’s financial statements arising from insurance contracts and helps users of those financial statements
understand the amount, timing and uncertainty of future cash flows from insurance contracts. The application of this
standard is not expected to have a material impact on the financial results of the Group as the Group has only an
immaterial amount of revenue generated from the insurance business. The impact of applying FRS 4 on the financial
statements upon first adoption of this standard as required by paragraph 30(b) of FRS 108 Accounting Policies, Changes
in Accounting Estimates and Errors is not required to be disclosed by virtue of exemptions provided under paragraph
41AA of FRS 4.

(iii) FRS 7 Financial Instruments: Disclosures – This standard requires disclosures in financial statements that enable users
to evaluate the significance of financial instruments for the entity’s financial position and performance, and the nature
and extent of risks arising from financial instruments to which an entity is exposed and how these risks are managed.
This standard requires both qualitative disclosures describing management’s objectives, policies and processes for
managing those risks, and quantitative disclosures providing information about the extent to which an entity is exposed
to risk, based on information provided internally to the entity’s key management personnel. An entity shall not apply
this standard for annual periods beginning prior to 1 January 2010 unless it also applies FRS 139. The impact of
applying FRS 7 on the financial statements upon first adoption of this standard as required by paragraph 30(b) of FRS
108 Accounting Policies, Changes in Accounting Estimates and Errors is not required to be disclosed by virtue of
exemptions provided under paragraph 44AB of FRS 7.

(iv) FRS 101 Presentation of Financial Statements – This standard sets the overall requirements for the presentation of
financial statements, guidelines for their structure and the minimum requirements for their content. The standard
separates owner and non-owner changes in equity, whereby the statement of changes in equity will include only details
of transactions with owners, and all non-owner changes in equity presented separately. In addition, the standard
introduces the statement of comprehensive income, which presents income and expense items recognised in profit and
loss, together with all other items of recognised income and expense, either in one single statement, or in two linked
statements. The application of this standard is not expected to have any impact on the financial results of the Group
and the Bank as the changes introduced are presentational in nature.

(v) IC Interpretation 9 Reassessment of Embedded Derivatives – This interpretation clarifies that the reassessment of an
embedded derivative after its initial recognition is forbidden unless the instrument’s terms have changed and this has
affected its cash flows significantly. This IC Interpretation is not expected to have any material impact on the financial
statements of the Group and the Bank.

(vi) Amendments to FRS 139 Financial Instruments: Recognition and Measurement, FRS 7 Financial Instruments: Disclosures
and IC Interpretation 9 Reassessment of Embedded Derivatives – These amendments allow for the reclassification of
certain non-derivative financial assets classified as held-for-trading to either held-to-maturity, loans and advances or
available-for-sale, and permits the transfer of certain financial assets from available-for-sale to loans and advances. These
amendments are not expected to have any material impact on the financial statements of the Group and the Bank.
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
232 NOTES TO THE FINANCIAL STATEMENTS

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

(vii) TR i-3 Presentation of Financial Statements of Islamic Financial Institutions – This technical release is to be read in
conjunction with FRS 101 Presentation of Financial Statements. The overall requirements for the presentation of financial
statements, guidelines for their structure and minimum requirements for their content is the same as that of FRS 101,
except for additional guidance specific to Islamic financial institutions. The application of this technical release is not
expected to have any impact on the financial results of the Group and the Bank as the changes introduced are
presentational in nature.

Subsequent to the end of the financial year, on 8 January 2010, the MASB issued the following revised FRSs, new IC
Interpretations and Amendments to FRSs:

FRS 1 First-time Adoption of Financial Reporting Standards

FRS 3 Business Combinations
FRS 127 Consolidated and Separate Financial Statements
IC Interpretation 12 Service Concession Arrangements
IC Interpretation 15 Agreements for the Construction of Real Estate
IC Interpretation 16 Hedges of a Net Investment in a Foreign Operation
IC Interpretation 17 Distributions of Non-cash Assets to Owners
Amendments to FRS 2 Share-based Payment
Amendments to FRS 5 Non-current Assets Held for Sale and Discontinued Operations
Amendments to FRS 138 Intangible Assets
Amendments to FRS 139 Financial Instruments: Recognition and Measurement
Amendments to IC Interpretation 9 Reassessment of Embedded Derivatives

The new requirements above take effect for annual periods beginning on or after 1 July 2010, except for Amendments to
FRS 139 which applies for annual periods beginning on or after 1 January 2010. IC Interpretations 12 and 15 are not
expected to have any impact on the Financial Statements of the Group and the Bank as they are not relevant to the
operations of the Group and the Bank. The adoption of the other revised FRSs, amendments to FRSs and IC Interpretations
is not expected to have a significant financial impact on the Group and the Bank, other than the Amendments to FRS 139.
However, the impact of applying the Amendments to FRS 139, as required to be disclosed by FRS 108.30(b), Accounting
Policies, Changes in Accounting Estimates and Errors, is not disclosed by virtue of the exemption provided under paragraph
103AB of FRS 139.

The Amendments to FRS 139 include an additional transitional arrangement for entities in the financial services sector,
whereby BNM may prescribe the use of an alternative basis for collective assessment of impairment for banking institutions.
This transitional arrangement as prescribed in BNM’s guidelines on Classification and Impairment Provisions for Loans/
Financing issued on 8 January 2010 is described earlier on page 230 to these financial statements.

In August 2008, the MASB had announced its plan to bring Malaysia to full convergence with International Financial Reporting
Standards (“IFRS”) by 1 January 2012. The financial impact and effects on disclosures and measurement ensuing from such
convergence are currently still being assessed pending the issuance of such revised FRSs incorporating the full
convergence.

(a) Basis of Acccounting

The financial statements of the Group and the Bank have been prepared on the historical cost basis, except for the
following assets and liabilities which are stated at fair value: securities held-for-trading, securities available-for-sale,
derivative financial instruments, recognised financial assets and liabilities designated as hedged items in qualifying fair
value hedge relationships which are adjusted for changes in fair value attributable to the risk being hedged and investment
properties, as disclosed in the notes to the financial statements and are in accordance with the provisions of the
Companies Act, 1965 and Financial Reporting Standards in Malaysia as modified by Bank Negara Malaysia Guidelines.

The financial statements incorporate all activities relating to the Islamic banking business which have been undertaken
by the Group and the Bank. Islamic banking business refers generally to the acceptance of deposits and granting of
financing under the principles of Shariah.
 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
NOTES TO THE FINANCIAL STATEMENTS 233

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

(a) Basis of Accounting (continued)
The financial statements are presented in Ringgit Malaysia (RM) and all values are rounded to the nearest thousand
(RM’000), unless otherwise stated.

In the preparation of the financial statements, management has been required to make judgements, estimates and
assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income
and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on
an ongoing basis. Revisions to accounting estimates are recognised in the financial statements in the period in which
the estimate is revised and in any future periods affected.

Significant areas of estimation, uncertainty and critical judgements used in applying accounting policies that have
significant effect in determining the amounts recognised in the financial statements include the following:

(i) Fair value estimation for securities held-for-trading (Note 6), securities available-for-sale (Note 7) and derivative
financial assets and liabilities (Note 10) – Fair values of financial instruments that are traded in active markets are
based on quoted market prices or dealer price quotations. For financial instruments which are not traded in an
active market, the fair value is determined using valuation techniques, which include the use of mathematical
models, comparison to similar instruments for which market observable prices exist and other valuation techniques.
Where possible, assumptions and inputs used on valuation techniques include observable data such as risk-free
and benchmark discount rates and credit spreads. Where observable market data are not available, judgement is
required in the determination of model inputs, which normally incorporate assumptions that other market participants
would use in their valuations, including assumptions about interest rate yield curves, exchange rates, volatilities
and prepayment and default rates.

(ii) Impairment of goodwill and intangible assets (Note 19) – the Group and the Bank perform an annual assessment
of the carrying value of its goodwill and intangible assets against the recoverable amount of the cash-generating
units (“CGU”) to which the goodwill and intangible assets have been allocated. The measurement of the recoverable
amount of CGUs are determined based on the value-in-use method, incorporating the present value of estimated
future cash flows expected to arise from the respective CGU’s ongoing operations. Management judgement is used
in the determination of the assumptions made, particularly the cash flow projections, discount rate and the growth
rates used. The estimation of pre-tax cash flows is sensitive to the periods for which the forecasts are available
and to assumptions regarding the long-term sustainable cash flows, and reflect management’s view of future
performance.

(iii) Allowance for losses on loans, advances and financing (Note 9 and Note 40) – whilst the assessment of allowance
for losses required for loans, advances and financing is made in accordance with the requirements of the BNM/
GP3 Guidelines on the Classification of Non-Performing Loans and Provision for Substandard, Bad and Doubtful
Debts, the Bank exercises judgement in ascertaining the recoverable amount when assessing the levels of loan
loss allowance required.

(iv) Impairment of assets – assessment of impairment of securities available-for-sale (Note 7) and securities held-to-
maturity (Note 8) is made in line with the guidance in the revised BNM/GP8 Guidelines on Financial Reporting for
Licensed Institutions to determine when the investment is impaired. Management judgement is required to evaluate
the duration and extent by which the fair value of the financial instrument is below its cost and/or carrying value.
The assessment of impairment of properties held under prepaid land lease payments (Note 17) and property and
equipment (Note 18) also requires management judgement in the assessment of whether negative fluctuations in
values of similar properties in the same location represents an indication of impairment in the value of the
properties.

(v) Valuation of investment properties (Note 16) – the measurement of the fair value for investment properties
performed by management is determined with reference to current prices in an active market for similar properties
in the same location and condition and subject to similar lease and other contracts.
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
234 NOTES TO THE FINANCIAL STATEMENTS

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

(a) Basis of Accounting (continued)
(vi) Income taxes (Note 42) – The Group and the Bank are subject to income taxes in many jurisdictions. Significant
management judgement is required in estimating the provision for income taxes, as there may be differing
interpretations of tax law for which the final outcome will not be established until a later date. Liabilities for taxation
are recognised based on estimates of whether additional taxes will be payable. The estimation process may involve
seeking the advise of experts, where appropriate. Where the final liability for taxation assessed by the Inland
Revenue Board is different from the amounts that were initially recorded, these differences will affect the income
tax expense and deferred tax provisions in the period in which the estimate is revised or when the final tax liability
is established.

(vii) Deferred tax assets (Note 13) – deferred tax assets are recognised for all unutilised tax losses to the extent that
it is probable that taxable profit will be available against which the tax losses can be utilised. Management
judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the
likely timing and level of future taxable profits together with future tax planning strategies.

(b) Basis of Consolidation

(i) Subsidiary Companies
The consolidated financial statements include the financial statements of the Bank and its subsidiary companies
made up to the end of the financial year.

Subsidiary companies are those enterprises controlled by the Group. Control exists when the Group has the power,
directly or indirectly, to govern the financial and operating policies of an enterprise so as to obtain benefits from
its activities. Potential voting rights are considered when assessing control. The financial results of subsidiary
companies are included in the consolidated financial statements from the date that control effectively commences
until the date that control effectively ceases.

The purchase method of accounting is used to account for the acquisition of subsidiary companies. The cost of
acquisition is measured as the fair value of the assets given, liabilities incurred or assumed, and the equity
instruments issued at the date of exchange plus costs directly attributable to the business combination. Identifiable
assets acquired, liabilities and contingent liabilities assumed in a business combination are measured initially at
their fair values at the acquisition date, irrespective of the extent of any minority interest. Any difference between
the cost of the business combination and the Group’s interest in the net fair value of the identifiable assets,
liabilities and contingent liabilities is recognised as goodwill. The accounting policy on goodwill is set out in Note
2(j)(i).

In preparing the consolidated financial statements, intragroup transactions, balances and unrealised gains on
transactions between group companies are eliminated. Unrealised losses resulting from intragroup transactions are
also eliminated unless there is evidence of impairment of the assets transferred. Consistent accounting policies are
applied by the subsidiary companies for transactions and events in similar circumstances.

Minority interest represents the portion of the total profit or loss for the year and net assets of a subsidiary
company attributable to equity interests that are not owned directly or indirectly by the Group. Minority interest is
presented in the consolidated balance sheet within equity and is presented in the consolidated statement of
changes in equity separately from equity attributable to equity holders of the Bank. Minority interest in the results
of the Group is presented in the consolidated income statement as an allocation of the total profit or loss for the
year between minority interest and equity holders of the Bank. Where losses applicable to the minority in a
subsidiary company exceed the minority interest in the equity of that subsidiary company, the excess and any
further losses applicable to the minority are attributable against the Group’s interest except to the extent that the
minority has a binding obligation to, and is able to make additional investment to cover the losses. If the subsidiary
company subsequently reports profits, such profits are allocated to the Group’s interest until the minority’s share
of losses previously absorbed by the Group has been recovered.
 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
NOTES TO THE FINANCIAL STATEMENTS 235

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

(b) Basis of Consolidation (continued)
(i) Subsidiary Companies (continued)
For business combinations where the Group’s equity interest in a subsidiary company is increased by virtue of a
subscription to a higher proportion of the subsidiary company’s new issue of shares as compared to its existing
equity interest and where the share issue price is above or below the subsidiary company’s net asset value, the
resultant dilution or accretion of its share of net assets in the subsidiary company is recognised in equity.

The gain or loss on disposal of a subsidiary company is the difference between the net disposal proceeds and
the Group’s share of its net assets as of the date of disposal including the cumulative amount of any exchange
differences that relate to the subsidiary company being disposed. All gains or losses on disposal of subsidiary
companies are recognised in the consolidated income statement.

In the Bank’s separate financial statements, investments in subsidiary companies are stated at cost less impairment
losses, if any. On disposal of such investments, the difference between the net disposal proceeds and their
carrying amounts is recognised as gain or loss on disposal in the Bank’s income statement.

(ii) Associated Companies

Associated companies are those enterprises in which the Group has significant influence but not control, generally
where the Group has long term equity interest and voting rights of between 20 to 50 percent. Significant influence
is the power to participate in the financial and operating policy decisions of the associated companies but not the
power to exercise control over the policies.

Investment in associated companies are accounted for in the Group’s consolidated financial statements using the
equity method. The Group’s investment in associated companies is recognised in the consolidated balance sheet
at cost plus the Group’s share of post-acquisition net results of the associated company less impairment loss, if
any, determined on an individual basis. The Group’s share of results of the associated company is recognised in
the consolidated income statement from the date that significant influence commences until the date that significant
influence ceases. When the Group’s share of losses in an associated company equals or exceeds its interest in
the associated company, the Group does not recognise further losses, unless it has incurred obligations or made
payments on behalf of the associated company. Where there has been a change recognised directly in the equity
of the associate companies, the Group recognises its share of such changes. Consistent accounting policies are
applied for transactions and events in similar circumstances.

Goodwill relating to an associated company is included in the carrying amount of the investment. Any excess of
the Group’s share of the fair value of the associated company’s net identifiable assets and contingent liabilities
over the cost of the investment is excluded from the carrying amount of the investment and is instead included
as income in the determination of the Group’s share of the results of the associated company in the period in
which the investment is acquired.

The gain or loss on disposal of an associated company is the difference between the net disposal proceeds and
the Group’s share of its net assets as of the date of disposal including the cumulative amount of any exchange
differences that relate to the associated company being disposed. All gains or losses on disposal of associated
companies are recognised in the consolidated income statement.

In the Bank’s separate financial statements, investment in associated companies is stated at cost less impairment
losses, if any, determined on an individual basis. On disposal of such investments, the difference between the net
disposal proceeds and their carrying amounts is recognised as gain or loss on disposal in the Bank’s income
statement.
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
236 NOTES TO THE FINANCIAL STATEMENTS

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

(c) Foreign Currency
(i) Functional and Presentation Currency
Items included in the financial statements of each entity in the Group are measured using the currency of the
primary economic environment in which the entity operates, ie. the functional currency. The financial statements of
the Group and the Bank are presented in Ringgit Malaysia (RM), which is the Bank’s functional currency.

(ii) Foreign Currency Transactions and Balances

In preparing the financial statements of the individual entities, transactions in currencies other than each entity’s
functional currency, ie. foreign currencies, are translated into the functional currency at exchange rates prevailing
at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated at
the closing exchange rate ruling at the balance sheet date. Exchange differences arising on the settlement of
monetary items or on translating monetary items at balance sheet date are recognised in the income statement.
Non-monetary items that are measured at historical cost in a foreign currency are translated at the exchange rate
prevailing at the date of the initial transaction. Non-monetary items measured at fair value in a foreign currency
are translated at exchange rates at the date when the fair value is determined. Any exchange component of a gain
or loss on a non-monetary item is recognised directly in equity if the gain or loss on the fair value of the non-
monetary item is recognised directly in equity. Any exchange component of a gain or loss on a non-monetary item
is recognised directly in the income statement if the gain or loss on the fair value of the non-monetary item is
recognised in the income statement.

(iii) Net Investment in Foreign Operations

Exchange differences arising from monetary items that form part of the Bank’s net investment in foreign operations
and that are denominated in the functional currency of the Bank or the foreign operation are recognised in the
income statement of the Bank. In the Group financial statements, such exchange differences are recognised initially
in equity and will be recognised in the income statement only upon disposal of the net investment.

(iv) Consolidation of Financial Statements of Foreign Operations

The results and financial position of the Group’s foreign operations and its subsidiary company incorporated in the
Federal Territory of Labuan, whose functional currencies are not the presentation currency or the currency of a
hyperinflationary economy, are translated into the presentation currency at average exchange rates for the year and
at the closing exchange rate as at balance sheet date respectively. All resulting exchange differences are
recognised in a separate component of equity as a foreign currency translation reserve and are subsequently
recognised in the income statement upon disposal of the foreign operation. Exchange differences arising from
foreign currency borrowings designated as hedges of a net investment in a foreign operation are recognised in the
foreign currency translation reserve in equity until the disposal of the net investment, at which time the accumulated
translation differences are taken to the income statement.

Goodwill and fair value adjustments arising from the acquisition of a foreign operation on or after 1 January 2006
are treated as assets and liabilities of the foreign operation and are translated at the closing rate at the balance
sheet date. For acquisitions prior to 1 January 2006, the exchange rates as at the date of initial acquisition were
used.

The closing rates used in the translation of foreign currency monetary assets and liabilities and the financial
statements of foreign operations are as follows:

2009 2008

1 USD RM3.4280 RM3.4645

1 HKD RM0.4418 RM0.4471

(d) Cash and Cash Equivalents

Cash and cash equivalents consist of cash and bank balances with banks and other financial institutions, and short-term
deposits maturing within one month.
 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
NOTES TO THE FINANCIAL STATEMENTS 237

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

(e) Securities
Investments in securities of the Group and the Bank are classified according to the following categories at initial
recognition depending on the purpose for which the securities were acquired.

(i) Securities Held-for-Trading

Securities are classified as held-for-trading if these financial assets are acquired principally for the purpose of
benefiting from actual or expected short-term price movement or to lock in arbitrage profits. Securities held-for-
trading are stated at fair value and any gain or loss arising from a change in their fair values and the derecognition
of securities held-for-trading are recognised in the income statement. The fair value of quoted securities is derived
from market bid prices. For unquoted securities, the fair value is determined based on quotes from independent
dealers or using valuation techniques such as the discounted cash flows method. Securities classified as held-for-
trading are not reclassified to securities held-to-maturity or securities available-for-sale while they are held.
However, for the period from 1 July 2008 to 31 December 2009, BNM’s circular dated 20 October 2008 allows
the reclassification of securities held-for-trading to securities available-for-sale and securities held-to-maturity under
certain limited circumstances. As at 31 December 2009, the Group and the Bank have not made any such
reclassification of securities.

(ii) Securities Held-to-Maturity

Securities held-to-maturity are financial assets with fixed or determinable payments and fixed maturity that the
Group and the Bank have the positive intent and ability to hold to maturity. Unquoted shares in organisations set
up for socio-economic purposes and equity instruments received as a result of loan restructuring or loan conversion
which do not have a quoted market price in an active market and whose fair value cannot be reliably measured
are also classified as securities held-to-maturity.

The securities held-to-maturity are measured at accreted/amortised cost based on the effective yield method, less
impairment losses, if any. Amortisation of premium, accretion of discount and impairment loss as well as gain or
loss arising from derecognition of securities held-to-maturity are recognised in the income statement.

Any sale or reclassification of a significant amount of securities held-to-maturity not close to their maturity would
result in the reclassification of all securities held-to-maturity to securities available-for-sale, and prevent the Group
and the Bank from classifying any securities as securities held-to-maturity for the current and following two
financial years.

(iii) Securities Available-for-Sale

Securities available-for-sale are financial assets that are not classified as held-for-trading or held-to-maturity. These
securities are those which are intended to be held for an indefinite period of time and which may be sold in
response to liquidity needs or in response to changes in market conditions.

Securities available-for-sale are measured at fair value or at cost (less impairment losses) if the fair value cannot
be reliably measured. Any gain or loss arising from a change in fair value are recognised directly in equity through
the statement of changes in equity, until the financial asset is sold, collected, disposed of or impaired, at which
time the cumulative gain or loss previously recognised in equity will be transferred to the income statement. The
fair value of quoted securities is derived from market bid prices. For securities denominated in a foreign currency,
changes in the fair value are analysed between foreign currency translation differences and changes in the market
bid price. Foreign currency translation differences are recognised in the income statement and changes due to the
market bid price are recognised in equity.

For unquoted securities, the fair value is determined based on quotes from independent dealers or using valuation
techniques such as the discounted cash flows method. Interest earned on securities available-for-sale is recognised
in the income statement based on the effective yield basis.
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
238 NOTES TO THE FINANCIAL STATEMENTS

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

(f) Derivative Financial Instruments and Hedge Accounting
Derivative financial instruments are recognised at fair value upon inception in the balance sheet, and are subsequently
remeasured at fair value. Fair values of exchange-traded derivatives are obtained from quoted market prices. Fair values
of over-the-counter derivatives are obtained using valuation techniques, including the discounted cash flows method and
option pricing models. Financial derivatives are classified as assets when their fair values are positive and as liabilities
when their fair values are negative.

The Group enters into derivative transactions for trading and for hedging purposes. For derivatives held-for-trading, fair
value changes are recognised in the income statement. For derivative transactions that meet the specific criteria for
hedge accounting, the Group applies either fair value, cash flow or net investment hedge accounting.

At the time a financial instrument is designated as a hedge, the Group formally documents the relationship between the
hedging instrument and the hedged item, including the nature of the risk to be hedged, the risk management objective
and strategy for undertaking the hedge and the method used to assess hedge effectiveness. Hedges are expected to
be highly effective and are assessed on an ongoing basis to ensure that they remain highly effective throughout the
hedge period. For actual effectiveness to be achieved, the changes in fair value or cash flows of the hedging instrument
and the hedged item must offset each other in the range of 80% to 125%.

The Group discontinues hedge accounting if the hedging instrument expires, is sold, terminated or exercised or if the
hedge no longer meets the criteria for hedge accounting or is revoked.

(i) Fair Value Hedge

Fair value hedges are hedges against exposure to changes in the fair value of a recognised asset or liability or an
unrecognised firm commitment that is attributable to a particular risk and could affect profit or loss. For qualifying
fair value hedges, the changes in fair value of the hedging instrument and the hedged item relating to the hedged
risk are recognised in the income statement. In the event the hedge no longer meets the criteria for hedge
accounting, the adjustment to the carrying amount of the hedged item is amortised to the income statement over
the expected life of the hedged item.

The Group has adopted fair value hedge accounting for its fixed-rate subordinated notes, Innovative Tier I capital
securities and Non-innovative Tier I stapled securities issued, certain fixed-rate private debt securities and
Malaysian government securities investments and certain negotiable instruments of deposit issued.

(ii) Cash Flow Hedge

Cash flow hedges are hedges of the exposure to variability in future cash flows that is attributable to a particular
risk associated with a recognised asset or liability or a highly probable forecast transaction and could affect profit
or loss. For qualifying cash flow hedges, the effective portion of the change in fair value of the hedging instrument
is taken to equity as a cash flow hedging reserve. The gain or loss relating to the ineffective portion is recognised
immediately in the income statement. Amounts accumulated in equity are released to the income statement in the
periods when the hedged forecast transactions affect the income statement. If the hedged forecast transactions
result in the recognition of a non-financial asset or a non-financial liability, the gain and loss previously deferred in
equity is transferred from equity and included in the initial measurement of the cost of the asset or liability.

(iii) Net Investment Hedge

Net investment hedges are hedges against the exposure to exchange rate fluctuations on the net assets of the
Group’s foreign operations and are accounted for similarly to cash flow hedges. Gains or losses on the hedging
instrument relating to the effective portion of the hedge are taken directly to the foreign currency translation reserve
while those relating to the ineffective portion of the hedge are recognised in the income statement. On disposal of
the foreign operation, the cumulative gains or losses recognised in equity will be transferred to the income
statement.
 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
NOTES TO THE FINANCIAL STATEMENTS 239

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

(g) Investment Properties
Investment properties are properties which are held to earn rental income or for capital appreciation or both. Properties
that are occupied by companies in the Group for conduct of business operations are accounted for as owner-occupied
rather than as investment properties upon consolidation.

In accordance with FRS 140, investment properties can be measured using either the cost or fair value method. The
Group has adopted the fair value method in measuring investment properties. Investment properties are measured
initially at its cost, including transaction cost. Subsequent to initial recognition, all properties are measured at fair value,
with any changes recognised in the income statement. When an item of property and equipment or prepaid land lease
payments is transferred to investment property following a change in its use, any difference arising at the date of
transfer between the carrying amount of the item immediately prior to transfer and its fair value is recognised directly
in equity as a revaluation reserve. If a fair value gain reverses a previously recognised impairment loss, the gain is
recognised in the income statement. Upon disposal of the investment property, any surplus previously recorded in equity
is transferred to retained earnings.

The fair values are based on market values, being the estimated amount for which a property could be exchanged on
the date of the valuation between a willing buyer and a willing seller in an arm’s length transaction. Fair values of
investment properties are determined either by independent professional valuers or by management based on their
judgement and estimates. Management’s estimates have been made with reference to current prices in an active market
for similar properties in the same location and condition and subject to similar lease and other contracts.

Investment properties are derecognised when either they have been disposed of or when the investment property is
permanently withdrawn from use and no future economic benefit is expected from its disposal. Any gain or loss on the
retirement or disposal of an investment property is recognised in the income statement.

(h) Assets Acquired Under Lease

Leases in which the Group is a lessee and assumes substantially all the risks and rewards of ownership are classified
as finance leases. All other leases in which the Group is a lessee are classified as operating leases. Leasehold land held
for own use that normally has an indefinite economic life and where title is not expected to pass to the lessee by the
end of the lease term is also classified as an operating lease. Leasehold land and building held under operating lease
that would otherwise meet the definition of an investment property is classified as investment property on a property-by-
property basis and is accounted for using the fair value model for investment properties, as set out in Note 2(g).

(i) Finance Lease

Upon initial recognition, the leased asset and the corresponding lease obligations are measured at an amount equal
to the lower of the fair value of the leased asset at the beginning of the lease term and the present value of the
minimum lease payments. In calculating the present value of the minimum lease payments, the discount factor
used is the interest rate implicit in the lease, when it is practicable to determine, otherwise the Group’s incremental
borrowing rate is used. Subsequent to initial recognition, the asset is accounted for in accordance with the
accounting policy applicable to property and equipment. Depreciation is provided at rates which write off the cost
or valuation of the asset over the term of the relevant lease or, where it is likely that the Group will obtain
ownership of the asset, the life of the asset. Finance charges implicit in the lease payments are charged to the
income statement over the period of the lease so as to produce an approximately constant periodic rate of charge
on the remaining balance of the obligations for each accounting period.

(ii) Operating Lease – Other Assets

All assets under operating leases, other than leasehold land, are not recognised on the balance sheet. All lease rentals
payable are accounted for on a straight-line basis over the lease term and are charged to the income statement.
When an operating lease is terminated before the lease period has expired, any payment required to be made to the
lessor by way of penalty is recognised in the income statement in the period the termination takes place.
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
240 NOTES TO THE FINANCIAL STATEMENTS

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

(h) Assets Acquired Under Lease (continued)
(iii) Operating Lease – Leasehold Land
The payment made upon entering into or acquiring a leasehold land is accounted for as prepaid land lease
payments in the balance sheet. In the case of a lease of land and buildings, the prepaid land lease payments are
allocated, whenever necessary, between the land element and the buildings element of the lease at the inception
of the lease in proportion to their relative fair values. The prepaid land lease payments are amortised over the lease
term in accordance with the pattern of benefits provided. Prepaid land lease payments are classified as short term
where the remaining lease term is 50 years or less and long term where the remaining lease term exceeds 50
years.

(i) Property and Equipment and Depreciation

All items of property and equipment are initially recorded at cost. Subsequent costs are included in the asset’s carrying
amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits
associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount
of replaced parts are derecognised. All other repairs and maintenance are charged to the income statement when they
are incurred.

When significant parts of an item of property and equipment have different useful lives, they are accounted for as
separate items (major components) of property and equipment.

Subsequent to initial recognition, property and equipment are stated at cost less accumulated depreciation and
accumulated impairment losses, if any. The policy for the recognition and measurement of impairment losses is in
accordance with Note 2(m)(iv).

Freehold land with an unlimited useful life and work-in-progress which are not yet available for use are not depreciated.
Depreciation of other property and equipment is provided on a straight line basis calculated to write off the cost of
each asset to its residual value over the term of its estimated useful lives at the following principal annual rates:

Buildings 2.0%
Renovations Over the term of the leases ranging from 2 – 7 years
Office equipment, furniture and fittings 10.0% – 33.3%
Computer equipment and software 20.0% – 33.3%
Motor vehicles 20.0%

The residual values, useful lives and depreciation method are reviewed at each financial year end to ensure that the
amount, method and period of depreciation are consistent with previous estimates and the expected pattern of
consumption of the future economic benefits embodied in the items of property and equipment.

An item of property and equipment is derecognised upon disposal or when no future economic benefits are expected
from its use or disposal. The difference between the net disposal proceeds, if any, and the net carrying amount is
recognised in the income statement.

When the use of a property changes from owner-occupied to investment property, the property is remeasured to fair
value and reclassified as investment property. Any gain arising on remeasurement is recognised directly in equity. Any
loss is recognised immediately in the income statement.
 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
NOTES TO THE FINANCIAL STATEMENTS 241

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

(j) Goodwill and Intangible Assets
(i) Goodwill
For acquisitions prior to 1 January 2006, goodwill acquired in a business combination represents the excess of the
cost of the acquisition of subsidiary companies over the Group’s interest in the fair values of the net identifiable
assets (including intangible assets) at the date of acquisition. With the adoption of FRS 3 Business Combinations
beginning 1 January 2006, goodwill represents the excess of the cost of the acquisition over the Group’s interest
in the net fair value of the identifiable assets, liabilities and contingent liabilities of the subsidiary companies.

Goodwill is measured at cost less accumulated impairment losses, if any. For the purpose of impairment
assessment, goodwill is allocated to cash-generating units (“CGU”) which are expected to benefit from the
synergies of the business combination. Each CGU represents the lowest level at which the goodwill is monitored
for internal management purposes and is not larger than an operating segment in accordance with FRS 8 Operating
Segments. The carrying amount of goodwill is assessed annually for impairment, or more frequently if events or
changes in circumstances indicate that it might be impaired. Gains and losses on the disposal of an entity include
the carrying amount of goodwill relating to the entity sold.

Negative goodwill, which represents the excess of the Group’s interest in the net fair value of the identifiable
assets, liabilities and contingent liabilities acquired over the cost of the acquisition of the subsidiary companies, is
recognised immediately in the income statement.

(ii) Intangible Assets

Intangible assets acquired separately are measured at cost on initial recognition. The cost of intangible assets
acquired in a business combination is their fair values as at the date of acquisition. Intangible assets are recognised
only when the identifiability and economic benefit probability criterion are met. Following initial recognition,
intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment losses.

Intangible assets with an indefinite useful life are not amortised but are reviewed annually for impairment or more
frequently if events or changes in circumstances indicate that the carrying value may be impaired. Intangible assets
with an indefinite useful life is reviewed annually to determine whether the indefinite useful life assessment
continues to be supportable.

Intangible assets with a finite useful life will be amortised on a straight line basis over the estimated useful life and
assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation
period and amortisation method for an intangible asset with a finite useful life are reviewed at least at each balance
sheet date.

(k) Foreclosed Properties

Foreclosed properties are those acquired in full or partial satisfaction of debts and are stated at the lower of cost and
fair value.

(l) Receivables
Receivables are recognised when there is a contractual right to receive cash or another financial asset from another
entity. Receivables are initially recognised at cost and subsequently stated at cost less allowance for doubtful debts,
which is made based on estimates of possible losses which may arise if any receivable account becomes
irrecoverable.
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
242 NOTES TO THE FINANCIAL STATEMENTS

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

(m) Impairment of Assets
The carrying amount of the Group’s assets except for deferred tax assets, financial assets (other than securities held-
to-maturity and available-for-sale) and investment properties are reviewed at each balance sheet date to determine
whether there are any indications of impairment. If any such indications exist, the asset’s recoverable amount is
estimated and an impairment loss is recognised in the income statement. The policies on impairment of assets are
summarised as follows:

(i) Securities Held-to-Maturity

For securities carried at amortised cost in which there are objective evidence of impairment, impairment loss is
measured as the difference between the securities’ carrying amount and the present value of the estimated future
cash flows discounted at the securities’ original effective interest rate. The amount of the impairment loss is
recognised in the income statement.

Subsequent reversals in the impairment loss is recognised when the decrease can be objectively related to an
event occurring after the impairment was recognised, to the extent that the securities’ carrying amount does not
exceed its amortised cost if no impairment had been recognised. The reversal is recognised in the income
statement.

For securities carried at cost, impairment loss is measured as the difference between the securities’ carrying
amount and the present value of estimated future cash flows discounted at the current market rate of return for
similar securities. The amount of impairment loss is recognised in the income statement and such impairment
losses are not reversed subsequent to its recognition.

(ii) Securities Available-for-Sale

For securities available-for-sale in which there are objective evidence of impairment which are other than temporary,
the cumulative impairment loss that had been recognised directly in equity is transferred from equity to the income
statement, even though the securities have not been derecognised. The cumulative impairment loss is measured
as the difference between the acquisition cost (net of any principal repayment and amortisation) and the current
fair value, less any impairment loss previously recognised in the income statement.

Impairment losses recognised on investments in equity instruments classified as available-for-sale are not reversed
subsequent to its recognition. Reversals of impairment losses on debt instruments classified as available-for-sale
are recognised in the income statement if the increase in fair value can be objectively related to an event occurring
after the recognition of the impairment loss in the income statement.

(iii) Goodwill/Intangible Assets

Goodwill and intangible assets that have an indefinite useful life are reviewed annually for impairment, or more
frequently if events or changes in circumstances indicate that it might be impaired. For impairment assessment,
goodwill from business combinations or the intangible asset is allocated to cash-generating units (“CGU”) which
are expected to benefit from the synergies of the business combination or intangible asset.

The recoverable amount is determined for each CGU based on its value in use. In assessing value in use, the
estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current
market assessments of the time value of money and the risks specific to the asset. An impairment loss is
recognised in the income statement when the carrying amount of the CGU, including attributable goodwill or
intangible asset, exceeds the recoverable amount of the CGU. The total impairment loss is allocated, first, to
reduce the carrying amount of goodwill or intangible assets allocated to the CGU and then to the other assets of
the CGU on a pro-rata basis.

An impairment loss on goodwill is not reversed in subsequent periods. An impairment loss for intangible assets is
reversed if and only if there has been a change in the estimates used to determine the intangible asset’s
recoverable amount since the last impairment loss was recognised and such reversal is through the income
statement.
 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
NOTES TO THE FINANCIAL STATEMENTS 243

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

(m) Impairment of Assets (continued)
(iv) Other Assets
Other assets such as property and equipment, prepaid land lease payments, foreclosed properties and investments
in subsidiary companies and associated companies are reviewed for objective indications of impairment at each
balance sheet date or whenever there is any indication that these assets may be impaired. Where such indications
exist, impairment loss is determined as the excess of the asset’s carrying value over its recoverable amount
(greater of value in use or fair value less costs to sell) and is recognised in the income statement. Any reversal of
an impairment loss for these non-financial assets is recognised in the income statement. The carrying amount is
increased to its revised recoverable amount, provided that the amount does not exceed the carrying amount that
would have been determined (net of amortisation or depreciation) had no impairment loss been recognised for the
asset in prior years.

(n) Repurchase and Reverse Repurchase Agreements

Securities purchased under resale agreements (ie. reverse repurchase agreements) represent collaterised lending which
the Group and the Bank are committed to resell at future dates and are reflected as an asset on the balance sheet.

Obligations on securities sold under repurchase agreements (ie. repurchase agreements) represent collaterised borrowing
obligations which the Group and the Bank are committed to repurchase at future dates and are reflected as a liability
on the balance sheet. The securities sold under repurchase agreements are treated as pledged assets and are not
derecognised from the balance sheet.

(o) Bills and Acceptances Payable

Bills and acceptances payable represent the Bank’s own bills and acceptances rediscounted and outstanding in the
market.

(p) Liabilities
Liabilities are recognised when there is a contractual obligation to deliver cash or another financial asset to another
entity. Deposits from customers are stated at placement values and adjusted for accrued interest. Deposits and
placements of banks and financial institutions are stated at placement values. Other liabilities are stated at cost, which
is the consideration expected to be paid in the future for goods and services received.

(q) General Insurance

General insurance underwriting results are determined after taking into account reinsurances, unearned premium
reserves, net commissions and net claims incurred.

Unearned premium reserves (“UPR”) represent the unexpired risks at the end of the financial year. A fixed percentage
method or time apportionment method is used in determining the UPR at balance sheet date.

Provision is made for outstanding claims based on the estimated costs of all claims together with related expenses less
reinsurance recoveries in respect of claims notified but not settled at balance sheet date. Provision is also made for the
cost of claims together with related expenses incurred but not reported at balance sheet date based on an actuarial
estimation by a qualified actuary using a mathematical method of estimation.

(r) Profit Equalisation Reserves (“PER”)

PER is the amount appropriated out of the total Islamic banking gross income in order to maintain a certain level of
return to depositors which is as stipulated by Bank Negara Malaysia’s circular on “Framework of Rate of Return”. PER
is deducted from the total Islamic banking gross income in deriving the net distributable gross income at a rate which
does not exceed the maximum amount of the total of 15% of monthly gross income, monthly net trading income, other
income and irregular income. The amount appropriated is shared by the depositors and the Group/Bank. PER is
maintained up to the maximum of 30% of total Islamic banking capital fund.
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
244 NOTES TO THE FINANCIAL STATEMENTS

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

(s) Provisions
A provision is recognised when there is a present legal or constructive obligation where as a result of past events, it
is probable that an outflow of resources embodying economic benefits will be required to settle a present obligation
and a reliable estimate can be made of the amount of the obligation.

Provisions are reviewed at each balance sheet date and if it is no longer probable that an outflow of resources
embodying economic benefits will be required to settle the obligation, the provision is reversed.

Where the effect of the value of money is material, provisions are discounted using a current pre-tax rate that reflects,
where appropriate, the risks specific to the liability.

(t) Debt Instruments

Debt instruments are classified as financial liabilities or equity in accordance with the substance of the contractual terms
of the instruments. The Group’s debt instruments consist mainly of subordinated notes, Innovative Tier I capital
securities and borrowings. These debt instruments are classified as liabilities in the balance sheet as there is a
contractual obligation by the Group to make cash payments of either principal or interest or both to holders of the
instruments and that the Group is contractually obliged to settle the financial instrument in cash or another financial
instrument.

The Group has also issued Non-innovative Tier I stapled securities which are potentially perpetual debt instruments,
subject to the occurrence of certain events. This debt instrument is classified as a liability in the balance sheet as there
is a contractual obligation to deliver cash or other financial instruments to its holders in the form of regular interest
payments, potentially extending into the indefinite future.

Debt instruments are recognised initially at the fair value of the consideration received less directly attributable
transaction costs. Subsequent to initial recognition, the debt instruments are stated at amortised cost with any difference
between proceeds net of transaction costs and the redemption value being recognised in the income statement over
the tenure of the debt instruments on an effective interest method.

Generally, it is the Group’s policy to hedge the fixed interest rate risk on these debt instruments, and apply fair value
hedge accounting. When hedge accounting is applied to fixed-rate debt instruments, the carrying values of the debt
instruments are adjusted for changes in fair value related to the hedged exposure, instead of being carried at amortised
cost.

(u) Share Capital

Ordinary shares are classified as equity when there is no contractual obligation to transfer cash or other financial assets.
Costs directly attributable to the issuance of new equity shares are taken to equity as a deduction from the
proceeds.

(v) Treasury Shares

When the Bank re-acquires its own equity shares, the amount of the consideration paid, including directly attributable
costs, is recognised in equity. Shares re-acquired are held as treasury shares and presented as a deduction from equity.
No gain or loss is recognised in the income statement on the sale, re-issuance or cancellation of the treasury shares.
Should such treasury shares be reissued by re-sale in the open market, the difference between the sales consideration
and the carrying amount are shown as a movement in equity, as appropriate. Where treasury shares are distributed as
share dividends, the cost of the treasury shares are applied in the reduction of the share premium reserve or distributable
retained profits or both.
 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
NOTES TO THE FINANCIAL STATEMENTS 245

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

(w) Contingent Liabilities and Contingent Assets
Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated
reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow of economic benefits is
remote. Possible obligations, whose existence will only be confirmed by the occurence or non-occurence of one or more
future events are also disclosed as contingent liabilities unless the probability of outflow of economic benefits is
remote.

A contingent asset is a possible asset that arises from past events whose existence will be confirmed by the occurrence
or non-occurrence of one or more uncertain future events beyond the control of the Group. The Group does not
recognise contingent assets but discloses its existence where inflows of economic benefits are probable, but not
virtually certain.

(x) Operating Revenue

Operating revenue of the Group comprises all types of revenue derived from banking, investment banking, financing,
stock-broking, leasing and factoring, general insurance, management of unit trust and sales of trust units as well as
trustee services but excluding all related companies transactions.

Operating revenue of the Bank comprises gross interest income, commission and other income derived from banking
and finance operations.

(y) Recognition of Interest and Financing Income

Interest income is recognised in the income statement for all interest bearing assets on an accrual basis. Interest income
includes the amortisation of premium or accretion of discount. Interest income on securities are recognised on an
effective yield basis.

Interest income on overdrafts, term loans and housing loans is accounted for on an accrual basis by reference to rest
periods as stipulated in the loan agreements, which are either monthly or daily. Interest income on hire purchase, block
discounting and leasing business is recognised using the “sum-of-digits” method. Income from Islamic banking financing
is recognised on an accrual basis in accordance with the principles of Shariah.

Handling fees paid to motor vehicle dealers for hire purchase loans are amortised in the income statement over the
tenor of the loan in accordance with Bank Negara Malaysia’s Circular on the Accounting Treatment of Handling Fees
for Hire Purchase Loans dated 16 October 2006 and is set-off against interest income recognised on the hire purchase
loans.

When an account becomes non-performing, interest accrued and recognised as income prior to the date the loan is
classified as non-performing is reversed out of income and set-off against the accrued interest receivable account in
the balance sheet. Thereafter, interest on the non-performing loan shall be recognised as income on a cash basis.
Customers’ accounts are deemed to be non-performing where repayments are in arrears for more than three (3) months
from the first day of default or after maturity date.

The policy on interest recognition on non-performing loans is in conformity with the revised Guidelines on Financial
Reporting for Licensed Institutions (BNM/GP8) issued by Bank Negara Malaysia on 5 October 2004.
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
246 NOTES TO THE FINANCIAL STATEMENTS

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

(z) Recognition of Fees and Other Income
Income from the various business activities of the Group and the Bank is recognised using the following bases:

(i) Loan arrangement, management and participation fees are recognised upfront as income based on contractual
arrangements. Guarantee fee is recognised as income upon issuance of the guarantees;

(ii) Dividend income is recognised when the right to receive payment is established;

(iii) Factoring commission income is recognised upon acceptance of the factored invoices. Factoring interest is
recognised on an accrual basis;

(iv) Fee on sale of trust units is recognised upon allotment of units, net of cost of units sold;

(v) Management fees from the management of unit trusts, net brokerage income, margin interest and rollover fees are
recognised on an accrual basis;

(vi) Other fees and commissions on services and facilities extended to customers are recognised on inception of such
transactions;

(vii) Fees from advisory and corporate finance activities are recognised as income on completion of each stage of the
assignment;

(viii) Premium income from general insurance is recognised in a financial period in respect of risks assumed during the
particular financial year; and

(ix) Rental income is recognised on an accrual basis when it falls due.

(aa) Recognition of Interest, Financing and Related Expenses

Interest expense and attributable profit (on activities relating to Islamic banking business) on deposits and borrowings
of the Group and the Bank are recognised on an accrual basis.

(ab) Allowance for Bad and Doubtful Debts and Financing

Loans, advances and financing are stated at cost less any allowance for bad and doubtful debts and financing.
Allowance for bad and doubtful debts and financing are made with regard to specific risks and relate to those loans or
trade receivables that have been individually reviewed and specifically identified as sub-standard, doubtful or bad.

A general allowance based on a percentage of total outstanding loans (including accrued interest), net of specific
allowance for bad and doubtful debts, is maintained by the Group and the Bank in accordance with the local regulatory
requirements in their respective jurisdictions against risks which are not specifically identified.

An uncollectible loan or portion of a loan classified as bad is written-off after taking into consideration the realisable
value of collateral, if any, when in the opinion of management, there is no prospect of recovery.

Values assigned to collateral held for non-performing loans secured by properties is determined based on the realisable
values of the properties, being the forced sale value provided by independent parties/valuers, and is modified by the
following:

(i) assigning only fifty percent (50%) of the realisable value of the properties held as collateral for non-performing
loans which are in arrears for more than five (5) years but less than seven (7) years; and

(ii) no value assigned to the realisable value of the properties held as collateral for non-performing loans which are in
arrears for more than seven (7) years.
 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
NOTES TO THE FINANCIAL STATEMENTS 247

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

(ab) Allowance for Bad and Doubtful Debts and Financing (continued)
The portion of non-performing loans where no realisable value has been assigned will be written-off.

The allowance for bad and doubtful debts and financing are computed in conformity with the BNM/GP3. Consistent
with previous years, the Group has adopted a more stringent classification policy on non-performing loans, whereby
loans are classified as non-performing and sub-standard when repayments are in arrears for more than three (3) months
from the first day of default or after maturity date.

Accordingly, the Group has also adopted a more stringent basis for specific allowances on non-performing loans by
making a twenty percent (20%) specific allowance on non-performing loans which are three (3) months to less than six
(6) months-in-arrears. The Directors are of the view that such treatment will reflect a more prudent provisioning policy
for loans, advances and financing.

Loans, advances and financing are renegotiated either as part of an ongoing customer relationship or in response to
an adverse change in the circumstances of the borrower, whereby the renegotiation can result in an extension of the
repayment period or a modification of the terms of the loan.

In conformity with the BNM/GP3, non-performing loans, advances and financing which have been rescheduled or
restructured are reclassified as performing upon completion of the relevant documentation in relation to the rescheduling
or restructuring exercise. Where the Group incurs a loss as a result of the rescheduling or restructuring, the loss is
written off immediately to the income statement.

(ac) Employee Benefits

(i) Short-Term Employee Benefits
Wages, salaries, bonuses and social security contributions are recognised as an expense in the year in which the
associated services are rendered by employees of the Group. Short-term accumulating compensated absences
such as paid annual leave are recognised when services are rendered by employees that increases their entitlement
to future compensated absences, and short-term non-accumulating compensated absences such as sick leave are
recognised when the absences occur.

(ii) Defined Contribution Plan

As required by law, companies in Malaysia make contributions to the state pension scheme, the Employees’
Provident Fund (“EPF”). Overseas subsidiary companies make contributions to their respective countries’ statutory
pension schemes. Such contributions are recognised as an expense in the income statement as incurred.

(iii) Defined Benefit Plan

The Bank and certain subsidiary companies contribute to a fully funded defined benefit plan approved by the Inland
Revenue Board known as the Public Bank Group Officers’ Retirement Benefits Fund (the “Fund”) for its eligible
employees. The obligations under the Fund are determined based on actuarial valuation where the amount of
benefit that employees have earned in return for their service in the current and prior years are estimated. The
benefit is calculated using the Projected Unit Credit Method in order to determine its present value. Actuarial gains
and losses are recognised as income or expense over four years when the cumulative unrecognised actuarial gains
or losses for the Fund exceed ten percent (10%) of the higher of the present value of the defined benefit obligation
and the fair value of plan assets. Where there are any improvements in benefits for the Fund, past service cost is
recognised immediately to the extent that the benefits are already vested, and otherwise is amortised on a straight-
line basis over the average period until the amended benefits become vested.
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
248 NOTES TO THE FINANCIAL STATEMENTS

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

(ac) Employee Benefits (continued)
(iii) Defined Benefit Plan (continued)
The amount recognised in the balance sheet represents the present value of the defined benefit obligations
adjusted for unrecognised actuarial gains and losses and unrecognised past service cost, and reduced by the fair
value of plan assets. Any net defined benefit surplus resulting from this calculation is limited to the net total of
any unrecognised actuarial losses and past service cost, and the present value of any economic benefits in the
form of refunds or reductions in future contributions to the Fund.

The amount recognised under personnel costs in the income statement includes the current service cost, interest
cost, the expected return on plan assets and actuarial gains or losses recognised on the Fund.

(iv) Share-based Compensation Benefits

The Group operates a share-based compensation scheme which allows the eligible directors and employees of
Public Financial Holdings Limited (“PFHL”) and its subsidiary companies to acquire shares in PFHL.

Where the Group pays for services of its employees using share options, the fair value of the transaction is
recognised as an expense in the income statement over the vesting periods of the grants, with a corresponding
increase in equity. The total amount to be recognised as compensation expense is determined by reference to the
fair value of the share option at the date of the grant and the number of share options to be vested by the vesting
date taking into account, if any, the market vesting conditions upon which the options were granted but excluding
the impact of any non-market vesting conditions. At the balance sheet date, the Group revises its estimate of the
number of share options that are expected to vest by the vesting date. Any revision of this estimate is included
in the income statement and a corresponding adjustment to equity over the remaining vesting period.

(ad) Tax Expense

Tax expense comprises current and deferred tax. Tax expense is recognised in the income statement except to the
extent it relates to items recognised directly in equity, in which case it is recognised in equity.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially
enacted at the balance sheet date, and any adjustment to tax payable in respect of prior years.

Deferred tax is recognised using the balance sheet method, on temporary differences arising between the tax bases of
assets and liabilities and their carrying amounts in the financial statements. In principle, deferred tax liabilities are
recognised for all taxable temporary differences and deferred tax assets are recognised for all deductible temporary
differences and unutilised tax losses to the extent that it is probable that taxable profit will be available against which
the deductible temporary differences and unutilised tax losses can be utilised. Deferred tax is not provided for goodwill
not deductible for tax purposes and the initial recognition of assets and liabilities that at the time of transaction, affects
neither accounting nor taxable profit. Deferred tax assets and deferred tax liabilities are offset if there is a legally
enforceable right to set off under the same taxable entity and taxation authority.

Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they
reverse, based on the laws that have been enacted or substantially enacted by the balance sheet date.

(ae) Dividends
Dividends on ordinary shares are accounted for as an appropriation of retained profits in the period in which they are
approved.
 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
NOTES TO THE FINANCIAL STATEMENTS 249

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

(af) Earnings Per Share
The Group presents basic and diluted (where applicable) earnings per share (“EPS”) data for its ordinary shares. Basic
EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Bank by the weighted average
number of ordinary shares outstanding during the period net of treasury shares. Diluted EPS is determined by adjusting
the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding
for the effects of all dilutive potential ordinary shares. No adjustment is made for anti-dilutive potential ordinary shares.

(ag) Segment Reporting

Segment reporting in the financial statements are presented on the same basis as is used by management internally
for evaluating operating segment performance and in deciding how to allocate resources to operating segments.
Operating segments are distinguishable components of the Group that engage in business activities from which it may
earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s
other components. An operating segment is evaluated regularly by the chief operating decision maker in deciding how
to allocate resources and in assessing performance, and for which discrete financial information is available.

3. CASH AND SHORT-TERM FUNDS

Group Bank

2009 2008 2009 2008

RM’000 RM’000 RM’000 RM’000

Cash and balances with banks and

other financial institutions 1,091,451 6,078,656 783,917 2,147,105
Money at call and deposit placements maturing
within one month 42,389,001 30,518,371 31,084,709 27,417,854

43,480,452 36,597,027 31,868,626 29,564,959

4. DEPOSITS AND PLACEMENTS WITH BANKS AND OTHER FINANCIAL INSTITUTIONS

Group Bank

2009 2008 2009 2008

RM’000 RM’000 RM’000 RM’000

Licensed banks 239,144 310,476 — 228,485

Licensed investment banks 50,000 200,000 250,000 200,000
Central Banks 2,825,000 1,000,000 2,625,000 1,000,000
Other financial institutions 68,560 430,969 240,967 2,405,841

3,182,704 1,941,445 3,115,967 3,834,326

PUBLIC BANK BERHAD
ANNUAL REPORT 2009
250 NOTES TO THE FINANCIAL STATEMENTS

5. SECURITIES PURCHASED UNDER RESALE AGREEMENTS

The fair value of securities accepted as collateral under resale agreements that the Group and the Bank are permitted to sell
or repledge in the absence of default by their owner was RM1,234,967,000 (2008 – RM5,141,746,000) and Nil (2008 –
RM4,762,407,000) respectively, of which none (2008 – none) have been resold.

6. SECURITIES HELD-FOR-TRADING
Group Bank

2009 2008 2009 2008

RM’000 RM’000 RM’000 RM’000
At fair value
Money market instruments:
Malaysian Government Treasury Bills 66,735 — 66,735 —
Malaysian Government Securities 433,224 255,573 433,224 255,573
Malaysian Government Investment Certificates 131,661 — 101,356 —
Cagamas bonds 125,367 4,896,761 100,323 4,514,465
Negotiable instruments of deposit 6,243,362 5,139,352 6,193,679 5,139,352
Bank Negara Malaysia Monetary Notes 744,463 890,201 744,463 890,201
Bank Negara Malaysia Bills 124,937 49,807 — —

7,869,749 11,231,694 7,639,780 10,799,591

Quoted securities:
Shares in Malaysia 925 980 925 980

Unquoted securities:
Private debt securities in Malaysia 86,601 117,168 15,110 46,170

7,957,275 11,349,842 7,655,815 10,846,741

 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
NOTES TO THE FINANCIAL STATEMENTS 251

7. SECURITIES AVAILABLE-FOR-SALE
Group Bank

2009 2008 2009 2008

RM’000 RM’000 RM’000 RM’000
At fair value
Money market instruments:
Malaysian Government Securities 2,772,548 — 2,762,225 —
Malaysian Government Investment Certificates 2,066,106 — 1,199,819 —
Negotiable instruments of deposit 50,637 42,363 310,039 464,017

4,889,291 42,363 4,272,083 464,017

Quoted securities:
Shares and convertible loan stocks in Malaysia 49,765 44,964 46,323 41,954
Shares outside Malaysia 6,846 11,546 — —
Trust units in Malaysia
– Public Institutional Bond Fund 1,415,767 1,256,645 1,315,851 1,160,239
– Others 2,996,838 1,257,839 2,588,541 857,336

4,469,216 2,570,994 3,950,715 2,059,529

Unquoted securities:
Shares in Malaysia 20,579 20,853 20,009 20,283
Shares outside Malaysia 3,067 3,295 61 253
Private debt securities in Malaysia 2,783,624 2,988,867 2,215,291 2,370,062

2,807,270 3,013,015 2,235,361 2,390,598

12,165,777 5,626,372 10,458,159 4,914,144

Included in securities available-for-sale are Malaysian Government Securities of the Bank which are utilised to meet the
Statutory Reserve Requirement set by Bank Negara Malaysia amounting to RM350,000,000 (2008 – Nil). (Refer to Note 12).
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
252 NOTES TO THE FINANCIAL STATEMENTS

8. SECURITIES HELD-TO-MATURITY
Group Bank

2009 2008 2009 2008

RM’000 RM’000 RM’000 RM’000
At amortised cost
Money market instruments:
Malaysian Government Treasury Bills 9,826 44,557 9,826 44,557
Malaysian Government Securities 2,702,667 3,220,432 2,620,859 3,215,441
Malaysian Government Investment Certificates 566,529 378,828 566,529 378,828
Bankers’ acceptances and Islamic accepted bills 1,020,955 21,326 129,387 —
Cagamas bonds 15,107 15,164 5,059 15,164
Negotiable instruments of deposit 513,121 3,864,744 4,028,238 5,594,802
Bank Negara Malaysia Monetary Notes — 100,651 — 100,651
Hong Kong Government Treasury Bills 220,788 142,931 — —
Sri Lanka Government Treasury Bills 53,523 1,554 53,523 1,554

5,102,516 7,790,187 7,413,421 9,350,997

Quoted securities:
Private debt securities outside Malaysia — 8,938 — —

Unquoted securities:
Shares in Malaysia 88,016 88,021 87,573 87,578
Private debt securities in Malaysia 159,065 150,102 148,976 140,069
Private debt securities outside Malaysia 1,283,322 263,536 — —

1,530,403 501,659 236,549 227,647

Accumulated impairment losses (12,712) (14,065) (12,712) (14,065)

6,620,207 8,286,719 7,637,258 9,564,579

The maturity structure of money market instruments held are as follows:

Group Bank

2009 2008 2009 2008

RM’000 RM’000 RM’000 RM’000

Maturity within one year 2,779,812 5,929,049 4,511,639 5,789,307

More than one year to three years 1,324,204 1,257,694 1,923,619 2,963,237
More than three years to five years 874,750 400,455 854,413 395,464
More than five years 123,750 202,989 123,750 202,989

5,102,516 7,790,187 7,413,421 9,350,997

 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
NOTES TO THE FINANCIAL STATEMENTS 253

8. SECURITIES HELD-TO-MATURITY (continued)

The indicative market value of money market instruments are as follows:

Group Bank

2009 2008 2009 2008

RM’000 RM’000 RM’000 RM’000

Malaysian Government Treasury Bills 9,823 44,622 9,823 44,622

Malaysian Government Securities 2,721,601 3,254,849 2,639,660 3,249,790
Malaysian Government Investment Certificates 570,115 387,188 570,115 387,188
Bankers’ acceptances and Islamic accepted bills 1,020,951 21,327 129,383 —
Cagamas bonds 15,277 15,182 5,090 15,182
Negotiable instruments of deposit 513,694 3,867,045 4,035,376 5,599,325
Bank Negara Malaysia Monetary Notes — 100,651 — 100,651
Hong Kong Government Treasury Bills 220,734 143,004 — —
Sri Lanka Government Treasury Bills 54,316 1,463 54,316 1,463

PUBLIC BANK BERHAD
ANNUAL REPORT 2009
254 NOTES TO THE FINANCIAL STATEMENTS

9. LOANS, ADVANCES AND FINANCING

Group Bank

2009 2008 2009 2008

RM’000 RM’000 RM’000 RM’000

Overdrafts 9,624,895 9,607,890 8,183,430 8,071,878

Term loans/financing
Housing loans/financing 38,239,258 32,699,324 32,520,706 27,275,929
Syndicated term loans/financing 2,263,231 2,085,055 1,101,921 1,136,904
Hire purchase receivables 35,999,213 33,172,280 24,572,823 22,153,569
Other term loans/financing 49,605,543 39,999,452 37,995,612 29,955,354
Credit card receivables 1,178,526 1,028,806 1,169,668 1,019,464
Bills receivables 114,879 129,934 83,338 105,869
Trust receipts 407,432 481,078 333,042 352,593
Claims on customers under acceptance credits# 3,132,655 3,071,979 3,120,974 3,057,674
Lease, factored and confirming receivables — 1,581 — —
Revolving credits 2,961,241 3,659,977 2,997,450 3,660,214
Staff loans* 832,315 693,402 776,225 652,119

144,359,188 126,630,758 112,855,189 97,441,567
Less: Unearned interest and income (6,748,761) (5,962,165) (3,165,885) (2,750,835)

Gross loans, advances and financing
(including Islamic house financing
sold to Cagamas) 137,610,427 120,668,593 109,689,304 94,690,732
Less: Islamic house financing sold to Cagamas — (350,009) — —

Gross loans, advances and financing
(excluding Islamic house financing
sold to Cagamas) 137,610,427 120,318,584 109,689,304 94,690,732
Less: Allowance for bad and doubful debts
and financing
– general (2,051,659) (1,759,487) (1,645,143) (1,419,932)
– specific (222,984) (172,802) (81,354) (96,509)

Net loans, advances and financing 135,335,784 118,386,295 107,962,807 93,174,291

# Included in claims on customers under acceptance credits of the Group and the Bank are bankers’ acceptance
rediscounted of RM22,444,000 (2008 – RM2,550,896,000).

* Included in staff loans of the Group and the Bank are loans to directors of subsidiary companies amounting to
RM1,426,094 (2008 – RM1,753,341) and RM711,601 (2008 – RM959,654) respectively.
 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
NOTES TO THE FINANCIAL STATEMENTS 255

9. LOANS, ADVANCES AND FINANCING (continued)

The maturity structure of gross loans, advances and financing are as follows:

Group Bank

2009 2008 2009 2008

RM’000 RM’000 RM’000 RM’000

Maturity within one year 23,963,064 22,490,549 19,380,641 18,072,749

More than one year to three years 14,871,529 12,117,023 10,813,628 8,079,915
More than three years to five years 16,104,439 16,108,654 12,116,481 11,753,430
More than five years 82,671,395 69,952,367 67,378,554 56,784,638

137,610,427 120,668,593 109,689,304 94,690,732
Less: Islamic house financing sold to Cagamas — (350,009) — —

137,610,427 120,318,584 109,689,304 94,690,732

Gross loans, advances and financing analysed by type of customer are as follows:

Group Bank

2009 2008 2009 2008

RM’000 RM’000 RM’000 RM’000

Domestic banking institutions 68,625 — — —

Domestic non-bank financial institutions
– Stock-broking companies 2,010 2,053 2,010 2,053
– Others 3,663,839 3,162,348 3,649,462 3,156,663
Domestic business enterprises
– Small and medium enterprises 22,485,538 20,664,386 21,405,515 19,657,035
– Others 17,554,970 13,292,658 17,066,195 12,972,116
Government and statutory bodies 316,353 774 534 687
Individuals 78,402,722 68,150,416 65,622,842 56,944,505
Other domestic entities 26,919 25,636 25,438 24,223
Foreign entities 15,089,451 15,370,322 1,917,308 1,933,450

137,610,427 120,668,593 109,689,304 94,690,732
Less: Islamic house financing sold to Cagamas — (350,009) — —

137,610,427 120,318,584 109,689,304 94,690,732

PUBLIC BANK BERHAD
ANNUAL REPORT 2009
256 NOTES TO THE FINANCIAL STATEMENTS

9. LOANS, ADVANCES AND FINANCING (continued)

Gross loans, advances and financing analysed by interest/profit rate sensitivity are as follows:

Group Bank

2009 2008 2009 2008

RM’000 RM’000 RM’000 RM’000

Fixed rate
– Housing loans/financing 2,399,719 3,909,425 1,375,787 2,579,080
– Hire purchase receivables 30,149,942 27,920,958 21,473,821 19,479,396
– Other fixed rate loans/financing 14,283,642 12,869,448 7,114,932 6,431,674
Variable rate
– Base lending rate plus 69,865,606 57,224,661 68,141,186 56,544,122
– Cost plus 11,802,092 9,199,229 10,958,834 8,696,698
– Other variable rates 9,109,426 9,544,872 624,744 959,762

137,610,427 120,668,593 109,689,304 94,690,732
Less: Islamic house financing sold to Cagamas — (350,009) — —

137,610,427 120,318,584 109,689,304 94,690,732

Gross loans, advances and financing analysed by economic purpose are as follows:

Group Bank

2009 2008 2009 2008

RM’000 RM’000 RM’000 RM’000

Purchase of securities 2,383,280 1,811,257 2,233,886 1,794,046

Purchase of transport vehicles 31,628,208 29,268,666 21,601,524 19,572,613
Purchase of landed properties 64,887,271 56,032,168 56,783,539 47,971,151

(of which: – residential 37,953,145 32,223,660 32,962,816 27,680,839

– non-residential) 26,934,126 23,808,508 23,820,723 20,290,312

Purchase of fixed assets

(excluding landed properties) 390,129 272,420 317,880 265,548
Personal use 8,477,853 7,264,917 3,847,006 3,570,301
Credit card 1,178,526 1,028,806 1,169,668 1,019,464
Purchase of consumer durables 16,495 59,064 12,644 41,853
Construction 1,552,576 1,399,355 947,445 780,484
Mergers & Acquisitions 99,835 10,204 99,835 10,204
Working capital 21,053,154 18,820,617 17,083,443 15,107,077
Other purpose 5,943,100 4,701,119 5,592,434 4,557,991

137,610,427 120,668,593 109,689,304 94,690,732
Less: Islamic house financing sold to Cagamas — (350,009) — —

137,610,427 120,318,584 109,689,304 94,690,732

 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
NOTES TO THE FINANCIAL STATEMENTS 257

9. LOANS, ADVANCES AND FINANCING (continued)

Gross loans, advances and financing analysed by sectors are as follows:

Group Bank

2009 2008 2009 2008

RM’000 RM’000 RM’000 RM’000

Agriculture, hunting, forestry and fishing 3,080,074 1,706,516 2,776,774 1,462,438

Mining and quarrying 102,570 93,749 93,681 84,729
Manufacturing 6,573,612 5,739,672 5,751,532 5,331,885
Electricity, gas and water 46,053 47,600 25,004 34,157
Construction 5,836,418 4,973,467 5,052,239 4,213,719
Wholesale & retail trade and restaurants & hotels 12,797,310 11,599,187 11,590,257 10,550,164
Transport, storage and communication 1,556,251 1,353,015 1,492,542 1,300,761
Finance, insurance and business services 7,680,286 6,785,617 6,815,720 6,155,949
Real estate 9,403,595 7,461,501 8,732,707 7,080,740
Community, social and personal services 1,260,033 897,690 887,750 837,748
Households 88,179,612 77,695,951 66,143,492 57,359,675

(of which: – purchase of residential properties 37,211,245 31,578,669 32,243,051 27,062,600

– purchase of transport vehicles 26,326,889 24,345,338 16,789,954 15,220,212
– others) 24,641,478 21,771,944 17,110,487 15,076,863

Others 1,094,613 2,314,628 327,606 278,767

137,610,427 120,668,593 109,689,304 94,690,732
Less: Islamic house financing sold to Cagamas — (350,009) — —

137,610,427 120,318,584 109,689,304 94,690,732

PUBLIC BANK BERHAD
ANNUAL REPORT 2009
258 NOTES TO THE FINANCIAL STATEMENTS

9. LOANS, ADVANCES AND FINANCING (continued)

Movements in non-performing loans, advances and financing (“NPL”) are as follows:

Group Bank

2009 2008 2009 2008

RM’000 RM’000 RM’000 RM’000

At 1 January 1,210,099 1,403,760 956,329 1,341,370

Non-performing during the year 2,483,525 2,314,078 1,652,963 2,023,579
Reclassified as performing (1,694,775) (1,906,369) (1,435,151) (1,839,860)
Recoveries (145,601) (94,853) (116,824) (90,270)
Amount written off (490,821) (460,099) (203,478) (272,082)
Loans/financing converted to
foreclosed properties/securities (41,436) (50,006) (40,457) (50,006)
Amount vested over to Public Islamic Bank Berhad — — — (156,585)
Exchange differences (1,364) 3,588 (26) 183

At 31 December 1,319,627 1,210,099 813,356 956,329
Specific allowance (222,984) (172,802) (81,354) (96,509)

Net non-performing loans, advances and financing
(“Net NPL”) 1,096,643 1,037,297 732,002 859,820

Net NPL as % of gross loans, advances

and financing (including Islamic house financing
sold to Cagamas) less specific allowance 0.80% 0.86% 0.67% 0.91%

Non-performing loans, advances and financing by classifications are as follows:

Group Bank

2009 2008 2009 2008

RM’000 RM’000 RM’000 RM’000

Substandard (> 3-9 months in arrears) 658,448 545,024 330,724 394,217

Doubtful (> 9-12 months in arrears) 177,958 160,308 90,103 112,352
Bad (> 12 months in arrears) 483,221 504,767 392,529 449,760

1,319,627 1,210,099 813,356 956,329

 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
NOTES TO THE FINANCIAL STATEMENTS 259

9. LOANS, ADVANCES AND FINANCING (continued)

Movements in the allowance for bad and doubtful debts and financing accounts are as follows:

Group Bank

2009 2008 2009 2008

RM’000 RM’000 RM’000 RM’000

General allowance
At 1 January 1,759,487 1,522,964 1,419,932 1,374,846
Allowance made during the year (Note 40) 293,607 232,101 225,120 232,437
Amount vested over to Public Islamic Bank Berhad — — — (187,085)
Exchange differences (1,435) 4,422 91 (266)

At 31 December 2,051,659 1,759,487 1,645,143 1,419,932

As % of gross loans, advances and financing

(including Islamic house financing sold
to Cagamas) less specific allowance 1.49% 1.46% 1.50% 1.50%

The general allowance of the Group is below 1.50% due to the local regulatory requirements and applicable accounting
standards of the Group’s overseas subsidiary companies in their respective jurisdictions. In addition to general allowance,
the Group also maintains regulatory reserves (Note 33) in equity as an additional credit risk absorbent in accordance with
the local regulatory requirements of certain overseas subsidiary companies.

Group Bank

2009 2008 2009 2008

RM’000 RM’000 RM’000 RM’000

Specific allowance
At 1 January 172,802 153,959 96,509 135,871
Allowance made during the year (Note 40) 621,338 542,651 244,243 330,367
Amount written back in respect of recoveries
(Note 40) (73,611) (74,660) (57,763) (70,419)
Amount written off (490,821) (460,099) (203,478) (272,082)
Reinstatement of amount written off previously
due to restructuring/rescheduling,
now classified as performing loan 6,286 721 5,745 670
Amount transferred to accumulated impairment
loss of foreclosed properties/securities (3,960) (295) (3,880) (295)
Amount vested over to Public Islamic Bank Berhad — — — (28,263)
Exchange differences (9,050) 10,525 (22) 660

At 31 December 222,984 172,802 81,354 96,509

PUBLIC BANK BERHAD
ANNUAL REPORT 2009
260 NOTES TO THE FINANCIAL STATEMENTS

9. LOANS, ADVANCES AND FINANCING (continued)

Non-performing loans, advances and financing analysed by economic purpose are as follows:

Group Bank

2009 2008 2009 2008

RM’000 RM’000 RM’000 RM’000

Purchase of securities 2,722 4,084 2,722 4,084

Purchase of transport vehicles 145,096 187,630 91,048 118,786
Purchase of landed properties 564,424 622,538 478,758 558,438

(of which: – residential 451,954 523,429 402,129 470,132

– non-residential) 112,470 99,109 76,629 88,306

Purchase of fixed assets

(excluding landed properties) 7,021 535 6,843 405
Personal use 153,777 111,530 47,513 57,280
Credit card 13,998 15,943 13,955 15,943
Purchase of consumer durables 242 1,757 222 1,582
Construction 4,861 — — —
Working capital 410,861 251,964 155,944 185,935
Other purpose 16,625 14,118 16,351 13,876

1,319,627 1,210,099 813,356 956,329

Non-performing loans, advances and financing analysed by sectors are as follows:

Group Bank

2009 2008 2009 2008

RM’000 RM’000 RM’000 RM’000

Agriculture, hunting, forestry and fishing 5,823 3,086 2,188 3,033

Mining and quarrying 104 162 104 162
Manufacturing 176,694 83,890 74,987 82,340
Electricity, gas and water 394 264 394 264
Construction 50,741 43,705 44,881 42,439
Wholesale & retail trade and restaurants & hotels 129,710 81,805 67,159 78,447
Transport, storage and communication 4,772 5,901 4,527 5,667
Finance, insurance and business services 44,188 19,302 16,249 18,964
Real estate 25,145 20,147 14,823 19,352
Community, social and personal services 3,710 4,337 3,659 3,681
Households 820,172 880,247 582,405 700,497

(of which: – purchase of residential properties 444,561 517,762 394,870 464,644

– purchase of transport vehicles 124,827 163,315 74,438 98,429
– others) 250,784 199,170 113,097 137,424

Others 58,174 67,253 1,980 1,483

1,319,627 1,210,099 813,356 956,329

 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
NOTES TO THE FINANCIAL STATEMENTS 261

10. DERIVATIVE FINANCIAL ASSETS/LIABILITIES

Derivative financial instruments are off-balance sheet financial instruments whose values change in response to changes in
prices or rates (such as foreign exchange rates, interest rates and security prices) of the underlying instruments. These
instruments allow the Group to transfer, modify or reduce its foreign exchange and interest rate risks via hedge relationships.
Derivative financial instruments that are entered into for hedging purposes but which do not meet the hedge effectiveness
criteria or which relate to customers’ deals are classified as trading derivatives.

The table below shows the Group’s and the Bank’s derivative financial instruments measured at their fair values together
with their corresponding contract/notional amounts as at the balance sheet date. The notional amounts of these derivative
financial instruments refers to the underlying contract value on which changes in the value of the derivatives are measured.
The notional amounts indicate the volume of transactions outstanding at the financial year end but are not indicative of either
the market risk or credit risk inherent in the derivative contracts. The risks associated with the use of derivative financial
instruments, as well as management’s policy for controlling these risks are set out in Note 47.

2009 2008
Contract/ Contract/
Notional Fair Value Notional Fair Value
Amount Assets Liabilities Amount Assets Liabilities
Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Trading derivatives:
Foreign exchange contracts
– Currency forwards 806,819 4,760 4,955 1,468,420 21,990 9,379
– Currency swaps 10,354,354 35,292 68,989 7,646,775 68,955 165,752
– Currency options purchased 47,045 1,291 — 37,532 592 —
Interest rate related contracts
– Interest rate swaps 84,350 84 36 — — —
Equity related contracts
– Options purchased 480,456 22,096 — 272,106 15,250 —
Precious metal contracts
– Forwards 3,767 17 1 — — —

11,776,791 63,540 73,981 9,424,833 106,787 175,131

Hedging derivatives:
Fair value hedge
Interest rate related contracts
– Interest rate swaps 10,458,170 235,459 195,688 9,208,962 469,007 320,015
Cash flow hedge
Interest rate related contracts
– Interest rate swaps 534,000 11,312 387 565,000 14,435 —

10,992,170 246,771 196,075 9,773,962 483,442 320,015

Total 22,768,961 310,311 270,056 19,198,795 590,229 495,146

Note 51(e) Note 51(e)

PUBLIC BANK BERHAD
ANNUAL REPORT 2009
262 NOTES TO THE FINANCIAL STATEMENTS

10. DERIVATIVE FINANCIAL ASSETS/LIABILITIES (continued)

2009 2008
Contract/ Contract/
Notional Fair Value Notional Fair Value
Amount Assets Liabilities Amount Assets Liabilities
Bank RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Trading derivatives:
Foreign exchange contracts
– Currency forwards 761,996 4,663 4,786 1,286,047 21,743 9,134
– Currency swaps 9,717,788 30,239 68,421 6,968,435 68,688 164,142
– Currency options purchased 47,045 1,291 — 37,532 592 —
Interest rate related contracts
– Interest rate swaps 567,698 6,461 34,085 933,289 12,142 54,160
Equity related contracts
– Options purchased 480,456 22,096 — 272,106 15,250 —
Precious metal contracts
– Forwards 3,767 17 1 — — —

11,578,750 64,767 107,293 9,497,409 118,415 227,436

Hedging derivatives:
Fair value hedge
Interest rate related contracts
– Interest rate swaps 9,443,482 226,782 135,716 7,655,190 456,865 215,218
Cash flow hedge
Interest rate related contracts
– Interest rate swaps 534,000 11,312 387 565,000 14,435 —

9,977,482 238,094 136,103 8,220,190 471,300 215,218

Total 21,556,232 302,861 243,396 17,717,599 589,715 442,654

Note 51(e) Note 51(e)

With the exception of options contracts, the fair values of derivative financial instruments are normally zero or negligible at
inception and the subsequent change in value is favourable or unfavourable as a result of fluctuations in market interest rates
and/or foreign exchange rates relative to the terms of the respective contracts.

The fair value at inception of options contracts purchased represents the consideration paid for these contracts, with
subsequent changes in the fair value dependent on the movements in the value of the underlying asset.

As at 31 December 2009, the Group and the Bank have positions in the following types of derivative financial instruments:

Forwards
Forwards are contractual agreements to buy or sell a specified financial instrument at a specific price and date in the future.
Forwards are customised contracts transacted in the over-the-counter market.

Swaps
Swaps are contractual agreements between two parties to exchange exposures in foreign currency or interest rates.
 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
NOTES TO THE FINANCIAL STATEMENTS 263

10. DERIVATIVE FINANCIAL ASSETS/LIABILITIES (continued)

Options
Options are contractual agreements under which the seller grants the purchaser the right, but not the obligation, either to
buy (a call option) or sell (a put option) at or by a set date during a set period, a specific amount of an underlying asset at
a predetermined price. The seller receives a premium from the purchaser in consideration of risk. Options may be either
exchange-traded or negotiated between the purchaser and the seller in the over-the-counter market.

Where derivatives of the Group and the Bank have been designated for the purpose of hedging and meets the hedge
effectiveness criteria, the accounting treatment of these derivatives will depend on the nature of the instrument hedged and
the type of hedge transaction, as described in Note 2(f). These hedge transactions include:

Fair Value Hedges

The Group and the Bank use fair value hedges to protect it against changes in the fair value of fixed-rate long-term financial
instruments due to movements in market interest rates. The financial instruments hedged for interest rate risk include the
Bank’s subordinated notes, Innovative Tier I capital securities, Non-innovative Tier I stapled securities, investments in certain
private debt securities and Malaysian government securities and certain negotiable instruments of deposit issued. The Group
and the Bank primarily use interest rate swaps as hedges of interest rate risk.

The net gains and losses arising from fair value hedges during the year are as follows:

Group Bank

2009 2008 2009 2008

RM’000 RM’000 RM’000 RM’000

(Losses)/Gains on hedging instruments (107,038) 208,501 (148,398) 288,370

Gains/(Losses) on the hedged items attributable

to the hedged risk 99,235 (197,700) 144,244 (280,896)

The gains and losses on the ineffective portions of the Group’s and the Bank’s fair value hedges are recognised immediately
in the income statement under other operating income.

Cash Flow Hedges

The Group and the Bank principally use interest rate swaps to protect against exposures to variability in future interest cash
flows on non-trading financial assets and liabilities which bear interest at variable rates, or which are expected to be refunded
or reinvested in the future.

The net gain on cash flow hedges reclassified from equity to the income statement are recognised in other operating income.
During the financial year, a net gain of RM1,204,000 (2008 – net gain of RM381,000) was recognised by the Group and the
Bank in the income statement.

The gains and losses on the ineffective portions of such derivatives are recognised immediately in the income statement
under other operating income. During the financial year, a loss of RM189,000 (2008 – gain of RM190,000) was recognised
by the Group and the Bank due to hedge ineffectiveness.

Hedge of Net Investment in Foreign Operations

The Group’s balance sheet is affected by gains and losses as a result of the revaluation of net assets of its subsidiary
companies denominated in currencies other than its functional currency. The Group hedges its exposures to foreign exchange
risk via the designation of certain long-term borrowings and short-term interbank borrowing funding pools.

The gains and losses on the ineffective portions recognised in the income statement under other operating income during
the financial year that arose from hedges of net investment in foreign operations was a loss of RM583,407 (2008 – gain of
RM753,560).
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
264 NOTES TO THE FINANCIAL STATEMENTS

11. OTHER ASSETS

Group Bank

2009 2008 2009 2008

RM’000 RM’000 RM’000 RM’000

Deferred handling fees * 185,114 166,293 130,372 114,548

Interest/Income receivable 54,184 70,803 38,196 51,803
Other receivables, deposits and prepayments 968,160 984,417 736,148 845,488
Manager’s stocks ** 40,730 25,696 — —
Amount due from trust funds ^ 154,740 96,108 — —
Foreclosed properties # 131,371 129,713 130,369 129,604
Taxi licenses 6,664 9,748 — —
Outstanding contracts on clients’ accounts @ 217,615 65,896 — —
Amount due from subsidiary companies ^^ — — 51,966 824,476
Dividend receivable from
subsidiary companies (Note 45(b)) — — 366,489 231,265

1,758,578 1,548,674 1,453,540 2,197,184

# Stated net of accumulated allowance

for impairment loss amounting to 52,300 38,511 47,035 33,399

@ Stated net of accumulated allowance

for bad and doubtful debts amounting to 25,026 25,974 — —

* This represents the unamortised balance of handling fees paid to motor vehicle dealers for hire purchase loans.

** Manager’s stocks represent trust units held by the fund management subsidiary company.

^ This balance refers to amount due from trust funds managed by the fund management subsidiary company in respect
of cancellation and creation of trust units. It also includes management fee receivable from trust funds.

^^ These balances are unsecured, non-interest bearing and have no fixed terms of repayment.

@ This balance represents outstanding purchase contracts in respect of the stock-broking business of the investment
banking subsidiary company entered into on behalf of clients where settlements have yet to be made by clients. The
trade settlement is 3 market days according to the Bursa Malaysia Securities Berhad’s trading rules.
 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
NOTES TO THE FINANCIAL STATEMENTS 265

12. STATUTORY DEPOSITS WITH CENTRAL BANKS

Group Bank

2009 2008 2009 2008

RM’000 RM’000 RM’000 RM’000

Statutory deposits with Bank Negara Malaysia * 732,885 2,339,800 588,362 1,998,200
Statutory deposits with the
National Bank of Cambodia # 289,296 296,908 — —

1,022,181 2,636,708 588,362 1,998,200

* The non-interest bearing statutory deposits are maintained with Bank Negara Malaysia in compliance with Section 37(1)
(c) of the Central Bank of Malaysia Act, 1958 (revised 1994). The amount of the Statutory Reserve Requirement is
determined based on a set percentage of total eligible liabilities.

With effect from 25 June 2009, Bank Negara Malaysia has allowed the Bank, as a Principal Dealer for Government and
Bank Negara Malaysia issuances and sukuk, to utilise its holdings of Malaysian Government Securities and Government
Investment Certificates in place of cash deposits to meet the Statutory Reserve Requirement, up to a nominal amount
of RM350,000,000 on a daily basis. The amount of Malaysian Government Securities used to meet the Statutory Reserve
Requirement as at the end of the financial year was RM350,000,000 (2008 – Nil).

# These statutory deposits are maintained with the National Bank of Cambodia (“NBC”) in respect of:

(i) Cambodian Public Bank Plc and are maintained in compliance with Article 5 of NBC Prakas No. B701-136, the
amounts of which are determined as set percentages of Cambodian Public Bank Plc’s issued share capital and
deposits from customers; and

(ii) CampuBank Lonpac Insurance Plc and are maintained in compliance with Article 53 of the Royale Government’s
Sub-Decree on Insurance dated 22 October 2001 and Article 1 of the Ministry of Economy and Finance’s Circular
No. 009 SHV dated 9 December 2002, the amounts are determined as a set percentage of the issued share capital
of CampuBank Lonpac Insurance Plc.
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
266 NOTES TO THE FINANCIAL STATEMENTS

13. DEFERRED TAX

Group Bank

2009 2008 2009 2008

RM’000 RM’000 RM’000 RM’000

At 1 January 486,905 299,560 387,572 276,975

Recognised in income statement (net) (Note 42)
– relating to origination and reversal of
temporary differences 118,112 80,144 99,541 59,977
Recognised in equity (net) (Note 42) (100,333) 107,362 (96,287) 96,875
Amount vested over to Public Islamic Bank Berhad — — — (46,255)
Exchange differences (77) (161) — —

At 31 December 504,607 486,905 390,826 387,572

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set-off current tax assets against
current tax liabilities and when the deferred income taxes relate to the same tax authority. The net deferred tax assets and
liabilities shown on the balance sheet after appropriate offsetting are as follows:

Group Bank

2009 2008 2009 2008

RM’000 RM’000 RM’000 RM’000

Deferred tax assets, net 506,607 488,855 390,826 387,572

Deferred tax liabilities, net (2,000) (1,950) — —

504,607 486,905 390,826 387,572

Deferred tax assets and liabilities prior to offsetting are summarised as follows:

Group Bank

2009 2008 2009 2008

RM’000 RM’000 RM’000 RM’000

Deferred tax assets 579,456 604,019 451,091 483,059

Deferred tax liabilities (74,849) (117,114) (60,265) (95,487)

504,607 486,905 390,826 387,572

 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
NOTES TO THE FINANCIAL STATEMENTS 267

13. DEFERRED TAX (continued)

The components and movements in deferred tax assets and liabilities during the financial year prior to offsetting are as
follows:

Allowance Other
for Losses Temporary
Deferred tax assets on Loans Tax Losses Differences Total
of the Group RM’000 RM’000 RM’000 RM’000

At 1 January 2008 380,206 27,396 25,321 432,923

Recognised in income statement (Note 42)
– relating to origination and reversal
of temporary differences 68,028 (791) (4,085) 63,152
Recognised in equity (Note 42) — — 107,362 107,362
Exchange differences 490 80 12 582

At 31 December 2008 448,724 26,685 128,610 604,019
Recognised in income statement (Note 42)
– relating to origination and reversal
of temporary differences 67,731 1,623 6,178 75,532
Recognised in equity (Note 42) — — (99,874) (99,874)
Exchange differences (155) (66) — (221)

At 31 December 2009 516,300 28,242 34,914 579,456

Excess of
Capital
Allowances Deferred Other
Over Handling Temporary
Deferred tax liabilities Depreciation Fees Differences Total
of the Group RM’000 RM’000 RM’000 RM’000

At 1 January 2008 81,814 37,962 13,587 133,363

Recognised in income statement (Note 42)
– relating to origination and reversal
of temporary differences (16,813) 3,611 (3,790) (16,992)
Exchange differences 743 — — 743

At 31 December 2008 65,744 41,573 9,797 117,114
Recognised in income statement (Note 42)
– relating to origination and reversal
of temporary differences 8,577 (41,573) (9,584) (42,580)
Recognised in equity (Note 42) — — 459 459
Exchange differences (144) — — (144)

At 31 December 2009 74,177 — 672 74,849

PUBLIC BANK BERHAD
ANNUAL REPORT 2009
268 NOTES TO THE FINANCIAL STATEMENTS

13. DEFERRED TAX (continued)

Allowance Other
for Losses Temporary
Deferred tax assets on Loans Differences Total
of the Bank RM’000 RM’000 RM’000

At 1 January 2008 367,206 10,849 378,055

Recognised in income statement (Note 42)
– relating to origination and reversal of temporary differences 67,267 (4,664) 62,603
Recognised in equity (Note 42) — 96,875 96,875
Amount vested over to Public Islamic Bank Berhad (46,771) (7,703) (54,474)

At 31 December 2008 387,702 95,357 483,059
Recognised in income statement (Note 42)
– relating to origination and reversal of temporary differences 56,822 7,497 64,319
Recognised in equity (Note 42) — (96,287) (96,287)

At 31 December 2009 444,524 6,567 451,091

Excess of
Capital
Allowances Deferred Other
Over Handling Temporary
Deferred tax liabilities Depreciation Fees Differences Total
of the Bank RM’000 RM’000 RM’000 RM’000

At 1 January 2008 50,068 37,962 13,050 101,080

Recognised in income statement (Note 42)
– relating to origination and reversal
of temporary differences 2,822 3,912 (4,108) 2,626
Amount vested over to Public Islamic Bank Berhad — (13,237) 5,018 (8,219)

At 31 December 2008 52,890 28,637 13,960 95,487
Recognised in income statement (Note 42)
– relating to origination and reversal
of temporary differences 7,716 (28,637) (14,301) (35,222)

At 31 December 2009 60,606 — (341) 60,265

Deferred tax assets have not been recognised in respect of the following items as it is not probable that the respective
subsidiary companies will generate sufficient future taxable profits available against which it can be utilised:

Group

2009 2008
RM’000 RM’000

Unutilised tax losses 16,687 28,132

Unutilised capital allowances 24,674 24,619

 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
NOTES TO THE FINANCIAL STATEMENTS 269

13. DEFERRED TAX (continued)

Subject to the agreement by the relevant tax authorities and subject to changes in the Group’s shareholdings of the
subsidiary companies under Section 44(5A) and (5B) of the Income Tax Act, 1967, the Group has unabsorbed tax losses and
unabsorbed capital allowances carried forward of RM126,696,000 (2008 – RM138,257,000) and RM24,674,000 (2008 –
RM24,619,000) respectively which give rise to the recognised and unrecognised deferred tax assets in respect of the above
unutilised tax losses and unutilised capital allowances.

14. INVESTMENT IN SUBSIDIARY COMPANIES

2009 2008

Market Market
Cost Value Cost Value
Bank RM’000 RM’000 RM’000 RM’000

Quoted shares outside Malaysia

– Quoted shares in Hong Kong SAR 1,672,195 1,577,155 1,672,195 1,042,365
Unquoted shares
– In Malaysia 1,750,747 1,475,747
– Outside Malaysia 272,169 272,169

3,695,111 3,420,111
Less: Accumulated impairment losses (430) (430)

3,694,681 3,419,681

Details of the subsidiary companies are as follows:

Effective Interest

Principal 2009 2008

Name Activities % %

Local subsidiary companies

Public Islamic Bank Berhad Islamic banking 100.0 100.0
Public Investment Bank Berhad + Investment banking 100.0 100.0
Public Invest Nominees (Tempatan) Sdn. Bhd. + Nominee services 100.0 100.0
Public Invest Nominees (Asing) Sdn. Bhd. + Nominee services 100.0 100.0
Public Consolidated Holdings Sdn. Bhd. + Investment holding 100.0 100.0
Public Mutual Berhad + Sale of trust units and management
of unit trusts 100.0 100.0
Public Holdings Sdn. Bhd. Property holding 100.0 100.0
Public Nominees (Tempatan) Sdn. Bhd. Nominee services 100.0 100.0
Public Nominees (Asing) Sdn. Bhd. Nominee services 100.0 100.0
Public Bank (L) Ltd. Offshore banking 100.0 100.0
PB Trust (L) Ltd. Offshore trust company 100.0 100.0
PB Venture Capital Sdn. Bhd. Investment holding 100.0 100.0
Public Leasing & Factoring Sdn. Bhd. Leasing and factoring 100.0 100.0
PB International Factors Sdn. Bhd. Dormant 100.0 100.0
PB Properties Sdn. Bhd. Dormant 100.0 100.0
PBFIN Berhad Dormant 100.0 100.0
HHB Holdings Berhad + Dormant 100.0 100.0
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
270 NOTES TO THE FINANCIAL STATEMENTS

14. INVESTMENT IN SUBSIDIARY COMPANIES (continued)

Details of the subsidiary companies are as follows (continued):
Effective Interest

Principal 2009 2008

Name Activities % %

Overseas subsidiary companies

Cambodian Public Bank Plc + Banking 100.0 100.0
CampuBank Lonpac Insurance Plc ++ General insurance 55.0 55.0
Public Financial Holdings Limited +* Investment and property holding 73.2 73.2
Public Bank (Hong Kong) Limited + Banking 73.2 73.2
Public Finance Limited + Deposit-taking and finance 73.2 73.2
Public Financial Limited + Investment holding 73.2 73.2
Public Securities Limited + Stock and share-broking 73.2 73.2
Public Securities (Nominees) Limited + Nominee services 73.2 73.2
Public Financial Securities Limited + Stock and share-broking 73.2 73.2
Public Bank (Nominees) Limited + Nominee services 73.2 73.2
Public Futures Limited + Dormant 73.2 73.2
Public Credit Limited + Dormant 73.2 73.2
Public Pacific Securities Limited + Dormant 73.2 73.2
Public Investments Limited + Dormant 73.2 73.2
Public Realty Limited + Dormant 73.2 73.2
Winton (B.V.I.) Limited + Investment holding 73.2 73.2
Winton Financial Limited + Provision of financing 73.2 73.2
Winton Motors, Limited + Trading of taxi cabs and taxi licences,
and leasing of taxis 73.2 73.2
Winton Holdings (Hong Kong) Limited + Dormant 73.2 73.2
Winsure Company, Limited + Dormant 70.9 70.9

* Shares quoted on The Stock Exchange of Hong Kong Limited.

+ Subsidiary companies not audited by KPMG.
++ Subsidiary company audited by KPMG Cambodia.

All the local subsidiary companies are incorporated in Malaysia. All the overseas subsidiary companies are incorporated in
Hong Kong SAR except for Public Financial Holdings Limited which is incorporated in Bermuda, Cambodian Public Bank Plc
and CampuBank Lonpac Insurance Plc which are incorporated in Cambodia, and Winton (B.V.I.) Limited which is incorporated
in the British Virgin Islands.

During the financial year, the Bank subscribed to 11,000,000 ordinary shares of RM1.00 each issued by Public Islamic Bank
Berhad at an issue price of RM25.00 per ordinary share for a total consideration of RM275,000,000.
 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
NOTES TO THE FINANCIAL STATEMENTS 271

15. INVESTMENT IN ASSOCIATED COMPANIES

Group Bank

2009 2008 2009 2008

RM’000 RM’000 RM’000 RM’000

Unquoted shares, at cost 101,365 101,365 101,325 101,325

Share of post-acquisition reserves 26,953 26,437 — —

128,318 127,802 101,325 101,325

Represented by:
Group’s share of net assets 128,318 127,802

The summarised financial information of associated companies is as follows:

Group

2009 2008
RM’000 RM’000

Total assets 1,228,814 1,011,173

Total liabilities 968,382 751,918
Operating revenue 103,027 115,784
Profit after tax 25,003 24,957

Details of the associated companies, all of which are unquoted, are as follows:

Effective Interest

Name Principal Activities Place of Incorporation 2009 2008
% %

PB Trustee Services Berhad Trustee services Malaysia 40.0 40.0

VID Public Bank Banking Socialist Republic of Vietnam 50.0 50.0
CPB Properties Company Ltd. Property holding Cambodia 49.0 49.0
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
272 NOTES TO THE FINANCIAL STATEMENTS

16. INVESTMENT PROPERTIES

Group

2009 2008
Note RM’000 RM’000

At valuation
At 1 January 66,012 54,390
Transfer to owner-occupied property
– Prepaid land lease payments 17 (3,489) —
– Property and equipment 18 (355) —
Revaluation gain from fair value adjustment 37 8,396 7,956
Disposals (72) (66)
Exchange differences (1,165) 3,732

At 31 December 69,327 66,012

Included in the above are:

Short-term leasehold land and building 23,679 23,837
Long-term leasehold land and building 45,648 42,175

69,327 66,012

The Group’s investment properties are stated at fair value and are situated in Malaysia and Hong Kong SAR. The investment
properties in Malaysia amounting to RM1,977,000 (2008 – RM2,044,000) have been valued on the basis of management’s
valuations based on current prices in an active market for similar properties in the same location and condition. The
investment properties in Hong Kong SAR amounting to RM67,350,000 (2008 – RM63,968,000) have been revalued by CS
Surveyors Limited, a firm of independent professionally qualified valuers, on an open market value based on their existing
use. The increase in the fair values of RM8,396,000 (2008 – RM7,956,000) has been recognised in the income statement
during the financial year.

The investment properties held by the Group are let under operating leases to third parties, from which the Group earned
rental income of RM5,695,000 (2008 – RM5,201,000) (Note 37) during the year.

No investment properties were pledged as security for banking facilities at the balance sheet date.
 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
NOTES TO THE FINANCIAL STATEMENTS 273

17. PREPAID LAND LEASE PAYMENTS

Short-term Long-term
leasehold leasehold
land land Total
Group Note RM’000 RM’000 RM’000
2009

Cost
At 1 January 2009 114,230 202,915 317,145
Additions — 637 637
Disposals — (48) (48)
Transfer (112,888) 112,888 —
Transfer from investment properties 16 — 3,489 3,489
Exchange differences (1,342) (2,256) (3,598)

At 31 December 2009 — 317,625 317,625

Accumulated amortisation
At 1 January 2009 13,484 9,060 22,544
Amortisation charge for the year 38 — 3,449 3,449
Transfer (13,326) 13,326 —
Exchange differences (158) (167) (325)

At 31 December 2009 — 25,668 25,668

Accumulated impairment loss

At 1 January 2009 — 2,728 2,728
Impairment loss for the year 41 — 33 33
Exchange differences — (32) (32)

At 31 December 2009 — 2,729 2,729

Carrying amounts
At 31 December 2009 — 289,228 289,228

Group
2008

Cost
At 1 January 2008 89,052 191,888 280,940
Additions 20,317 1,076 21,393
Exchange differences 4,861 9,951 14,812

At 31 December 2008 114,230 202,915 317,145

PUBLIC BANK BERHAD
ANNUAL REPORT 2009
274 NOTES TO THE FINANCIAL STATEMENTS

17. PREPAID LAND LEASE PAYMENTS (continued)

Short-term Long-term
leasehold leasehold
land land Total
Group Note RM’000 RM’000 RM’000
2008 (continued)

Accumulated amortisation
At 1 January 2008 10,766 8,026 18,792
Amortisation charge for the year 38 2,040 697 2,737
Exchange differences 678 337 1,015

At 31 December 2008 13,484 9,060 22,544

Accumulated impairment loss

At 1 January 2008 — 2,587 2,587
Exchange differences — 141 141

At 31 December 2008 — 2,728 2,728

Carrying amounts
At 31 December 2008 100,746 191,127 291,873

No leasehold land of the Group were pledged as security for banking facilities at the balance sheet date.

The leasehold land are subject to an impairment test in accordance with FRS 136 Impairment of Assets which is based on
the higher of fair value less costs to sell and value in use. The fair value less costs to sell of the leasehold land was
determined with reference to a qualified external valuer’s valuation.

Long-term leasehold land

2009 2008
Bank Note RM’000 RM’000

Cost
At 31 December 58 58

Accumulated amortisation
At 1 January 43 41
Amortisation charge for the year 38 2 2

At 31 December 45 43

Carrying amounts
At 31 December 13 15

No leasehold land of the Bank was pledged as security for banking facilities at the balance sheet date.
 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
NOTES TO THE FINANCIAL STATEMENTS 275

18. PROPERTY AND EQUIPMENT

Office
equipment, Computer
Freehold furniture & equipment Motor Work-in-
land Buildings Renovations fittings & software vehicles progress Total
Group Note RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

2009
Cost
At 1 January 2009 175,877 504,565 241,708 435,724 764,603 20,937 40,579 2,183,993
Additions — 37,432 41,894 28,462 63,206 1,168 2,120 174,282
Disposals — (70) (3,785) (6,836) (17,528) (120) — (28,339)
Transfer from
investment properties 16 — 355 — — — — — 355
Transfers — 27,074 (6,696) 6,645 51 — (27,074) —
Write-offs 38 — — (1,163) (1,765) (25,652) (5) — (28,585)
Exchange differences — (437) (354) (139) (698) (50) (289) (1,967)

At 31 December 2009 175,877 568,919 271,604 462,091 783,982 21,930 15,336 2,299,739


Accumulated depreciation
At 1 January 2009 — 125,724 173,707 319,460 528,561 16,781 — 1,164,233
Depreciation charge for the year 38 — 10,144 16,508 26,358 74,745 2,291 — 130,046
Disposals — (29) (2,765) (5,848) (17,354) (117) — (26,113)
Transfers — — 25 (74) 49 — — —
Write-offs 38 — — (584) (1,387) (25,180) 3 — (27,148)
Exchange differences — (85) (328) (119) (620) (48) — (1,200)

At 31 December 2009 — 135,754 186,563 338,390 560,201 18,910 — 1,239,818


Accumulated impairment loss
At 1 January 2009 1,064 7,207 — — — — — 8,271
Impairment loss 41 — 67 — — — — — 67
Exchange differences — 32 — — — — — 32

At 31 December 2009 1,064 7,306 — — — — — 8,370

Carrying amounts
At 31 December 2009 174,813 425,859 85,041 123,701 223,781 3,020 15,336 1,051,551


Property and equipment that
have been fully depreciated which
are still in use are as follows:

At cost
At 31 December 2009 — 395 105,267 144,357 401,815 8,320 — 660,154

PUBLIC BANK BERHAD
ANNUAL REPORT 2009
276 NOTES TO THE FINANCIAL STATEMENTS

18. PROPERTY AND EQUIPMENT (continued)

Office
equipment, Computer
Freehold furniture & equipment Motor Work-in-
land Buildings Renovations fittings & software vehicles progress Total
Group Note RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

2008
Cost
At 1 January 2008 174,677 497,496 220,962 404,633 623,738 20,935 11,052 1,953,493
Additions 1,200 5,182 28,296 25,861 177,615 1,064 29,527 268,745
Disposals — — — (1,563) (23,437) (1,229) — (26,229)
Transfers — — (7,859) 7,858 1 — — —
Write-offs 38 — — (874) (1,575) (15,339) — — (17,788)
Exchange differences — 1,887 1,183 510 2,025 167 — 5,772

At 31 December 2008 175,877 504,565 241,708 435,724 764,603 20,937 40,579 2,183,993

Accumulated depreciation
At 1 January 2008 — 115,478 155,602 297,481 496,153 15,558 — 1,080,272
Depreciation charge for the year 38 — 9,960 17,942 24,665 61,293 2,262 — 116,122
Disposals — — — (1,513) (19,198) (1,155) — (21,866)
Write-offs 38 — — (867) (1,563) (11,115) — — (13,545)
Exchange differences — 286 1,030 390 1,428 116 — 3,250

At 31 December 2008 — 125,724 173,707 319,460 528,561 16,781 — 1,164,233

Accumulated impairment loss

At 1 January 2008 1,064 7,348 — — — — — 8,412
Exchange differences — (141) — — — — — (141)

At 31 December 2008 1,064 7,207 — — — — — 8,271

Carrying amounts
At 31 December 2008 174,813 371,634 68,001 116,264 236,042 4,156 40,579 1,011,489

Property and equipment that

have been fully depreciated which
are still in use are as follows:

At cost
At 31 December 2008 — 395 86,651 131,701 387,998 8,161 — 614,906

No land and buildings of the Group were pledged as security for banking facilities at the balance sheet date.
 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
NOTES TO THE FINANCIAL STATEMENTS 277

18. PROPERTY AND EQUIPMENT (continued)

Office
equipment, Computer
Freehold furniture & equipment Motor
land Buildings Renovations fittings & software vehicles Total
Bank Note RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

2009
Cost
At 1 January 2009 81,092 262,076 191,530 330,603 699,490 16,013 1,580,804
Additions — — 32,710 24,918 50,697 258 108,583
Disposals — — (20) (3,038) (17,156) (115) (20,329)
Transfers — — (6,721) 6,721 — — —
Write-offs 38 — — (530) (1,654) (25,395) (5) (27,584)
Exchange differences — — (36) (24) (138) (9) (207)

At 31 December 2009 81,092 262,076 216,933 357,526 707,498 16,142 1,641,267


Accumulated depreciation
At 1 January 2009 — 68,657 133,938 222,033 493,993 13,861 932,482
Depreciation charge for the year 38 — 5,231 11,614 23,079 62,585 1,610 104,119
Disposals — — — (2,165) (17,142) (112) (19,419)
Write-offs 38 — — (519) (1,276) (24,923) (4) (26,722)
Exchange differences — — (18) (17) (118) (8) (161)

At 31 December 2009 — 73,888 145,015 241,654 514,395 15,347 990,299


Carrying amounts
At 31 December 2009 81,092 188,188 71,918 115,872 193,103 795 650,968

Property and equipment that

have been fully depreciated which
are still in use are as follows:

At cost
At 31 December 2009 — 395 88,507 135,129 386,597 8,054 618,682

PUBLIC BANK BERHAD
ANNUAL REPORT 2009
278 NOTES TO THE FINANCIAL STATEMENTS

18. PROPERTY AND EQUIPMENT (continued)

Office
equipment, Computer
Freehold furniture & equipment Motor
land Buildings Renovations fittings & software vehicles Total
Bank Note RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

2008
Cost
At 1 January 2008 81,092 262,076 179,888 302,010 577,560 16,778 1,419,404
Additions — — 20,386 23,377 157,374 445 201,582
Disposals — — — (1,050) (22,825) (1,226) (25,101)
Transfers — — (7,859) 7,859 — — —
Write-offs 38 — — (874) (1,501) (12,535) — (14,910)
Amount vested over to
Public Islamic Bank Berhad — — (52) (130) (373) — (555)
Exchange differences — — 41 38 289 16 384

At 31 December 2008 81,092 262,076 191,530 330,603 699,490 16,013 1,580,804


Accumulated depreciation
At 1 January 2008 — 63,425 122,610 203,489 468,524 13,266 871,314
Depreciation charge for the year 38 — 5,232 12,181 21,078 52,290 1,737 92,518
Disposals — — — (1,029) (18,608) (1,155) (20,792)
Write-offs 38 — — (867) (1,490) (8,315) — (10,672)
Amount vested over to
Public Islamic Bank Berhad — — (16) (43) (164) — (223)
Exchange differences — — 30 28 266 13 337

At 31 December 2008 — 68,657 133,938 222,033 493,993 13,861 932,482


Carrying amounts
At 31 December 2008 81,092 193,419 57,592 108,570 205,497 2,152 648,322


Property and equipment that have been
fully depreciated which are still
in use are as follows:

At cost
At 31 December 2008 — 395 80,962 129,170 384,696 8,079 603,302

No land and buildings of the Bank were pledged as security for banking facilities at the balance sheet date.

Included in property and equipment of the Group and the Bank are computer equipment and software under finance lease
with a carrying amount of RM58,035,000 (2008 – RM74,221,000) which will expire in two years.

Details of the terms and conditions of the finance lease arrangement are disclosed in Note 24.
 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
NOTES TO THE FINANCIAL STATEMENTS 279

19. INTANGIBLE ASSETS

Group Bank

2009 2008 2009 2008

RM’000 RM’000 RM’000 RM’000

Goodwill
At 1 January 2,045,670 1,983,956 695,393 695,393
Impairment loss (Note 41) — (2,486) — —
Exchange differences (14,565) 64,200 — —

At 31 December 2,031,105 2,045,670 695,393 695,393

Intangible Assets
At 1 January 26,348 26,340 — —
Additions 159 — — —
Exchange differences (1) 8 — —

At 31 December 26,506 26,348 — —

Total carrying amounts of goodwill
and intangible assets 2,057,611 2,072,018 695,393 695,393

Impairment Assessment on Goodwill and Intangible Assets

Goodwill and intangible assets have been allocated to the Group’s cash-generating units (“CGU”), which are either operating
segments or at a level not larger than an operating segment, for impairment assessment as follows:

As at 31 December 2009

Nominal
growth rate
beyond initial
Discount cash flow
Group Bank rate projections
RM’000 RM’000 % %

Cash-generating unit:
Hire purchase financing 395,953 395,953 10.6 6.5
East Malaysia operations
(in respect of business acquired
from the former Hock Hua Bank) 299,440 299,440 9.6 6.5
Hong Kong operations 1,288,360 — 7.5 5.0
Fund management 19,555 — 9.6 6.5
Investment banking 54,303 — 10.6 6.5

2,057,611 695,393

PUBLIC BANK BERHAD
ANNUAL REPORT 2009
280 NOTES TO THE FINANCIAL STATEMENTS

19. INTANGIBLE ASSETS (continued)

Impairment Assessment on Goodwill and Intangible Assets (continued)

As at 31 December 2008
Nominal
growth rate
beyond initial
Discount cash flow
Group Bank rate projections
Cash-generating unit: RM’000 RM’000 % %

Hire purchase financing 395,953 395,953 12.5 6.8

East Malaysia operations
(in respect of business acquired
from the former Hock Hua Bank) 299,440 299,440 11.5 6.8
Hong Kong operations 1,302,767 — 6.5 5.0
Fund management 19,555 — 11.5 6.8
Investment banking 54,303 — 12.5 6.8

2,072,018 695,393

Goodwill is allocated to the Group’s CGUs expected to benefit from the synergies of the acquisitions. For annual impairment
assessment purposes, the recoverable amount of the CGUs are based on their value-in-use. The value-in-use calculations
apply a discounted cash flow model using cash flow projections based on financial forecasts approved by management. The
key assumptions for the computation of value-in-use include the discount rates and growth rates applied. Discount rates
used are based on the pre-tax weighted average cost of capital plus an appropriate risk premium, where applicable, at the
date of assessment of the respective CGU. Cash flow projections are based on five year financial budgets approved by
management. Cash flows beyond the fifth year are extrapolated to fifty years using a nominal long-term growth rate which
does not exceed the average of the last twenty years’ inflation-adjusted Gross Domestic Product growth rates of the
respective countries where the CGUs operate. Impairment is recognised in the income statement when the carrying amount
of a CGU exceeds its recoverable amount.

The intangible assets consist mainly of a share-broking licence and stock exchange trading rights which are deemed to have
indefinite useful lives as there are no expiry dates. The recoverable amount of the intangible assets have been assessed
using the value-in-use method, by discounting the estimated cash flows from their CGUs. Impairment is recognised in the
income statement when the carrying amount of the CGUs exceeds their recoverable amounts.

Management believes that any reasonably possible change in the key assumptions would not cause the carrying amount of
the goodwill and intangible assets to exceed the recoverable amount of the CGU. Based on this review, there is no evidence
of impairment on the Group’s and the Bank’s goodwill and intangible assets.
 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
NOTES TO THE FINANCIAL STATEMENTS 281

20. DEPOSITS FROM CUSTOMERS

Group Bank

2009 2008 2009 2008

RM’000 RM’000 RM’000 RM’000

Demand deposits 18,976,859 15,751,979 15,936,503 13,316,359

Savings deposits 22,858,130 19,036,598 16,124,134 14,083,581
Fixed deposits 85,787,925 76,415,563 65,550,396 61,500,482
Negotiable instruments of deposit 3,394,628 6,287,168 2,540,777 3,496,321
Money market deposits 38,694,799 32,428,323 34,058,387 30,430,866
Other deposits 1,179,248 1,265,667 1,177,293 1,263,250

170,891,589 151,185,298 135,387,490 124,090,859

The full amount of deposits of the Bank and its banking subsidiary companies in Malaysia, namely Public Islamic Bank
Berhad and Public Investment Bank Berhad, are guaranteed by the Government of Malaysia via Perbadanan Insurans Deposit
Malaysia (“PIDM”), an independent statutory body established under the Malaysia Deposit Insurance Corporation Act, 2005.
This full deposit guarantee is effective from 16 October 2008 until 31 December 2010. This guarantee covers all Ringgit
Malaysia and foreign currency deposits held under fixed deposits, current accounts, savings accounts, principal guaranteed
conventional structured deposits and negotiable instruments of deposit held by non-bank customers, inclusive of all Islamic
deposits. This guarantee excludes inter-bank money market placements, non-principal guaranteed conventional structured
products and negotiable instruments of deposit held by banks.

The maturity structure of fixed deposits, negotiable instruments of deposit and money market deposits are as follows:

Group Bank

2009 2008 2009 2008

RM’000 RM’000 RM’000 RM’000

Due within six months 112,029,003 100,423,101 87,562,161 81,525,784

More than six months to one year 15,189,248 14,070,005 14,073,917 13,574,329
More than one year to three years 621,041 632,700 494,807 323,482
More than three years to five years 38,060 5,248 18,675 4,074

127,877,352 115,131,054 102,149,560 95,427,669

PUBLIC BANK BERHAD
ANNUAL REPORT 2009
282 NOTES TO THE FINANCIAL STATEMENTS

20. DEPOSITS FROM CUSTOMERS (continued)

The deposits are sourced from the following types of customers:

Group Bank

2009 2008 2009 2008

RM’000 RM’000 RM’000 RM’000

Federal and state governments 1,031,886 1,264,639 545,672 952,163

Local government and statutory authorities 2,440,356 2,195,715 1,759,319 1,658,138
Business enterprises 50,290,996 39,923,804 41,227,046 34,495,900
Individuals 70,755,509 69,735,065 66,742,087 66,117,793
Foreign customers 19,232,990 13,924,463 5,541,648 1,997,651
Others 27,139,852 24,141,612 19,571,718 18,869,214

170,891,589 151,185,298 135,387,490 124,090,859

21. DEPOSITS AND PLACEMENTS OF BANKS AND OTHER FINANCIAL INSTITUTIONS

Group Bank

2009 2008 2009 2008

RM’000 RM’000 RM’000 RM’000

Licensed banks 15,331,108 10,016,033 12,524,465 8,435,209

Licensed Islamic banks 1,923,325 149,824 — —
Licensed investment banks 2,027,848 733,510 2,594,024 973,879
Bank Negara Malaysia 3,651 869,270 — 866,435
Other financial institutions 3,328,368 4,915,508 5,665,440 6,817,383

22,614,300 16,684,145 20,783,929 17,092,906

22. BILLS AND ACCEPTANCES PAYABLE

Bills and acceptances payable represents the Bank’s own bills and acceptances rediscounted and outstanding in the
market.

23. RECOURSE OBLIGATIONS ON LOANS SOLD TO CAGAMAS

This represents the proceeds received from housing loans (excluding Islamic financing) sold directly to Cagamas Berhad with
recourse to the Bank. Under this agreement, the Bank undertakes to administer the loans on behalf of Cagamas Berhad and
to buy-back any loans which are regarded as defective based on prudential criteria set by Cagamas Berhad.
 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
NOTES TO THE FINANCIAL STATEMENTS 283

24. OTHER LIABILITIES

Group Bank

2009 2008 2009 2008

RM’000 RM’000 RM’000 RM’000

Interest/Income payable 687,036 878,147 607,897 776,927

Other payables and accruals 1,463,226 1,365,328 794,835 708,733
Amount due to trust funds * 78,827 37,625 — —
Unprocessed sales and/or redemptions # 64,761 22,873 — —
Employee benefits (Note 25(a)) (66,325) (76,901) (63,844) (74,024)
Profit Equalisation Reserves (Note 57(l)) 11,876 34,784 — —
Finance lease liabilities ** 42,852 70,133 42,852 70,133
Outstanding contracts on clients’ accounts ^ 208,912 63,115 — —
Dividend payable to shareholders 20,592 27,713 3,712 4,063
Amount due to subsidiary companies @ — — 13,926 17,601

2,511,757 2,422,817 1,399,378 1,503,433

* This balance refers to amount due to trust funds managed by the fund management subsidiary company in respect of
cancellation and creation of trust units.

# The unprocessed sales and/or redemptions are in respect of the fund management activities of a subsidiary company.

** Finance lease liabilities of the Group and the Bank are payable as follows:

2009 2008
Future Present Value Future Present Value
Minimum Future of Finance Minimum Future of Finance
Lease Finance Lease Lease Finance Lease
Payments Charges Liabilities Payments Charges Liabilities
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Less than one year 29,500 1,196 28,304 29,500 2,219 27,281
Between one and three years 14,750 202 14,548 44,250 1,398 42,852

44,250 1,398 42,852 73,750 3,617 70,133

The Bank leases computer equipment and software under finance lease expiring in two years (Note 18). At the end of the lease term,
the Bank has the option to acquire the assets at a nominal price deemed to be a bargain purchase option. There are no restrictive
covenants imposed by the lease agreement and no arrangements have been entered into for contingent rental payments.

^ These balances relate to contracts entered by the stock-broking business of the investment banking subsidiary company
on behalf of clients where settlements are yet to be made and amount due to Bursa Malaysia Securities Clearing Sdn.
Bhd. The trade settlement is three (3) market days according to Bursa Malaysia Securities Berhad’s trading rules.

@ These balances are unsecured, non-interest bearing and have no fixed terms of repayment.
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
284 NOTES TO THE FINANCIAL STATEMENTS

25. EMPLOYEE BENEFITS

(a) Defined Benefit Plan
The Bank and certain subsidiary companies contribute to a fully funded defined benefit plan known as the Public Bank
Group Officers’ Retirement Benefits Fund (“the Fund”) for its eligible employees. Under the Fund, eligible employees are
entitled to one month of the final/last drawn salary for each completed year of service with the Group upon attainment
of the retirement age of 55. For employees who leave before the attainment of the retirement age, the retirement benefit
will be computed based on the scale rate stipulated in the rules of the Fund.

Governance
The assets of the Fund are held separately from the assets of the Group and the Bank and are administered by a board
of trustees. There are six (6) trustees currently, all of whom are members of senior management of the Bank.

The amounts recognised in the balance sheets are determined as follows:

Group Bank

2009 2008 2009 2008

RM’000 RM’000 RM’000 RM’000

Present value of funded obligations (397,078) (373,995) (382,227) (360,009)

Fair value of plan assets 563,614 437,201 542,534 420,850

166,536 63,206 160,307 60,841
Unrecognised actuarial (gain)/loss (100,211) 13,695 (96,463) 13,183

Net assets (Note 24) 66,325 76,901 63,844 74,024

Movements in the present value of funded obligations are as follows:

Group Bank

2009 2008 2009 2008

RM’000 RM’000 RM’000 RM’000

Obligation at 1 January 373,995 342,574 360,009 335,894

Allocation adjustment — — — 620
Current service cost 25,601 24,756 24,644 24,237
Interest cost 19,952 18,516 19,206 18,126
Benefits paid – the Fund (20,214) (20,248) (19,459) (19,825)
Actuarial (gain)/loss on funded obligations (2,256) 8,397 (2,173) 8,221
Amount vested over to
Public Islamic Bank Berhad — — — (7,264)

Obligation at 31 December 397,078 373,995 382,227 360,009

 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
NOTES TO THE FINANCIAL STATEMENTS 285

25. EMPLOYEE BENEFITS (continued)

(a) Defined Benefit Plan (continued)
Movements in the fair value of plan assets are as follows:

Group Bank

2009 2008 2009 2008

RM’000 RM’000 RM’000 RM’000

Fair value at 1 January 437,201 590,401 420,850 578,888

Allocation adjustment — — — 1,063
Expected return on plan assets 34,976 46,758 33,668 45,776
Benefits paid – the Fund (20,214) (20,248) (19,459) (19,825)
Actuarial gain/(loss) on plan assets 111,651 (179,710) 107,475 (175,937)
Amount vested over to
Public Islamic Bank Berhad — — — (9,115)

Fair value at 31 December 563,614 437,201 542,534 420,850

The fair value of plan assets constitutes the following:

Group Bank

2009 2008 2009 2008

RM’000 RM’000 RM’000 RM’000

Deposit placements and cash 48,931 603 47,101 580

Money market instruments 399,150 210,286 384,222 202,421
Equity instruments * 203,253 320,623 195,651 308,632
Trust units 290,550 211,976 279,683 204,048
Properties # 261,265 237,765 251,494 228,873
Other assets (net) 27,465 30,948 26,437 29,791
Borrowings (667,000) (575,000) (642,054) (553,495)

563,614 437,201 542,534 420,850

* Included in the fair value of equity instruments are ordinary shares of the Bank held by the Fund with a fair value
of RM78,706,000 (2008 – RM236,662,000).

# All the properties held as plan assets of the Group and the Bank are occupied by the Bank and certain subsidiaries
of the Group.
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
286 NOTES TO THE FINANCIAL STATEMENTS

25. EMPLOYEE BENEFITS (continued)

(a) Defined Benefit Plan (continued)
The amounts recognised in other operating expenses in the income statements are as follows:

Group Bank

2009 2008 2009 2008

RM’000 RM’000 RM’000 RM’000

Current service cost 25,601 24,756 24,644 24,237

Interest cost 19,952 18,516 19,206 18,126
Expected return on plan assets (34,976) (46,758) (33,668) (45,776)
Actuarial gains recognised — (38,457) — (37,650)
Allocation adjustment — — (38) —

Amount included under
“personnel costs” (Note 38(a)) 10,577 (41,943) 10,144 (41,063)

Expected return on plan assets 34,976 46,758 33,668 45,776
Actuarial gain/(loss) on plan assets 111,651 (179,710) 107,475 (175,937)

Actual return/(loss) on plan assets 146,627 (132,952) 141,143 (130,161)

The surplus of the defined benefit plan for the past five years are as follows:

2009 2008 2007 2006 2005

RM’000 RM’000 RM’000 RM’000 RM’000

Group
Present value of funded obligations (397,078) (373,995) (342,574) (259,619) (245,841)
Fair value of plan assets 563,614 437,201 590,401 410,368 337,301

Plan surplus 166,536 63,206 247,827 150,749 91,460

Experience adjustment on plan liabilities (2,256) 8,397 65,911 (8,452) 37,953

Experience adjustment on plan assets 111,651 (179,710) 170,040 50,467 33,048

Bank
Present value of funded obligations (382,227) (360,009) (335,894) (246,714) (237,900)
Fair value of plan assets 542,534 420,850 578,888 389,973 326,406

Plan surplus 160,307 60,841 242,994 143,259 88,506

Experience adjustment on plan liabilities (2,173) 8,221 64,626 (8,030) 36,293

Experience adjustment on plan assets 107,475 (175,937) 166,725 47,958 31,980

No estimated contributions are expected to be paid to the plan in the forthcoming financial year by the Group and the
Bank.
 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
NOTES TO THE FINANCIAL STATEMENTS 287

25. EMPLOYEE BENEFITS (continued)

(a) Defined Benefit Plan (continued)
Principal actuarial assumptions used at the balance sheet date (expressed as weighted averages):

Group and Bank

2009 2008

Discount rate 5.50% 5.50%

Expected return on plan assets 8.00% 8.00%
Expected rate of salary increases 7.00% 7.00%

The principal actuarial assumptions are based on the last actuarial valuation performed as of 31 December 2007.

The expected rate of return on plan assets is based on the average rate of earnings expected on the funds invested
to provide for the benefits included in the projected benefit obligation.

(b) Equity Compensation Benefits

Public Financial Holdings Limited Group Employees’ Share Option Scheme
On 18 May 2005, an offer of options under the Public Financial Holdings Limited Group Employees’ Share Option
Scheme (“PFHL ESOS”) was made to eligible participants to subscribe for 66,526,000 ordinary shares of Public Financial
Holdings Limited (“PFHL”). The expiry date of granting of share options under the PFHL ESOS is 27 February 2012 with
the exercise period of ten (10) years from the grant date.

The salient features of the PFHL ESOS are as follows:

(i) Eligible participants of the PFHL ESOS include directors and employees working under “continuous contracts” for
the purposes of the Hong Kong Employment Ordinance;

(ii) The total number of shares to be issued under the PFHL ESOS shall not exceed in aggregate thirty percent (30%)
of the issued and paid-up share capital of PFHL at any point of time during the tenure of the PFHL ESOS.

In addition, any individual director or employee’s maximum entitlement shall not exceed one percent (1%) of the
ordinary shares of PFHL in issue in the 12 months period up to (and including) the date of the grant. Any
substantial shareholder or independent non-executive director’s maximum entitlement shall not exceed one tenth
percent (0.1%) of the ordinary shares of PFHL in issue and have an aggregate value based on the closing price
of the ordinary shares of PFHL at the date of each grant, in excess of HKD5 million in the 12 months period up
to (and including) the date of grant;

(iii) The option exercise price for each ordinary share of HKD0.10 each of PFHL shall be determined by the directors
at their discretion based on the higher of the closing price of the ordinary shares of PFHL on the Hong Kong Stock
Exchange (“HKSE”) at the offer date and the average closing price of the ordinary shares of PFHL on the HKSE
for five (5) business days immediately preceding the offer date and the nominal value of an ordinary share of PFHL;
and

(iv) The Group is not legally bound or obliged to repurchase or settle the options in cash.
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
288 NOTES TO THE FINANCIAL STATEMENTS

25. EMPLOYEE BENEFITS (continued)

(b) Equity Compensation Benefits (continued)
A summary of the movements in the number of PFHL ESOS and the weighted average exercise prices are as
follows:

2009 2008
Weighted Weighted
Number of average Number of average
share options exercise price share options exercise price
’000 HKD ’000 HKD

At 1 January 35,119 6.35 40,564 6.35

Exercised — — (4,021) 6.35
Lapsed (5,794) 6.35 (1,424) 6.35

At 31 December 29,325 6.35 35,119 6.35

Options exercisable at end of financial year 29,325 6.35 35,119 6.35

Weighted average share price

during the financial year 2.94 5.47

Details of PFHL ESOS outstanding as at the end of the financial year are as follows:

Grant Date Exercise Period Exercise Price Number of share options outstanding
’000

18 May 2005 10 June 2005 to 9 June 2015 HKD6.35 29,325

The weighted average remaining contractual maturity of the PFHL ESOS outstanding as at the end of the financial year
was 5.44 years (2008 – 6.44 years).

There were no new PFHL ESOS granted during the financial year (2008 - Nil). All share options issued have been vested
prior to 1 January 2006 and, as allowed by the transitional provisions in FRS 2 Share-based Payments, the recognition
and measurement principles in FRS 2 have not been applied.

26. BORROWINGS
Group Bank

2009 2008 2009 2008

RM’000 RM’000 RM’000 RM’000

Unsecured:
Term loan 653,101 860,234 — —

The unsecured term loan is denominated in Hong Kong Dollars. The loan is for a tenure of 3 years and bears interest at
HIBOR plus 1.65% (2008 – HIBOR plus 0.525% to HIBOR plus 0.65%).
 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
NOTES TO THE FINANCIAL STATEMENTS 289

27. SUBORDINATED NOTES

Group Bank

2009 2008 2009 2008

Note RM’000 RM’000 RM’000 RM’000

USD350 million 5.625%

Subordinated Notes due in 2014,
callable with step-up in 2009 (a) — 1,212,575 — 1,212,575
USD400 million 5.00%
Subordinated Notes due in 2017,
callable with step-up in 2012 (b) 1,371,200 1,385,800 1,371,200 1,385,800

Issued under the RM5.0 billion

Subordinated Medium Term
Note Programme:
First tranche:
RM1,400 million 4.73%
Subordinated Notes due in 2018,
callable with step-up in 2013 (c)(i) 1,379,783 1,379,975 1,400,000 1,400,000
Second tranche:
RM200 million 4.60%
Subordinated Notes due in 2019,
callable with step-up in 2014 (c)(ii) 200,000 — 200,000 —
Third tranche:
RM223 million 4.60%
Subordinated Notes due in 2019,
callable with step-up in 2014 (c)(iii) 223,000 — 223,000 —
Fourth tranche:
RM50 million 4.60%
Subordinated Notes due in 2019,
callable with step-up in 2014 (c)(iv) 50,000 — 50,000 —

3,223,983 3,978,350 3,244,200 3,998,375
Less: Transaction costs (5,814) (9,488) (5,814) (9,488)
Discount on issuance (8,460) (11,994) (8,460) (11,994)
Unrealised fair value loss arising
from fair value hedge 117,494 209,402 117,494 209,402

3,327,203 4,166,270 3,347,420 4,186,295
Accumulated accretion of discount and
amortisation of transaction costs 8,119 11,925 8,119 11,925

3,335,322 4,178,195 3,355,539 4,198,220

(a) On 22 June 2004, the Bank issued USD350 million in aggregate principal amount of Subordinated Notes due in 2014
callable with step-up in 2009. The Notes bear interest at the rate of 5.625% per annum from (and including) 22 June
2004 to (but excluding) 22 September 2009 and, thereafter, at a rate per annum equal to the interest rate of five year
US treasury notes plus 3.100%. The interest is payable semi-annually in arrears on 22 March and 22 September in each
year commencing on 22 March 2005. The Notes were issued at a price of 99.716 percent of the principal amount of
the Notes. These Notes were fully redeemed on 22 September 2009 together with accrued interest.
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
290 NOTES TO THE FINANCIAL STATEMENTS

27. SUBORDINATED NOTES (continued)

(b) On 20 June 2005, the Bank issued USD400 million in aggregate principal amount of Subordinated Notes due in 2017
callable with step-up in 2012. The Notes bear interest at the rate of 5.000% per annum from (and including) 20 June
2005 to (but excluding) 20 June 2012 and, thereafter, at a rate per annum equal to the interest rate of five year US
treasury notes plus 2.827%. The interest is payable semi-annually in arrears on 20 June and 20 December in each year
commencing on 20 December 2005. The Notes were issued at a price of 99.383 per cent of the principal amount of
the Notes. The Notes will, subject to the prior consent of Bank Negara Malaysia, be redeemable in whole but not in
part, at the option of the Bank in the event of certain changes affecting taxation in Malaysia or on 20 June 2012 at
their principal amount plus accrued interest (if applicable).

(c) On 13 March 2008, the Bank obtained approval from Bank Negara Malaysia for a Subordinated Medium Term Note
Programme (“the MTN Programme”) for the issuance of up to RM5.0 billion in aggregate principal value of Subordinated
Notes. The tenor of the MTN Programme will be up to fifteen (15) years, with the maturity for each issuance to range
between ten (10) to fifteen (15) years, and callable from five (5) years prior to the relevant maturity date of each
issuance. Each issuance will bear interest at a rate to be determined prior to the issuance, payable semi-annually in
arrears.

The Subordinated Notes to be issued under the MTN Programme shall be issued at par. The Notes will, subject to the
prior consent of Bank Negara Malaysia, be redeemable in whole but not in part, at the option of the Bank in the event
of certain changes affecting taxation in Malaysia or if there is a more than insubstantial risk that the Notes will no longer
qualify as Tier II Capital for the purposes of Bank Negara Malaysia’s capital adequacy requirements or on the first call
date or at any subsequent interest payment date thereafter at their principal amount plus accrued interest (if
applicable).

The Bank has issued the following tranches of Subordinated Notes under the MTN Programme:

(i) On 16 May 2008, the Bank issued the first tranche of RM1,400 million in aggregate principal amount of
Subordinated Notes due in 2018 callable with step-up in 2013. The Notes bear interest at the rate of 4.73% per
annum from (and including) 16 May 2008 to (but excluding) 16 May 2013 and thereafter, at the rate of 5.73% per
annum from (and including) 16 May 2013 to (but excluding) the date of early redemption in full of such Notes or
the maturity date of the Notes (whichever is earlier). The interest is payable semi-annually in arrears on 16 May
and 16 November each year commencing 16 November 2008.

(ii) On 6 November 2009, the Bank issued the second tranche of RM200 million in aggregate principal amount of
Subordinated Notes due in 2019 callable with step-up in 2014. The Notes bear interest at the rate of 4.60% per
annum from (and including) 6 November 2009 to (but excluding) 6 November 2014 and thereafter, at the rate of
5.60% per annum from (and including) 6 November 2014 to (but excluding) the date of early redemption in full of
such Notes or the maturity date of the Notes (whichever is earlier). The interest is payable semi-annually in arrears
on 6 May and 6 November each year commencing 6 May 2010.

(iii) On 10 December 2009, the Bank issued the third tranche of RM223 million in aggregate principal amount of
Subordinated Notes due in 2019 callable with step-up in 2014. The Notes bear interest at the rate of 4.60% per
annum from (and including) 10 December 2009 to (but excluding) 10 December 2014 and thereafter, at the rate of
5.60% per annum from (and including) 10 December 2014 to (but excluding) the date of early redemption in full
of such Notes or the maturity date of the Notes (whichever is earlier). The interest is payable semi-annually in
arrears on 10 June and 10 December each year commencing 10 June 2010.

(iv) On 31 December 2009, the Bank issued the fourth tranche of RM50 million in aggregate principal amount of
Subordinated Notes due in 2019 callable with step-up in 2014. The Notes bear interest at the rate of 4.60% per
annum from (and including) 31 December 2009 to (but excluding) 31 December 2014 and thereafter, at the rate of
5.60% per annum from (and including) 31 December 2014 to (but excluding) the date of early redemption in full
of such Notes or the maturity date of the Notes (whichever is earlier). The interest is payable semi-annually in
arrears on 30 June and 31 December each year commencing 30 June 2010.
 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
NOTES TO THE FINANCIAL STATEMENTS 291

27. SUBORDINATED NOTES (continued)

The above Subordinated Notes constitute unsecured liabilities of the Bank, and are subordinated in right of payment upon
the occurrence of any winding up proceeding to the prior payment in full of all deposit liabilities and all other liabilities of
the Bank, other than the Innovative Tier I Capital Securities and the Non-innovative Tier I Stapled Securities, which are
subordinated to the Subordinated Notes, in accordance with the terms and conditions of the Subordinated Notes. The
Subordinated Notes qualify as Tier II Capital for the purpose of determining the capital adequacy ratios of the Group and
the Bank.

The Bank has entered into interest rate swap contracts as fair value hedges of its Subordinated Notes in order to minimise
its exposure to changes in fair value due to interest rate volatility.

28. INNOVATIVE TIER I CAPITAL SECURITIES

Group and Bank

2009 2008
Note RM’000 RM’000

USD200 million 6.84% Innovative Tier I Capital Securities due in 2036,

callable with step-up in 2016 (a) 685,600 692,900
RM1,200 million 5.10% Innovative Tier I Capital Securities due in 2036,
callable with step-up in 2016 (b) 1,200,000 1,200,000

1,885,600 1,892,900
Less: Transaction costs (3,544) (3,562)
Unrealised fair value loss arising from fair value hedge 89,146 234,366

1,971,202 2,123,704
Accumulated amortisation of transaction costs 1,131 780

1,972,333 2,124,484

(a) On 22 August 2006, the Bank issued USD200 million in aggregate principal amount of Innovative Tier I Capital Securities
(“the USD IT-1 Securities”) due in 2036 and callable with step-up in 2016. The USD IT-1 Securities bear interest at the
rate of 6.84% per annum from (and including) 22 August 2006 to (but excluding) 22 August 2016 and thereafter, at the
interest rate per annum of 2.30% above the London Interbank Offered Rate for three-month US Dollar deposits. The
interest is payable semi-annually in arrears on 22 February and 22 August each year commencing on 22 February 2007
to 22 August 2016, and thereafter quarterly in arrears on 22 February, 22 May, 22 August and 22 November of each
year.

The Bank may, at its option, defer the payment of interest up to a limit of 50 per cent of the aggregate principal of the
USD IT-1 Securities, with any subsequent deferral in excess of this limit subject to the prior approval of Bank Negara
Malaysia (“BNM”). If the Bank has not made a payment of interest, whether deferred or not, it shall not pay any dividend
to its ordinary shareholders and/or any interest on any security or instrument ranking junior to the USD IT-1 Securities.
The USD IT-1 Securities were issued at a price of 100.0 percent of the principal amount of the USD IT-1 Securities.
The USD IT-1 Securities will, subject to the prior consent of BNM, be redeemable in whole but not in part, at the option
of the Bank in the event of certain changes affecting taxation in Malaysia or if there is a more than insubstantial risk
that the USD IT-1 Securities will no longer qualify as Tier I Capital for the purposes of BNM’s capital adequacy
requirement or on 22 August 2016 or on any subsequent interest payment date thereafter at their principal amount plus
accrued interest (if applicable).
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
292 NOTES TO THE FINANCIAL STATEMENTS

28. INNOVATIVE TIER I CAPITAL SECURITIES (continued)

(b) On 22 December 2006, the Bank issued RM1,200 million in aggregate principal amount of Innovative Tier I Capital
Securities (“the RM IT-1 Securities”) due in 2036 and callable with step-up in 2016. The RM IT-1 Securities bear interest
at the rate of 5.10% per annum from (and including) 22 December 2006 to (but excluding) 22 December 2016 and
thereafter, at the interest rate per annum of 1.82% above the three-month Kuala Lumpur Interbank Offered Rate. The
interest is payable semi-annually in arrears on 22 June and 22 December each year commencing on 22 June 2007 to
22 December 2016, and thereafter quarterly in arrears on 22 March, 22 June, 22 September and 22 December of each
year.

The Bank may, at its option, defer the payment of interest up to a limit of 50 per cent of the aggregate principal of the
RM IT-1 Securities, with any subsequent deferral in excess of this limit subject to the prior approval of BNM. If the Bank
has not made a payment of interest, whether deferred or not, it shall not pay any dividend to its ordinary shareholders
and/or any interest on any security or instrument ranking junior to the RM IT-1 Securities. The RM IT-1 Securities were
issued at a price of 100.0 percent of the principal amount of the RM IT-1 Securities. The RM IT-1 Securities will, subject
to the prior consent of BNM, be redeemable in whole but not in part, at the option of the Bank in the event of certain
changes affecting taxation in Malaysia or if there is a more than insubstantial risk that the RM IT-1 Securities will no
longer qualify as Tier I Capital for the purposes of BNM’s capital adequacy requirement or on 22 December 2016 or on
any interest payment date thereafter at their principal amount plus accrued interest (if applicable).

The Innovative Tier I Capital Securities above rank pari passu among themselves and equally with the Non-innovative Tier I
Stapled Securities and constitute unsecured liabilities of the Bank, and are subordinated in right of payment upon occurrence
of any winding up proceeding to the prior payment in full of all deposit liabilities and all other liabilities including the
Subordinated Notes of the Bank in accordance with the terms and conditions of the Innovative Tier I Capital Securities. The
Innovative Tier I Capital Securities qualify as Tier I Capital for the purpose of determining the capital adequacy ratios of the
Group and the Bank, up to a maximum of 15% of the Tier I Capital, with the excess qualifying as Tier II Capital.

The Bank has entered into interest rate swap contracts as fair value hedges of its Innovative Tier I Capital Securities in order
to minimise its exposure to changes in fair value due to interest rate volatility.

29. NON-INNOVATIVE TIER I STAPLED SECURITIES

Group and Bank

2009 2008
Note RM’000 RM’000

Issued under the RM5.0 billion Non-Innovative

Tier 1 Stapled Securities Programme:
First tranche:
RM1,200 million 7.50% Stapled Securities callable in 2019 (a) 1,200,000 —
Second tranche:
RM888 million 7.20% Stapled Securities callable in 2019 (b) 888,000 —

2,088,000 —
Less: Transaction costs (7,557) —
Unrealised fair value gain arising from fair value hedge (9,289) —

2,071,154 —
Accumulated amortisation of transaction costs 435 —

2,071,589 —

 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
NOTES TO THE FINANCIAL STATEMENTS 293

29. NON-INNOVATIVE TIER I STAPLED SECURITIES (continued)

On 16 March 2009, the Bank and PBFIN Berhad (“PBFIN”), a wholly-owned subsidiary company of the Bank, obtained
approval from Bank Negara Malaysia for a Non-Innovative Tier 1 Stapled Securities (“Stapled Securities”) Programme (“the
NIT-1 Programme”) for the issuance of up to RM5.0 billion in nominal value of Stapled Securities, comprising the following
securities:

(i) Non-Cumulative Perpetual Capital Securities (“NCPCS”) issued by the Bank; and
(ii) Subordinated Notes (“Sub-Notes”) issued by PBFIN.

The NCPCS are stapled to an equivalent amount in nominal value of the Sub-Notes.

Under the NIT-1 Programme, the tenor of the NCPCS will be perpetual, with the first optional redemption date to be on a
date falling no earlier than the fifth (5th) anniversary of the first issue date, whilst the Sub-Notes have a maturity of fifty (50)
years. The NCPCS will not be subject to the payment of any distribution until the occurence of an assignment event, upon
which distribution will be accrued at a fixed interest rate to be determined prior to each issuance of NCPCS. The Sub-Notes
will bear interest at a rate which is the same rate as the distribution of the NCPCS together with which the Sub-Notes is
stapled, payable semi-annually in arrears. Therefore, the Stapled Securities are effectively issued by the Bank and PBFIN at
a pre-determined fixed interest rate.

The Bank and PBFIN have issued the following tranches of Stapled Securities under the NIT-1 Programme:

(a) On 5 June 2009, the Bank and PBFIN issued the first tranche of RM1,200 million in nominal value of Stapled Securities.
The first optional redemption date of the NCPCS will be on 5 June 2019, whilst the Sub-Notes are due on 5 June 2059.
The Stapled Securities were issued at par. The Sub-Notes bear interest at a rate of 7.50% per annum, payable semi-
annually. Should an assignment event occur, the NCPCS will also accrue interest at a rate of 7.50% per annum.

(b) On 13 November 2009, the Bank and PBFIN issued the second tranche of RM888 million in nominal value of Stapled
Securities. The first optional redemption date of the NCPCS will be on 13 November 2019, whilst the Sub-Notes are
due on 13 November 2059. The Stapled Securities were issued at par. The Sub-Notes bear interest at a rate of 7.20%
per annum, payable semi-annually. Should an assignment event occur, the NCPCS will also accrue interest at a rate of
7.20% per annum.

The other salient features of the NIT-1 Programme are as follows:

The Bank may, at its option, redeem the NCPCS in whole but not in part, on a date falling no earlier than the fifth (5th)
anniversary of the first issue date or on any distribution payment date thereafter, subject to fulfilling the following redemption
conditions:

(i) the Bank is solvent at the time of redemption and immediately thereafter;
(ii) the Bank is not in breach of BNM’s minimum capital adequacy ratio requirements; and
(iii) the Bank has obtained written approval from BNM prior to the redemption.
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
294 NOTES TO THE FINANCIAL STATEMENTS

29. NON-INNOVATIVE TIER I STAPLED SECURITIES (CONTINUED)

The NCPCS will cease to be stapled to the Sub-Notes only upon the occurence of an assignment event. Once unstapled,
ownership of the Sub-Notes will be assigned to the Bank pursuant to a note assignment agreement entered into between
the Bank and investors of the Stapled Securities on the date of the issue of the Stapled Securities. These investors will then
hold only the NCPCS. An assignment event means the occurence of any of the following events:

(i) the Bank elects that an assignment event occurs; or

(ii) BNM determines that an assignment event should occur; or
(iii) the redemption of the NCPCS pursuant to:
(a) A tax redemption, whereby there is a more than an insubstantial risk that, as a result of changes in the applicable
tax regulations, the Bank and/or PBFIN would become obliged to pay additional amounts or will no longer be able
to obtain tax deductions for interest payments on the Sub-Notes or the inter-company loan between the Bank and
PBFIN; or
(b) a regulatory redemption, whereby the NCPCS no longer qualify as Non-Innovative Tier I Capital of the Bank for
the purposes of BNM’s capital adequacy ratio requirements; or
(c) redemption of the NCPCS on the optional redemption date.
(iv) the deferral of any interest on the Sub-Notes; or
(v) the Bank is in breach of BNM’s minimum capital adequacy ratio requirements; or
(vi) the commencement of winding up proceeding in respect of the Bank or PBFIN; or
(vii) the appointment of an administrator in connection with the restructuring of the Bank or PBFIN; or
(viii) the occurence of the optional redemption date; or
(ix) PBFIN ceases to be, directly or indirectly, a wholly-owned subsidiary company of the Bank.

The Bank will not be able to pay any dividends to its shareholders or make any interest payments on any securities ranking
pari passu with or junior to the NCPCS or acquire any of its ordinary shares or redeem any securities ranking pari passu
with or junior to the NCPCS (collectively referred to as the “Dividend and Capital Stopper”) if, following the occurence of an
assignment event, the Bank does not pay a distribution on the NCPCS on its due date for payment. The Dividend and Capital
Stopper will only cease to be effective upon the resumption of payments of distribution on the NCPCS for a continuous
period of one year.

The NCPCS are direct and unsecured obligations of the Bank. The NCPCS rank pari passu and without preference among
themselves, with the existing RM1,200 million and USD200 million Innovative Tier I Capital Securities and with the most junior
class of preference shares (if any), but in priority to the rights and claims of holders of ordinary shares of the Bank. The
NCPCS are subordinated in right of payment upon the occurence of any winding up proceeding to the prior payment in full
of all deposit liabilities and all other liabilities of the Bank including the Subordinated Notes of the Bank.

The Sub-Notes constitute direct and unsecured obligations of PBFIN. The Sub-Notes rank pari passu and without preference
among themselves and with the most junior class of preference shares (if any) of PBFIN, but in priority to the rights and
claims of holders of ordinary shares of PBFIN. The Sub-Notes will be subordinated in right of payment upon the occurence
of any winding up proceeding of PBFIN to the prior payment in full of all liabilities of PBFIN except to those liabilities which
rank equal with or junior to the Sub-Notes.

The NCPCS qualify as Non-Innovative Tier 1 Capital in line with the requirements of BNM’s Risk-Weighted Capital Adequacy
Framework (General Requirements and Capital Components).

The Group has entered into interest rate swap contracts as fair value hedges of its Stapled Securities in order to minimise
its exposure to changes in fair value due to interest rate volatility.
 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
NOTES TO THE FINANCIAL STATEMENTS 295

30. PROVISION FOR TAX EXPENSE AND ZAKAT

Group Bank

2009 2008 2009 2008

RM’000 RM’000 RM’000 RM’000

Tax expense 464,060 382,284 286,242 254,818

Zakat 230 170 — —

464,290 382,454 286,242 254,818

31. SHARE CAPITAL

Number of Ordinary
Shares of RM1.00 Each Amount

2009 2008 2009 2008

Group and Bank ’000 ’000 RM’000 RM’000

Authorised:
Ordinary shares of RM1.00 each 10,000,000 10,000,000 10,000,000 10,000,000

Issued and fully paid:

Ordinary shares of RM1.00 each
At 1 January 3,531,926 3,527,891 3,531,926 3,527,891
Issued pursuant to the exercise of share options — 4,035 — 4,035

At 31 December 3,531,926 3,531,926 3,531,926 3,531,926

32. TREASURY SHARES

The amount relates to the acquisition cost of treasury shares.

On 25 February 2009, the shareholders of the Bank renewed their approval for the Bank to buy-back its own shares. During
the financial year, the Bank bought back from the open market, 10,000 (2008 – 20,000) of its issued ordinary shares of
RM1.00 each (“PBB Shares”) listed and quoted as “Local” and 5,000 (2008 – Nil) of its PBB Shares listed and quoted as
“Foreign” on the Main Market of Bursa Malaysia Securities Berhad (“Bursa Malaysia”) at an average buy-back price of
RM9.27 (2008 – RM10.70) per share. The total consideration paid for the share buy-back of PBB Shares by the Bank during
the financial year, including transaction costs, was RM139,494 (2008 – RM214,760) and was financed by internally generated
funds. The PBB Shares bought back are held as treasury shares in accordance with Section 67A Subsection 3(A)(b) of the
Companies Act, 1965.

None of the treasury shares held were resold or cancelled during the financial year. On 11 March 2009, a total of 95,834,632
treasury shares were distributed as share dividend on the basis of one (1) PBB treasury share listed and quoted as “Local”
on the Main Market of Bursa Malaysia for every thirty-five (35) ordinary shares of RM1.00 each held in PBB.

Of the total 3,531,925,834 (2008 – 3,531,925,834) issued and paid-up PBB Shares as at 31 December 2009, 80,477,168
(2008 – 176,296,800) PBB Shares are held as treasury shares by the Bank. Treasury shares have no rights to voting,
dividends and participation in other distribution. As at 31 December 2009, the number of outstanding PBB Shares in issue
after the set-off is therefore 3,451,448,666 (2008 – 3,355,629,034) ordinary shares of RM1.00 each.
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
296 NOTES TO THE FINANCIAL STATEMENTS

32. TREASURY SHARES (CONTINUED)

Subsequent to the financial year end, on 19 January 2010, a total of approximately 50,756,598 treasury shares were declared
by the Directors to be distributed to the shareholders as share dividend for the financial year ended
31 December 2009, on the basis of one (1) treasury share for every sixty-eight (68) shares of RM1.00 each held, fractions
of treasury shares to be disregarded. Subsequent to the distribution of the share dividend, the treasury shares balance will
be approximately 29,720,570 PBB shares at a carrying value of RM214,801,422.

33. OTHER RESERVES

Foreign
Currency
Statutory Capital Translation Hedging Revaluation Regulatory
Reserves Reserves Reserves Reserves Reserves Reserves Total
Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

At 1 January 2009 3,619,061 60,442 (75,117) 14,245 (425,232) 50,336 3,243,735

Currency translation differences
in respect of foreign operations — — (32,954) — — — (32,954)
Currency translation differences
in respect of net investment hedge — — 35,193 — — — 35,193
Net unrealised gain on change in
fair value of securities available-for-sale — — — — 522,620 — 522,620
Net realised gain on securities
available-for-sale reclassified to
income statement (Note 37) — — — — (46,113) — (46,113)
Net unrealised loss on change in
fair value of derivatives designated
as cash flow hedges — — — (2,116) — — (2,116)
Net realised gain on cash flow hedges
reclassified to the income statement — — — (1,204) — — (1,204)
Deferred tax (Note 42) — — — (2,731) (97,602) — (100,333)
Transfer from retained profits 133,961 — — — — 9,995 143,956

At 31 December 2009 3,753,022 60,442 (72,878) 8,194 (46,327) 60,331 3,762,784



 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
NOTES TO THE FINANCIAL STATEMENTS 297

33. OTHER RESERVES (continued)

Foreign
Currency
Statutory Capital Translation Hedging Revaluation Regulatory
Reserves Reserves Reserves Reserves Reserves Reserves Total
Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

At 1 January 2008 3,578,490 60,442 (76,744) 381 14,897 36,258 3,613,724

Currency translation differences
in respect of foreign operations — — 145,173 — — — 145,173
Currency translation differences
in respect of net investment hedge — — (143,546) — — — (143,546)
Net unrealised loss on change in
fair value of securities available-for-sale — — — — (533,977) — (533,977)
Net realised gain on securities
available-for-sale reclassified
to income statement (Note 37) — — — — (13,514) — (13,514)
Net unrealised gain on change in
fair value of derivatives designated
as cash flow hedges — — — 14,245 — — 14,245
Net realised gain on cash flow hedges
reclassified to the income statement — — — (381) — — (381)
Deferred tax (Note 42) — — — — 107,362 — 107,362
Transfer from retained profits 40,571 — — — — 14,078 54,649

At 31 December 2008 3,619,061 60,442 (75,117) 14,245 (425,232) 50,336 3,243,735

Statutory Hedging Revaluation

Reserves Reserves Reserves Total
Bank RM’000 RM’000 RM’000 RM’000

At 1 January 2009 3,531,926 14,245 (307,112) 3,239,059

Net unrealised gain on change in fair value of
securities available-for-sale — — 407,574 407,574
Net realised gain on securities available-for-sale
reclassified to income statement (Note 37) — — (33,354) (33,354)
Net unrealised loss on change in fair value of
derivatives designated as cash flow hedges — (2,116) — (2,116)
Net realised gain on cash flow hedges
reclassified to the income statement — (1,204) — (1,204)
Deferred tax (Note 42) — (2,731) (93,556) (96,287)

At 31 December 2009 3,531,926 8,194 (26,448) 3,513,672

PUBLIC BANK BERHAD
ANNUAL REPORT 2009
298 NOTES TO THE FINANCIAL STATEMENTS

33. OTHER RESERVES (continued)

Statutory Hedging Revaluation
Reserves Reserves Reserves Total
Bank RM’000 RM’000 RM’000 RM’000

At 1 January 2008 3,527,891 381 (23,793) 3,504,479

Net unrealised loss on change in fair value of
securities available-for-sale — — (366,703) (366,703)
Net realised gain on securities available-for-sale
reclassified to income statement (Note 37) — — (13,491) (13,491)
Net unrealised gain on change in fair value of
derivatives designated as cash flow hedges — 14,245 — 14,245
Net realised gain on cash flow hedges
reclassified to the income statement — (381) — (381)
Deferred tax (Note 42) — — 96,875 96,875
Transfer from retained profits 4,035 — — 4,035

At 31 December 2008 3,531,926 14,245 (307,112) 3,239,059

The statutory reserves of the Group and the Bank are maintained in compliance with Section 36 of the Banking and Financial
Institutions Act, 1989 and Section 15 of the Islamic Banking Act, 1983 and are not distributable as cash dividends.

The capital reserves of the Group arose mainly from the capitalisation of retained profits that resulted from bonus issues by
subsidiary companies and the restructuring exercise involving certain subsidiary companies undertaken by the Group in
previous years.

The foreign currency translation reserves comprise all foreign exchange differences arising from the translation of the financial
statements of foreign subsidiary companies and its subsidiary company incorporated in the Federal Territory of Labuan, after
offsetting the impact of the effective portion of net investment hedges.

The hedging reserves are in respect of the effective portion of unrealised fair value gains and losses on cash flow hedging
instruments.

The revaluation reserves are in respect of unrealised fair value gains and losses on securities available-for-sale, after off-
setting the impact of related fair value hedges.

The regulatory reserves are maintained by the Group’s banking subsidiary companies in Hong Kong SAR in line with the
requirements of the Hong Kong Monetary Authority.

34. RETAINED PROFITS

Prior to the year of assessment 2008, company income tax was based on the full imputation system where tax on dividend
was imposed at both the company’s and shareholders’ level. The tax at shareholders’ level took into account the tax imputed
at the company’s level through tax credits.

Pursuant to the Finance Act, 2007, the single tier system was introduced and took effect from the year of assessment 2008.
Under the single tier system, tax on a company’s profit is a final tax and dividend distributed to shareholders will be
exempted from tax. With the implementation of the single tier system, companies with a credit balance in the Section 108
account are allowed either to elect for an irrevocable option to switch over to the single tier system or to continue using the
available credit balance as at 31 December 2007 after adjusting for any tax deductions for the purpose of dividend
distribution, until 31 December 2013.
 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
NOTES TO THE FINANCIAL STATEMENTS 299

34. RETAINED PROFITS (CONTINUED)

The Bank did not elect for the irrevocable option to disregard the available Section 108 balance accumulated until
31 December 2007. Therefore, the Bank is allowed to continue utilising its available Section 108 balance for the purpose of
dividend distribution until the credit balances are fully utilised or upon expiry of the six year transitional period on
31 December 2013, whichever is earlier.

As at 31 December 2009, the Bank has a credit balance of RM717,381,000 (2008 – RM1,197,442,000) in its Section 108
account and tax exempt profits of RM377,076,000 (2008 – RM355,332,000), subject to agreement by the Inland Revenue
Board.

Subsequent to the financial year ended 31 December 2009, on 19 January 2010, the Board of Directors had declared a
second interim cash dividend and a share dividend for the financial year ended 31 December 2009 as disclosed in Note 44.
The Bank will adopt parallel distribution of both franked and single tier dividend whereby the cash dividend will be franked
out from the available Section 108 credit balance while the share dividend will be distributed as single tier dividend.

35. INTEREST INCOME

Group Bank

2009 2008 2009 2008

RM’000 RM’000 RM’000 RM’000

Loans, advances and financing

– Interest income other than
recoveries from NPLs 5,894,413 6,012,156 5,126,445 5,312,156
– Recoveries from NPLs 74,611 82,389 74,611 82,389
Money at call and deposit placements
with financial institutions 783,059 1,552,005 662,643 1,398,635
Securities held-for-trading 225,590 296,899 203,608 266,999
Securities available-for-sale 151,511 144,185 137,246 118,868
Securities held-to-maturity 310,740 268,460 277,997 206,878
Others 63,164 57,911 63,229 57,896

7,503,088 8,414,005 6,545,779 7,443,821
Amortisation of premium less accretion of discount (39,362) (6,777) (43,352) (12,685)
Net interest/income suspended (110,675) (117,520) (110,640) (117,520)

7,353,051 8,289,708 6,391,787 7,313,616

PUBLIC BANK BERHAD
ANNUAL REPORT 2009
300 NOTES TO THE FINANCIAL STATEMENTS

36. INTEREST EXPENSE

Group Bank

2009 2008 2009 2008

RM’000 RM’000 RM’000 RM’000

Deposits and placements of banks and

other financial institutions 127,246 232,420 77,446 186,551
Deposits from customers 2,927,871 3,932,019 2,763,455 3,612,358
Loans sold to Cagamas 40,512 144,646 40,512 144,646
Subordinated notes 105,800 152,319 106,746 152,915
Innovative Tier I capital securities 60,340 86,193 60,340 86,193
Non-innovative Tier I stapled securities 41,413 — 41,413 —
Borrowings 9,298 11,337 — —
Others 4,129 3,462 3,775 3,177

3,316,609 4,562,396 3,093,687 4,185,840

37. OTHER OPERATING INCOME

Group Bank

2009 2008 2009 2008

RM’000 RM’000 RM’000 RM’000

(a) Fee income:

Commissions 147,999 157,612 168,100 166,245
Service charges and fees 202,203 200,692 152,913 139,445
Guarantee fees 29,540 29,153 22,798 23,316
Processing fees 14,511 22,032 1,369 1,046
Commitment fees 53,301 47,561 49,474 43,995
Unit trust management fees 373,752 331,588 — —
Fee on sale of trust units 68,941 64,899 — —
Net brokerage and commissions
from stock-broking activities 87,044 69,526 — —
Other fee income 45,873 51,783 41,566 40,600

1,023,164 974,846 436,220 414,647

(b) Net gain arising from disposal of:

Securities held-for-trading 11,678 10,919 8,201 11,344
Securities available-for-sale (Note 33) 46,113 13,514 33,354 13,491

57,791 24,433 41,555 24,835

 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
NOTES TO THE FINANCIAL STATEMENTS 301

37. OTHER OPERATING INCOME (continued)

Group Bank

2009 2008 2009 2008

RM’000 RM’000 RM’000 RM’000

(c) Gross dividend income from:

Securities held-for-trading 42 89 42 89
Securities available-for-sale 84,295 47,345 78,211 43,215
Securities held-to-maturity 7,644 6,657 7,488 6,461
Associated companies — — 10,379 5,130
Subsidiary companies:
– quoted outside Malaysia — — 64,452 81,468
– unquoted in Malaysia — — 335,184 272,558

91,981 54,091 495,756 408,921

(d) Unrealised gain/(loss) on revaluation of:

Securities held-for-trading 14,946 1,700 15,273 1,417
Trading derivatives (9,047) (3,815) 763 (37,036)

5,899 (2,115) 16,036 (35,619)

(e) Unrealised gain/(loss) on hedging derivatives 4,271 (44) 3,130 190

(f) Other income:

Foreign exchange profit 169,792 174,300 194,874 25,120
Rental income from:
– investment properties (Note 16) 5,695 5,201 — —
– other properties 8,830 7,434 5,038 4,123
Net gain/(loss) on disposal of property
and equipment 1,159 (1,773) 864 (1,748)
Net loss on disposal of foreclosed properties (3,144) (8,652) (3,304) (8,812)
Gain on revaluation of investment properties
(Note 16) 8,396 7,956 — —
Lease income and factoring charges — 44 — —
Gain on disposal of prepaid land
lease payments 12 — — —
Gain on disposal of investment properties 4 — — —
Goodwill income * — 200,000 — 180,000
Others 23,085 17,806 23,789 16,441

213,829 402,316 221,261 215,124

Total other operating income 1,396,935 1,453,527 1,213,958 1,028,098

* The goodwill income was received pursuant to a long-term regional strategic alliance agreement entered into with
ING Asia/Pacific Limited (“ING”) on 7 November 2007, which involves the joint development of bancassurance
business, Takaful business and various other services between the Group and ING in the Asia Pacific region for
ten (10) years commencing 1 January 2008.
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
302 NOTES TO THE FINANCIAL STATEMENTS

38. OTHER OPERATING EXPENSES

Group Bank

2009 2008 2009 2008

RM’000 RM’000 RM’000 RM’000

Personnel costs
– Salaries, allowances and bonuses 1,041,399 913,011 801,873 721,562
– Pension costs 127,455 62,475 110,920 49,451
– Others 100,459 86,185 88,348 75,888

1,269,313 1,061,671 1,001,141 846,901

Establishment costs
– Depreciation and amortisation 133,495 118,859 104,121 92,520
– Rental 71,096 62,666 71,175 67,502
– Insurance 16,812 14,985 13,352 12,181
– Water and electricity 37,780 32,492 27,895 24,115
– General repairs and maintenance 62,024 57,141 54,880 51,817
– Information technology expenses 22,016 22,136 11,076 13,080
– Others 31,065 30,126 19,833 19,807

374,288 338,405 302,332 281,022

Marketing expenses
– Sales commission 91,364 82,041 — —
– Advertisement and publicity 82,187 71,747 32,092 29,524
– Others 83,838 70,110 53,564 48,769

257,389 223,898 85,656 78,293

Administration and general expenses

– Communication expenses 73,003 62,551 70,339 51,401
– Legal and professional fees 52,511 48,304 41,892 40,065
– Others 83,409 56,272 27,170 31,947

208,923 167,127 139,401 123,413

Shared service cost charged to

Public Islamic Bank Berhad — — (136,415) (21,100)

Total other operating expenses 2,109,913 1,791,101 1,392,115 1,308,529

 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
NOTES TO THE FINANCIAL STATEMENTS 303

38. OTHER OPERATING EXPENSES (continued)

(a) Included in other operating expenses are the following statutory disclosures:

Group Bank

2009 2008 2009 2008

RM’000 RM’000 RM’000 RM’000

Auditors’ remuneration:*
– statutory audit fees 2,903 2,778 853 891
– audit related services 448 424 279 158
– other services 258 183 109 52
Depreciation of property and equipment
(Note 18) 130,046 116,122 104,119 92,518
Amortisation of prepaid land lease payments
(Note 17) 3,449 2,737 2 2
Direct operating expenses of investment
properties that:
– generated rental income 50 63 — —
Directors’ remuneration (Note 39) 25,376 22,132 18,559 16,204
Pension costs
– defined contribution plan 116,878 104,333 100,776 90,353
– defined benefit plan (Note 25(a)) 10,577 (41,943) 10,144 (41,063)
Property and equipment written off (Note 18) 1,437 4,243 862 4,238
Rental of premises 71,096 62,666 71,175 67,502

* Included in the auditors’ remuneration for statutory audit fees, audit related services and other services of the
Group are fees paid to accounting firms other than the Bank’s auditors amounting to RM1,842,000 (2008 –
RM1,652,000), RM124,000 (2008 – RM91,000) and RM78,000 (2008 – RM59,000) respectively.

Included in the auditors’ remuneration for statutory audit fees, audit related services and other services of the Bank
are fees paid in relation to the Bank’s overseas branches of RM153,000 (2008 – RM151,000), RM36,000 (2008 –
Nil) and RM8,000 (2008 – RM8,000) respectively.

Audit related services included half year limited review, validation review based on agreed-upon procedures and
review of statement of internal control.

(b) Employees
The number of persons employed by the Group and the Bank (excluding Directors) as at the end of the financial year
was 17,169 (2008 – 16,160) and 14,319 (2008 – 13,511) respectively.
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
304 NOTES TO THE FINANCIAL STATEMENTS

39. DIRECTORS’ REMUNERATION

Group Bank

2009 2008 2009 2008

RM’000 RM’000 RM’000 RM’000

Directors of the Bank:

Executive Directors:
Fees 905 678 270 250
Salary and other remuneration,
including meeting allowances 3,823 3,373 3,711 3,267
Bonuses 5,400 4,704 5,400 4,704
Benefits-in-kind
– arising from exercise of share options — 174 — —
– others 49 73 49 73

10,177 9,002 9,430 8,294

Non-Executive Directors:
Fees 2,743 2,018 1,035 892
Other remuneration 8,410 7,307 8,111 7,055
Benefits-in-kind
– arising from exercise of share options — 24 — —
– others 59 113 59 113

11,212 9,462 9,205 8,060

Past Director:
Other remuneration 32 36 32 36
Benefits-in-kind 13 25 13 25

45 61 45 61

Directors of subsidiary companies:

Executive Directors:
Fees 204 186 — —
Salary and other remuneration,
including meeting allowances 2,331 2,181 — —
Bonuses 1,228 1,423 — —
Benefits-in-kind
– arising from exercise of share options — 268 — —
– others 201 200 — —

3,964 4,258 — —

 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
NOTES TO THE FINANCIAL STATEMENTS 305

39. DIRECTORS’ REMUNERATION (continued)

Group Bank

2009 2008 2009 2008

RM’000 RM’000 RM’000 RM’000

Directors of subsidiary companies (continued):

Non-Executive Directors:
Fees 266 211 — —
Other remuneration 34 15 — —
Benefits-in-kind
– arising from exercise of share options — 116 — —

300 342 — —

Grand total 25,698 23,125 18,680 16,415

Total (excluding benefits-in-kind) (Note 38) 25,376 22,132 18,559 16,204

Included in the remuneration of the Executive Directors is the remuneration attributable to the Chief Executive Officer of the
Bank, including benefits-in-kind, during the financial year amounting to RM5,312,000 (2008 – RM4,650,000).

The total remuneration (including benefits-in-kind) of the Directors of the Bank are as follows:

Remuneration received from

<----------------- Remuneration received from the Bank -----------------> <------ ------>
Subsidiary Companies
Benefits- Benefits-
Other in-kind Bank Other in-kind Group
Salary Fees Bonus Emoluments Others Total Fees Emoluments ESOS Total
2009 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Executive Directors:
Tan Sri Dato’ Sri Tay Ah Lek 1,080 135 3,100 972 25 5,312 363 76 — 5,751
Dato’ Sri Lee Kong Lam 900 135 2,300 759 24 4,118 272 36 — 4,426

1,980 270 5,400 1,731 49 9,430 635 112 — 10,177

Non-Executive Directors:
Tan Sri Dato’ Sri
Dr. Teh Hong Piow — 180 — 7,314 59 7,553 484 23 — 8,060
Tan Sri Dato’ Thong Yaw Hong — 180 — 369 — 549 420 61 — 1,030
Dato’ Yeoh Chin Kee — 135 — 82 — 217 106 34 — 357
Y.A.M. Tengku Abdul Rahman
Ibni Sultan Haji Ahmad Shah
Al-Mustain Billah — 135 — 82 — 217 90 34 — 341
Dato’ Haji Abdul Aziz bin Omar — 135 — 100 — 235 203 60 — 498
Dato’ Dr. Haji Mohamed Ishak
bin Haji Mohamed Ariff — 135 — 82 — 217 203 53 — 473
Quah Poh Keat — 135 — 82 — 217 202 34 — 453

— 1,035 — 8,111 59 9,205 1,708 299 — 11,212

Total Directors’ remuneration 1,980 1,305 5,400 9,842 108 18,635 2,343 411 — 21,389

PUBLIC BANK BERHAD
ANNUAL REPORT 2009
306 NOTES TO THE FINANCIAL STATEMENTS

39. DIRECTORS’ REMUNERATION (continued)

The total remuneration (including benefits-in-kind) of the Directors of the Bank are as follows (continued):

Remuneration received from

<----------------- Remuneration received from the Bank -----------------> <------ ------>
Subsidiary Companies
Benefits- Benefits-
Other in-kind Bank Other in-kind Group
Salary Fees Bonus Emoluments Others Total Fees Emoluments ESOS Total
2008 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Executive Directors:
Tan Sri Dato’ Sri Tay Ah Lek 936 125 2,702 850 37 4,650 253 78 174 5,155
Dato’ Sri Lee Kong Lam 816 125 2,002 665 36 3,644 175 28 — 3,847

1,752 250 4,704 1,515 73 8,294 428 106 174 9,002

Non-Executive Directors:
Tan Sri Dato’ Sri Dr. Teh Hong Piow — 170 — 6,303 88 6,561 364 36 — 6,961
Tan Sri Dato’ Thong Yaw Hong — 170 — 371 25 566 296 50 — 912
Dato’ Yeoh Chin Kee — 125 — 82 — 207 128 29 24 388
Y.A.M. Tengku Abdul Rahman
Ibni Sultan Haji Ahmad Shah
Al-Mustain Billah — 125 — 82 — 207 30 26 — 263
Dato’ Haji Abdul Aziz bin Omar — 125 — 100 — 225 130 52 — 407
Dato’ Dr. Haji Mohamed Ishak
bin Haji Mohamed Ariff — 125 — 82 — 207 130 46 — 383
Quah Poh Keat — 52 — 35 — 87 48 13 — 148

— 892 — 7,055 113 8,060 1,126 252 24 9,462

Total Directors’ remuneration 1,752 1,142 4,704 8,570 186 16,354 1,554 358 198 18,464

40. ALLOWANCE FOR LOSSES ON LOANS, ADVANCES AND FINANCING

Group Bank

2009 2008 2009 2008

RM’000 RM’000 RM’000 RM’000

Allowance for bad and doubtful debts

and financing:
– general allowance (net) (Note 9) 293,607 232,101 225,120 232,437
– specific allowance (Note 9) 621,338 542,651 244,243 330,367
– specific allowance written back (Note 9) (73,611) (74,660) (57,763) (70,419)
Bad debts recovered from stock-broking activities (512) (9) — —
Bad debts and financing written off 2,308 539 599 385
Bad debts and financing recovered (152,160) (152,060) (90,962) (98,581)

690,970 548,562 321,237 394,189

 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
NOTES TO THE FINANCIAL STATEMENTS 307

41. IMPAIRMENT LOSS

Group Bank

2009 2008 2009 2008

RM’000 RM’000 RM’000 RM’000

Securities available-for-sale 5,572 — 129 —

Securities held-to-maturity — 29,197 — 145
Foreclosed properties 9,407 1,179 9,407 1,179
Property and equipment (Note 18) 67 — — —
Prepaid land lease payments (Note 17) 33 — — —
Intangible assets (Note 19) — 2,486 — —

15,079 32,862 9,536 1,324

42. TAX EXPENSE AND ZAKAT

Group Bank

2009 2008 2009 2008

RM’000 RM’000 RM’000 RM’000

Malaysian income tax 851,970 798,283 701,413 679,512

Overseas income tax 37,061 63,153 4,691 2,777

889,031 861,436 706,104 682,289
(Over)/Under provision in prior years
– Malaysian income tax (3,062) (26,532) — —
– Overseas income tax 1,786 1,589 942 2,519

887,755 836,493 707,046 684,808
Deferred tax (income)/expense (Note 13)
relating to origination and reversal of
temporary differences arising from: (118,112) (80,144) (99,541) (59,977)

• allowance for losses on loans (67,731) (68,028) (56,822) (67,267)

• tax losses (1,623) 791 — —
• excess of capital allowances over depreciation 8,577 (16,813) 7,716 2,822
• deferred handling fees (41,573) 3,611 (28,637) 3,912
• other temporary differences (15,762) 295 (21,798) 556

Tax expense 769,643 756,349 607,505 624,831
Zakat 250 179 — 149

769,893 756,528 607,505 624,980

Domestic income tax is calculated at the Malaysian statutory tax rate of 25% (2008 – 26%) on the estimated chargeable
profit for the year. The computation of deferred tax assets and deferred tax liabilities is also based on the statutory tax rate
of 25%.

Tax in foreign jurisdictions is calculated at the rates prevailing in the respective jurisdictions.
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
308 NOTES TO THE FINANCIAL STATEMENTS

42. TAX EXPENSE AND ZAKAT (continued)

A reconciliation of income tax expense applicable to profit before tax expense at the statutory tax rate to income tax expense
at the effective income tax rate of the Group and of the Bank are as follows:

2009 2008
Group % RM’000 % RM’000

Profit before tax expense 3,321,433 3,379,188

Income tax using Malaysian tax rate of 25%

(2008 – 26%) 25.0 830,358 26.0 878,588
Effects of different tax rates in foreign jurisdictions (1.1) (34,999) (0.9) (30,006)
Income not subject to tax (2.2) (73,393) (2.9) (97,548)
Effects of utilisation of unrecognised benefit
of tax losses 0.0 (1,059) 0.0 (12)
Expenses not deductible for tax purposes 1.3 41,738 0.9 30,270
Income subject to tax at Bank but eliminated at Group 0.2 8,274 0.0 —

23.2 770,919 23.1 781,292
Over provision in prior years — (1,276) (0.7) (24,943)

Tax expense for the year 23.2 769,643 22.4 756,349

2009 2008
Bank % RM’000 % RM’000

Profit before tax expense 2,789,170 2,897,716

Income tax using Malaysian tax rate of 25%

(2008 – 26%) 25.0 697,293 26.0 753,406
Income not subject to tax (3.8) (107,191) (5.2) (151,551)
Expenses not deductible for tax purposes 0.6 16,461 0.7 20,457

21.8 606,563 21.5 622,312
Under provision in prior years — 942 0.1 2,519

Tax expense for the year 21.8 607,505 21.6 624,831

 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
NOTES TO THE FINANCIAL STATEMENTS 309

42. TAX EXPENSE AND ZAKAT (continued)

Group Bank

2009 2008 2009 2008

RM’000 RM’000 RM’000 RM’000

Tax recognised directly in equity

Relating to unrealised gain/(loss)
on securities available-for-sale (Note 33) 97,602 (107,362) 93,556 (96,875)
Relating to net gain on cash flow hedges (Note 33) 2,731 — 2,731 —

Tax recognised directly in equity (Note 13) 100,333 (107,362) 96,287 (96,875)

Tax savings arising from tax losses

Tax savings arising from utilisation of tax losses 1,059 12 — —

43. EARNINGS PER SHARE (EPS)

(a) Basic Earnings Per Share
The calculation of the basic earnings per share is based on the net profit attributable to equity holders of the Bank for
the financial year divided by the weighted average number of ordinary shares of RM1.00 each in issue during the
financial year excluding the weighted average treasury shares held by the Bank.

Group Bank

2009 2008 2009 2008

Net profit attributable to equity holders

of the Bank (RM’000) 2,517,302 2,581,237 2,181,665 2,272,736

’000
Number of ordinary shares at beginning
of the year 3,355,629 3,351,614 3,355,629 3,351,614
Effect of share dividend distributed
during the year 77,718 — 77,718 —
Effects of share options exercised
during the year — 3,527 — 3,527
Effects of shares bought back and held
as treasury shares (11) (13) (11) (13)

Weighted average number of ordinary shares
in issue 3,433,336 3,355,128 3,433,336 3,355,128

Basic earnings per share (sen) 73.3 76.9 63.5 67.7

PUBLIC BANK BERHAD
ANNUAL REPORT 2009
310 NOTES TO THE FINANCIAL STATEMENTS

43. EARNINGS PER SHARE (EPS) (continued)

(b) Diluted Earnings Per Share
The calculation of the diluted earnings per share is based on the net profit attributable to equity holders of the Bank
for the year divided by the adjusted weighted average number of ordinary shares of RM1.00 each in issue or previously
issuable under the exercise of share options granted under the expired Public Bank Berhad Group Employees’ Share
Option Scheme which is set out as follows:

Group Bank

2009 2008 2009 2008

’000
Weighted average number of ordinary shares 3,433,336 3,355,128 3,433,336 3,355,128
Effects of share options — 508 — 508

Adjusted weighted average number of
ordinary shares in issue or issuable 3,433,336 3,355,636 3,433,336 3,355,636

Diluted earnings per share (sen) 73.3 76.9 63.5 67.7

44. DIVIDENDS
Group and Bank

2009 2008
RM’000 RM’000

Dividends recognised as distribution to ordinary equity holders of the Bank:

First interim dividend of 30.0% less 25.0% tax (2008 – 30.0% less 26.0% tax) 776,577 744,952
Final dividend of 40.0% less 26.0% tax and special dividend of 10.0%
less 26.0% tax in respect of the financial year ended 31 December 2007 — 1,241,230
Final dividend of 25.0% less 25.0% tax in respect of the financial year ended
31 December 2008 629,178 —

1,405,755 1,986,182

The final dividend in respect of the financial year ended 31 December 2008 also included a share dividend distribution of
95,834,632 treasury shares on the basis of one (1) PBB treasury share listed and quoted as “Local” on the Main Market of
Bursa Malaysia for every thirty-five (35) ordinary shares of RM1.00 each held in PBB.

Subsequent to the financial year end, on 19 January 2010, the Directors declared a second interim cash dividend of 25.0%,
less 25.0% tax, amounting to approximately RM647,146,625 computed based on the outstanding issued and paid-up capital,
excluding treasury shares held by the Bank, of 3,451,448,666 ordinary shares of RM1.00 each and a share dividend
distribution from the treasury shares held by the Bank, on the basis of one (1) PBB treasury share listed and quoted as
“Local” on the Main Market of Bursa Malaysia for every sixty-eight (68) ordinary shares of RM1.00 each held, fractions of
treasury shares to be disregarded, in respect of the financial year ended 31 December 2009. The financial statements for the
current financial year do not reflect these dividends. Upon declaration, the cash dividend payment will be accounted for in
equity as an appropriation of retained earnings and the share dividend distributed will be accounted for as a transfer of
reserves, during the financial year ending 31 December 2010. The Directors do not propose any final dividend in respect of
the financial year ended 31 December 2009.
 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
NOTES TO THE FINANCIAL STATEMENTS 311

44. DIVIDENDS (CONTINUED)

Accordingly, based on the above, the gross and net dividend declared per share for each financial year are as follows:

Gross per share Net per share

2009 2008 2009 2008

Sen Sen Sen Sen

Dividends per RM1.00 share:

Cash Dividends
Paid:
First interim dividend of 30.0% less 25.0% tax
(2008 – 30.0% less 26.0% tax) 30.0 30.0 22.5 22.2

Declared subsequent to the financial year end:

Final dividend of 25.0% less 25.0% tax — 25.0 — 18.8
Second interim dividend of 25.0% less 25.0% tax 25.0 — 18.8 —

55.0 55.0 41.3 41.0

Share Dividends
Declaration of share dividend on the basis of one (1) PBB treasury share listed and quoted as “Local” on the Main Market
of Bursa Malaysia for every sixty-eight (68) ordinary shares of RM1.00 each held, fractions of treasury shares to be
disregarded (2008 – 1 for 35). Based on the share price of PBB Local shares of RM11.30 per share on 31 December 2009
(2008 – RM8.85 per share), the value of the share dividends attributable to shareholders would be 16.6 sen (2008 – 25.3
sen) per RM1.00 share.

45. RELATED PARTY TRANSACTIONS

Parties are considered to be related if one party has the ability to control the other party or exercise significant influence
over the other party in making financial or operational decisions, or if one other party controls both. The related parties of
the Group and the Bank are:

(i) Subsidiary Companies

Details of the subsidiary companies are shown in Note 14.

(ii) Associated Companies

Associated companies are those entities in which the Group has significant influence but not control, and where it
generally holds interest of between 20% to 50% in the entities as disclosed in Note 15.

(iii) Key Management Personnel

Key management personnel are defined as those persons having authority and responsibility for planning, directing and
controlling the activities of the Group and the Bank either directly or indirectly. The key management personnel of the
Group and the Bank includes Executive Directors and Non-Executive Directors of the Bank and certain members of
senior management of the Bank and heads of major subsidiary companies (including close members of their families)
of the Group.
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
312 NOTES TO THE FINANCIAL STATEMENTS

45. RELATED PARTY TRANSACTIONS (CONTINUED)

(iv) Public Bank Group Officers’ Retirement Benefits Fund
Details of the retirement benefit fund are shown in Note 25(a).

(v) Companies in Which Certain Directors Have Substantial Financial Interest

These are entities in which significant voting power in such entities directly or indirectly resides with certain Directors
of the Bank.

All related party transactions are conducted on normal commercial terms which are not more favourable than those generally
available to the public.

(a) The significant transactions of the Group and the Bank with its related parties are as follows:

Key Companies in which Public Bank Group

Management Certain Directors have Officers’ Retirement
Personnel Substantial Interest Benefits Fund

2009 2008 2009 2008 2009 2008

Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Income earned:
Interest on loans, advances
and financing 2 4 — — 16,320 24,746
Commission income — — 22,777 20,335 — —
Rental income 147 147 2,435 2,277 — —
Brokerage income 4 2 249 100 7 4

153 153 25,461 22,712 16,327 24,750

Expenditure incurred:
Interest on deposits 56,173 81,922 7,306 10,769 1 —
Interest on non-innovative Tier I
stapled securities 65 — — — — —
Rental of premises — — 580 357 15,878 13,612
Insurance premiums — — 23,286 21,610 — —

56,238 81,922 31,172 32,736 15,879 13,612

 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
NOTES TO THE FINANCIAL STATEMENTS 313

45. RELATED PARTY TRANSACTIONS (CONTINUED)

(a) The significant transactions of the Group and the Bank with its related parties are as follows (continued):

Key Companies in which Public Bank Group

Subsidiary Associated Management Certain Directors have Officers’ Retirement
Companies Companies Personnel Substantial Interest Benefits Fund

2009 2008 2009 2008 2009 2008 2009 2008 2009 2008
Bank RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Income earned:
Interest on loans,
advances
and financing 57,306 125,054 49 — 2 4 — — 16,320 24,746
Dividend income
(Note 37(c)) 399,636 354,026 10,379 5,130 — — — — — —
Overhead expenses
recharged 8,819 1,713 — — — — — — — —
Shared service costs
charged (Note 38) 136,415 21,100 — — — — — — — —
Commission income 29,860 33,318 — — — — 22,496 20,103 — —
Commitment fees
and bank
charges received — 1,838 — — — — — — — —
Rental income 1,147 1,165 — — 147 147 11 11 — —

633,183 538,214 10,428 5,130 149 151 22,507 20,114 16,320 24,746

Expenditure incurred:
Interest on deposits 68,029 82,910 — — 56,145 81,644 6,556 8,241 1 —
Interest on
non-innovative Tier I
stapled securities — — — — 65 — — — — —
Rental of premises 24,423 24,403 — — — — 580 357 15,362 13,096
Insurance premiums — — — — — — 19,235 17,938 — —
Brokerage commission 67 110 — — — — — — — —
Corporate
advisory fees 5 2,253 — — — — — — — —
Others 2,613 1,993 — — — — — — — —

95,137 111,669 — — 56,210 81,644 26,371 26,536 15,363 13,096

Included in the significant transactions of the Group are interest on deposits paid to Directors of the Bank (including
close members of their families) amounting to RM56,126,000 (2008 – RM81,823,000) and rental received from a Director
of the Bank amounting to RM147,000 (2008 – RM147,000).

Included in the significant transactions of the Bank are interest on deposits paid to Directors of the Bank (including
close members of their families) amounting to RM56,102,000 (2008 – RM81,568,000) and rental received from a Director
of the Bank amounting to RM147,000 (2008 – RM147,000).
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
314 NOTES TO THE FINANCIAL STATEMENTS

45. RELATED PARTY TRANSACTIONS (continued)

(b) The significant outstanding balances of the Group and the Bank with its related parties are as follows:

Key Companies in which Public Bank Group

Associated Management Certain Directors have Officers’ Retirement
Companies Personnel Substantial Interest Benefits Fund

2009 2008 2009 2008 2009 2008 2009 2008

Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Amount due from

related parties
Interbank lending 46,887 36,476 — — — — — —
Loans, advances and financing — — 132 161 — — 667,737 575,524
Rental deposits — — — — — — 4,091 3,625

46,887 36,476 132 161 — — 671,828 579,149

Amount due to
related parties
Demand deposits 1,393 650 27,385 57,889 5,031 5,066 1,459 1,429
Short-term deposits 58,984 271,217 2,318,289 2,216,244 148,691 141,387 — —
Non-innovative Tier I
stapled securities — — 1,650 — — — — —
Others — — 243 4 — — 47 154

60,377 271,867 2,347,567 2,274,137 153,722 146,453 1,506 1,583

 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
NOTES TO THE FINANCIAL STATEMENTS 315

45. RELATED PARTY TRANSACTIONS (continued)

(b) The significant outstanding balances of the Group and the Bank with its related parties are as follows (continued):

Key Companies in which Public Bank Group
Subsidiary Associated Management Certain Directors have Officers’ Retirement
Companies Companies Personnel Substantial Interest Benefits Fund

2009 2008 2009 2008 2009 2008 2009 2008 2009 2008
Bank RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Amount due from

related parties
Interbank lending 5,328,245 6,427,728 46,887 36,476 — — — — — —
Loans, advances
and financing 323,794 254,394 — — 132 161 — — 667,737 575,524
Dividend receivable
(Note 11) 366,489 231,265 — — — — — — — —
Rental deposits 32,635 32,601 — — — — — — 3,962 3,496
Interest receivable 797 25,260 — — — — — — — —
Others 18,534 766,615 — — — — — — — —

6,070,494 7,737,863 46,887 36,476 132 161 — — 671,699 579,020

Amount due to
related parties
Demand deposits 61,624 141,503 1,393 650 27,352 57,781 5,031 5,066 1,459 1,429
Short-term deposits 1,773,829 507,991 58,984 271,217 2,317,333 2,205,883 139,000 88,488 — —
Non-innovative Tier I
stapled securities — — — — 1,650 — — — — —
Interbank borrowing 4,957,133 3,680,054 — — — — — — — —
Subordinated notes 20,217 20,025 — — — — — — — —
Interest payable 2,140 5,773 — — — — — — — —
Others 11,786 11,828 — — — — — — 47 154

6,826,729 4,367,174 60,377 271,867 2,346,335 2,263,664 144,031 93,554 1,506 1,583


Included in the significant outstanding balances of the Group are demand deposits and short-term deposits payable to
Directors of the Bank (including close members of their families) amounting to RM2,342,941,000 (2008 –
RM2,270,913,000).

Included in the significant outstanding balances of the Bank are demand deposits and short-term deposits payable to
Directors of the Bank (including close members of their families) amounting to RM2,342,781,000 (2008 –
RM2,261,482,000).
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
316 NOTES TO THE FINANCIAL STATEMENTS

45. RELATED PARTY TRANSACTIONS (continued)

(c) There were no loans granted to the Directors of the Bank. Loans made to other key management personnel of the
Group and the Bank are on similar terms and conditions generally available to other employees within the Group.

No provisions have been recognised in respect of loans granted to key management personnel (2008 – Nil).

(d) Key Management Personnel Compensation

The remuneration of Directors and other members of key management during the year are as follows:

Group Bank

2009 2008 2009 2008

RM’000 RM’000 RM’000 RM’000

Short-term employee benefits

Fees 3,648 2,696 1,305 1,142
Salary and other remuneration,
including meeting allowances 22,609 19,912 18,638 16,534
Benefits-in-kind
– arising from exercise of share options — 198 — —
– others 598 655 158 235
Post-employment benefits 3,727 3,250 3,301 2,903

30,582 26,711 23,402 20,814

Included in the total key management personnel compensation are:

Group Bank

2009 2008 2009 2008

RM’000 RM’000 RM’000 RM’000

Directors’ remuneration including

benefits-in-kind
– Directors of the Bank 21,389 18,464 18,635 16,354

 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
NOTES TO THE FINANCIAL STATEMENTS 317

45. RELATED PARTY TRANSACTIONS (continued)

(d) Key Management Personnel Compensation (continued)
The movement in share options of key management personnel is as follows:

PFHL ESOS

2009 2008
’000 ’000

At 1 January 4,478 5,988

Exercised — (1,510)
Lapsed (550) —

At 31 December 3,928 4,478

The share options were granted on the same terms and conditions as those offered to other employees of the Group
(Note 25(b)).

46. CREDIT TRANSACTIONS AND EXPOSURES WITH CONNECTED PARTIES

Group Bank

2009 2008 2009 2008

RM’000 RM’000 RM’000 RM’000

Oustanding credit exposures

with connected parties 713,200 1,031,884 922,351 1,319,862
of which:
Total credit exposure which is
non-performing or in default 163 1,278 156 1,278

Total credit exposures 134,203,958 120,017,622 119,388,052 107,573,353

Percentage of outstanding credit exposures

to connected parties
– as a proportion of total credit exposures 0.53% 0.86% 0.77% 1.23%
– as a proportion of capital base 3.88% 6.54% 6.26% 10.37%
– which is non-performing or in default 0.02% 0.12% 0.02% 0.10%

PUBLIC BANK BERHAD
ANNUAL REPORT 2009
318 NOTES TO THE FINANCIAL STATEMENTS

46. CREDIT TRANSACTIONS AND EXPOSURES WITH CONNECTED PARTIES (continued)

The disclosure on Credit Transactions and Exposures with Connected Parties above is presented in accordance with para
9.1 of Bank Negara Malaysia’s revised Guidelines on Credit Transactions and Exposures with Connected Parties.

Based on these guidelines, a connected party refers to the following:

(i) Directors of the Bank and their close relatives;

(ii) Controlling shareholder and his close relatives;
(iii) Executive officer, being a member of management having authority and responsibility for planning, directing and/or
controlling the activities of the Bank, and his close relatives;
(iv) Officers who are responsible for or have the authority to appraise and/or approve credit transactions or review the status
of existing credit transactions, either as a member of a committee or individually, and their close relatives;
(v) Firms, partnerships, companies or any legal entities which control, or are controlled by any person listed in (i) to (iv)
above, or in which they have an interest, as a director, partner, executive officer, agent or guarantor, and their
subsidiaries or entities controlled by them;
(vi) Any person for whom the persons listed in (i) to (iv) above is a guarantor; and
(vii) Subsidiary of or an entity controlled by the Bank and its connected parties.

Credit transactions and exposures to connected parties as disclosed above includes the extension of credit facilities and/or
off-balance sheet credit exposures such as guarantees, trade-related facilities and loan commitments. It also includes
holdings of equities and private debt securities issued by the connected parties.

The credit transactions with connected parties above are all transacted on an arm’s length basis and on terms and conditions
no more favourable than those entered into with other counterparties with similar circumstances and credit worthiness. Due
care has been taken to ensure that the credit worthiness of the connected party is not less than that normally required of
other persons.

47. FINANCIAL RISK MANAGEMENT

Overview
The Group’s and the Bank’s risk management practice seeks to ensure that adequate financial resources are available for
the development of the Group’s and the Bank’s businesses whilst managing its key areas of credit, market, liquidity and
operational risks.

The Group’s overall risk management framework, including the risk governance and the Group’s risk management process
are set out in the Risk Management section of the Annual Report.

(a) Credit Risk

Credit risk is the potential loss of revenue as a result of defaults by borrowers or counterparties through the Group’s
lending, hedging, trading and investing activities. The primary exposure to credit risk arises through its loans, advances
and financing as well as financial transactions with counterparties including interbank money market activities, derivative
instruments used for hedging and debt securities. The amount of credit exposure is represented by the carrying amounts
of the assets in the balance sheet.

The management of credit risk is governed by credit policies and guidelines documenting the lending standards,
discretionary power for loans approval, credit risk rating, collateral and valuation, review, rehabilitation and restructuring
of problematic and delinquent loans. The management of counterparties are guided by counterparty limit, counterparty
ratings, tenure and types of permissible transactions and these are subject to regular review.

(i) The credit exposure arising from credit concentration risk are set out below:

Credit Risk Concentration

A concentration of credit risk exists when a number of counterparties are engaged in similar activities and have
similar economic characteristics that would cause their ability to meet contractual obligations to be similarly affected
by changes in economic and other conditions. The analyses of credit risk concentration presented below relates
only to financial assets subject to credit risk and are based on the industry in which the customer is engaged.
 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
NOTES TO THE FINANCIAL STATEMENTS 319

47. FINANCIAL RISK MANAGEMENT (continued)

(a) Credit Risk (continued)
Credit Risk Concentration (continued)

Transport Agriculture,
Government and Manufacturing, Construction Motor Other
Group and Central Financial Business Wholesale & & Real Residential Vehicle Consumer
2009 Banks Services Services Retail Trade Estate Mortgages Financing Loans Total
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

On-Balance Sheet
Financial Assets
Cash and short-term funds 38,672,566 4,807,886 — — — — — — 43,480,452
Deposits and placements
with banks and
other financial institutions 2,825,000 357,704 — — — — — — 3,182,704
Securities purchased under
resale agreements 1,200,243 — — — — — — — 1,200,243
Securities held-for-trading 1,501,020 6,424,928 31,257 — 70 — — — 7,957,275
Securities available-for-sale 4,838,654 4,667,560 1,531,614 1,126,142 1,807 — — — 12,165,777
Securities held-to-maturity 3,554,419 2,919,967 75,587 5,073 65,161 — — — 6,620,207
Gross loans, advances
and financing — 7,680,286 2,816,284 23,694,232 15,240,013 37,211,245 26,326,889 24,641,478 137,610,427
Derivative financial assets — 310,311 — — — — — — 310,311
Statutory deposits with
Central Banks 1,022,181 — — — — — — — 1,022,181

Total 53,614,083 27,168,642 4,454,742 24,825,447 15,307,051 37,211,245 26,326,889 24,641,478 213,549,577


Group
2008

On-Balance Sheet
Financial Assets
Cash and short-term funds 32,798,470 3,798,557 — — — — — — 36,597,027
Deposits and placements
with banks and
other financial institutions 1,000,000 941,445 — — — — — — 1,941,445
Securities purchased under
resale agreements 5,141,746 — — — — — — — 5,141,746
Securities held-for-trading 1,195,581 10,138,161 10,833 5,212 55 — — — 11,349,842
Securities available-for-sale 88,502 2,916,302 1,580,619 1,037,381 3,568 — — — 5,626,372
Securities held-to-maturity 3,890,039 4,271,196 60,463 52 64,969 — — — 8,286,719
Gross loans, advances
and financing — 6,785,617 2,250,705 21,501,352 12,434,968 31,228,660 24,345,338 21,771,944 120,318,584
Derivative financial assets — 590,229 — — — — — — 590,229
Statutory deposits with
Central Banks 2,636,708 — — — — — — — 2,636,708

Total 46,751,046 29,441,507 3,902,620 22,543,997 12,503,560 31,228,660 24,345,338 21,771,944 192,488,672

PUBLIC BANK BERHAD
ANNUAL REPORT 2009
320 NOTES TO THE FINANCIAL STATEMENTS

47. FINANCIAL RISK MANAGEMENT (continued)

(a) Credit Risk (continued)
Credit Risk Concentration (continued)

Transport Agriculture,
Government and Manufacturing, Construction Motor Other
Bank and Central Financial Business Wholesale & & Real Residential Vehicle Consumer
2009 Banks Services Services Retail Trade Estate Mortgages Financing Loans Total
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

On-Balance Sheet
Financial Assets
Cash and short-term funds 29,000,500 2,868,126 — — — — — — 31,868,626
Deposits and placements
with banks and other
financial institutions 2,625,000 490,967 — — — — — — 3,115,967
Securities held-for-trading 1,345,778 6,309,112 855 — 70 — — — 7,655,815
Securities available-for-sale 3,962,044 4,415,814 1,200,587 877,979 1,735 — — — 10,458,159
Securities held-to-maturity 3,251,823 4,249,693 70,530 51 65,161 — — — 7,637,258
Gross loans, advances
and financing — 6,815,720 2,380,292 20,564,854 13,784,946 32,243,051 16,789,954 17,110,487 109,689,304
Derivative financial assets — 302,861 — — — — — — 302,861
Statutory deposits
with Central Banks 588,362 — — — — — — — 588,362

Total 40,773,507 25,452,293 3,652,264 21,442,884 13,851,912 32,243,051 16,789,954 17,110,487 171,316,352

Bank
2008

On-Balance Sheet
Financial Assets
Cash and short-term funds 25,681,066 3,883,893 — — — — — — 29,564,959
Deposits and placements
with banks and other
financial institutions 1,000,000 2,834,326 — — — — — — 3,834,326
Securities purchased under
resale agreements 4,762,407 — — — — — — — 4,762,407
Securities held-for-trading 1,145,774 9,699,987 813 112 55 — — — 10,846,741
Securities available-for-sale 53,105 2,795,466 1,190,833 871,221 3,519 — — — 4,914,144
Securities held-to-maturity 3,742,117 5,696,978 60,463 52 64,969 — — — 9,564,579
Gross loans, advances
and financing — 6,155,949 2,138,509 17,742,140 11,294,459 27,062,600 15,220,212 15,076,863 94,690,732
Derivative financial assets — 589,715 — — — — — — 589,715
Statutory deposits
with Central Banks 1,998,200 — — — — — — — 1,998,200

Total 38,382,669 31,656,314 3,390,618 18,613,525 11,363,002 27,062,600 15,220,212 15,076,863 160,765,803

 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
NOTES TO THE FINANCIAL STATEMENTS 321

47. FINANCIAL RISK MANAGEMENT (continued)

(a) Credit Risk (continued)
(ii) The main types of collateral obtained by the Group and the Bank to mitigate credit risk are as follows:

• for personal housing loans – mortgages over residential properties

• for commercial property loans – charges over the properties being financed
• for motor vehicle financing – charges over the vehicles financed
• for share margin financing – securities from listed exchange
• for other loans – charges over business assets such as premises, inventories, trade receivables or deposits

(iii) The status of loans, advances and financing of the Group and the Bank that had been rescheduled/restructured
are as follows:

Group Bank

2009 2008 2009 2008

RM’000 RM’000 RM’000 RM’000

Current 2,079,190 1,909,454 1,793,981 1,844,493

Past Due 711,936 186,062 522,109 158,499
Non-performing 154,474 31,587 62,157 27,147

2,945,600 2,127,103 2,378,247 2,030,139

(b) Market Risk

Market risk is the risk of loss arising from adverse movements in the level of market prices or rates. The market risk
of the Group and the Bank can be identified into trading market risk and non-trading market risk.

Trading Market Risk – Trading market risk arises from changes in interest rates, foreign exchange rates, equity prices
and credit spreads on the value of assets held for trading.

Non-Trading Market Risk – Non-trading market risk arises from changes in interest rates, foreign exchange rates and
equity prices. The Group’s and the Bank’s main non-trading market risk is interest rate risk, arising from the re-pricing
mismatches of its assets and liabilities from its banking activities and also the Group’s and the Bank’s investment of
surplus funds.

(i) Interest Rate Risk

Interest rate risk is the impact to earnings and economic value of the Group due to fluctuations in interest rates.
Interest rate exposure arises from differences in the maturity and repricing dates of assets, liabilities and off-
balance sheet items. These mismatches are actively monitored and managed as part of the overall interest rate
risk management process which is conducted in accordance with the Group’s policies as approved by the Risk
Management Committee.

(a) The following tables indicate the effective interest rates at the balance sheet date and the Group’s and the
Bank’s sensitivity to interest rates by time band based on the earlier of contractual repricing date and maturity
date. Actual repricing dates may differ from contractual repricing dates due to prepayment of loans or early
withdrawal of deposits.
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
322 NOTES TO THE FINANCIAL STATEMENTS

47. FINANCIAL RISK MANAGEMENT (continued)

(b) Market Risk (continued)
(i) Interest Rate Risk (continued)
The Group and the Bank are exposed to various risks associated with the effects of fluctuations in the prevailing
levels of market interest rates on its financial position and cash flows. The following tables indicate the effective
interest rates at the balance sheet date and the periods in which the financial instruments reprice or mature,
whichever is earlier.

<----------------------------------------------------------------- Non trading book ----------------------------------------------------------------->

Non- Effective
Group Up to > 1 - 3 > 3 - 12 > 1 - 2 > 2 - 3 > 3 - 4 > 4 - 5 Over 5 interest Trading interest
2009 1 month months months years years years years years sensitive book Total rate
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 %

ASSETS
Cash and short-term funds 42,368,283 — — — — — — — 1,112,169 — 43,480,452 1.95
Deposits and placements
with banks and other
financial institutions 4,427 3,088,957 89,320 — — — — — — — 3,182,704 2.00
Securities purchased
under resale agreements — — — — — — — — — 1,200,243 1,200,243 2.01
Securities held-for-trading — — — — — — — — — 7,957,275 7,957,275 2.20
Securities available-for-sale — 157,102 92,240 4,447,443 321,980 42,710 1,415,317 1,087,872 4,601,113 — 12,165,777 2.16
Securities held-to-maturity 1,673,687 960,226 1,429,223 847,321 517,227 315,929 603,682 184,166 88,746 — 6,620,207 2.99
Loans, advances
and financing
– performing 86,823,139 8,118,975 9,954,579 7,977,834 6,575,325 5,151,787 3,286,607 8,402,554 — — 136,290,800 5.34
– non-performing * — — — — — — — — (955,016) — (955,016) —
Other non-interest
sensitive balances — — — — — — — — 7,165,175 28,537 7,193,712 —

TOTAL ASSETS 130,869,536 12,325,260 11,565,362 13,272,598 7,414,532 5,510,426 5,305,606 9,674,592 12,012,187 9,186,055 217,136,154

LIABILITIES AND EQUITY

Deposits from customers 86,999,103 36,225,731 27,192,665 385,139 171,199 269,979 173,724 — 19,474,049 — 170,891,589 1.87
Deposits and placements
of banks and other
financial institutions 13,023,409 8,783,194 634,522 8,506 — — — — 164,669 — 22,614,300 2.06
Bills and acceptances
payable 7,481 14,963 — — — — — — 590,286 — 612,730 2.15
Recourse obligations on
loans sold to Cagamas 2,402 2,382 7,848 5,547 3,584 — — — — — 21,763 4.19
Borrowings 653,101 — — — — — — — — — 653,101 1.72
Subordinated notes — — — — 1,371,200 1,379,783 473,000 — 111,339 — 3,335,322 2.14
Innovative Tier I
capital securities — — — — — — — 1,885,600 86,733 — 1,972,333 2.71
Non-innovative Tier I
stapled securities — — — — — — — 2,088,000 (16,411) — 2,071,589 5.05
Other non-interest
sensitive balances — — — — — — — — 3,120,230 127,873 3,248,103 —

Total Liabilities 100,685,496 45,026,270 27,835,035 399,192 1,545,983 1,649,762 646,724 3,973,600 23,530,895 127,873 205,420,830
Equity attributable to equity
holders of the Bank — — — — — — — — 11,023,206 — 11,023,206 —
Minority interests — — — — — — — — 692,118 — 692,118 —

TOTAL LIABILITIES
AND EQUITY 100,685,496 45,026,270 27,835,035 399,192 1,545,983 1,649,762 646,724 3,973,600 35,246,219 127,873 217,136,154

 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
NOTES TO THE FINANCIAL STATEMENTS 323

47. FINANCIAL RISK MANAGEMENT (continued)

(b) Market Risk (continued)
(i) Interest Rate Risk (continued)

<----------------------------------------------------------------- Non trading book ----------------------------------------------------------------->

Non- Effective
Group Up to > 1 - 3 > 3 - 12 > 1 - 2 > 2 - 3 > 3 - 4 > 4 - 5 Over 5 interest Trading interest
2009 1 month months months years years years years years sensitive book Total rate
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 %

On-balance sheet interest

sensitivity gap 30,184,040 (32,701,010) (16,269,673) 12,873,406 5,868,549 3,860,664 4,658,882 5,700,992 (23,234,032) 9,058,182 —
Off-balance sheet interest
sensitivity gap
(interest rate swaps) 833,600 (3,884,040) (1,419,192) (51,940) 1,019,252 1,552,000 (1,049,860) 3,000,180 — — —

TOTAL INTEREST
SENSITIVITY GAP 31,017,640 (36,585,050) (17,688,865) 12,821,466 6,887,801 5,412,664 3,609,022 8,701,172 (23,234,032) 9,058,182 —

* This is arrived at after deducting the general allowance and specific allowance from the outstanding gross non-performing loans.

<----------------------------------------------------------------- Non trading book ----------------------------------------------------------------->

Non- Effective
Group Up to > 1 - 3 > 3 - 12 > 1 - 2 > 2 - 3 > 3 - 4 > 4 - 5 Over 5 interest Trading interest
2008 1 month months months years years years years years sensitive book Total rate
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 %

ASSETS
Cash and short-term funds 33,979,116 — — — — — — — 2,617,911 — 36,597,027 3.24
Deposits and placements
with banks and other
financial institutions 4,496 1,581,038 179,393 — — — — — 176,518 — 1,941,445 3.74
Securities purchased
under resale agreements 3,962,485 799,922 — — — — — — — 379,339 5,141,746 2.96
Securities held-for-trading — — — — — — — — — 11,349,842 11,349,842 3.39
Securities available-for-sale 87,591 — 553,321 161,004 411,816 332,671 — 1,494,450 2,585,519 — 5,626,372 3.71
Securities held-to-maturity 2,722,137 2,422,240 1,057,146 984,232 308,723 312,084 127,921 263,451 88,785 — 8,286,719 3.76
Loans, advances
and financing
– performing 74,633,947 6,187,337 9,973,247 7,192,884 6,048,162 4,628,514 3,655,891 7,138,512 — — 119,458,494 6.12
– non-performing * — — — — — — — — (722,190) — (722,190) —
– Islamic house
financing
sold to Cagamas (200,008) (150,001) — — — — — — — — (350,009) 3.74
Other non-interest
sensitive balances — — — — — — — — 8,730,572 103,088 8,833,660 —

TOTAL ASSETS 115,189,764 10,840,536 11,763,107 8,338,120 6,768,701 5,273,269 3,783,812 8,896,413 13,477,115 11,832,269 196,163,106

PUBLIC BANK BERHAD
ANNUAL REPORT 2009
324 NOTES TO THE FINANCIAL STATEMENTS

47. FINANCIAL RISK MANAGEMENT (continued)

(b) Market Risk (continued)
(i) Interest Rate Risk (continued)

<----------------------------------------------------------------- Non trading book ----------------------------------------------------------------->

Non- Effective
Group Up to > 1 - 3 > 3 - 12 > 1 - 2 > 2 - 3 > 3 - 4 > 4 - 5 Over 5 interest Trading interest
2008 1 month months months years years years years years sensitive book Total rate
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 %

LIABILITIES AND EQUITY

Deposits from customers 87,995,916 21,186,551 24,350,228 345,119 334,486 179,881 257,695 12,560 16,522,862 — 151,185,298 2.98
Deposits and placements
of banks and other
financial institutions 10,011,625 4,481,695 1,225,826 — — — — — 964,999 — 16,684,145 3.15
Bills and acceptances
payable 848,427 1,392,527 309,942 — — — — — 511,478 — 3,062,374 3.59
Recourse obligations on
loans sold to Cagamas 1,206,190 3,309,160 18,090 3,379 458 — — — — — 4,537,277 3.63
Borrowings 860,234 — — — — — — — — — 860,234 1.11
Subordinated notes — — 1,233,361 — — 1,494,279 1,450,555 — — — 4,178,195 3.65
Innovative Tier I
capital securities — — — — — — — 2,124,484 — — 2,124,484 4.33
Other non-interest
sensitive balances — — — — — — — — 3,073,076 229,291 3,302,367 —

Total Liabilities 100,922,392 30,369,933 27,137,447 348,498 334,944 1,674,160 1,708,250 2,137,044 21,072,415 229,291 185,934,374
Equity attributable to equity
holders of the Bank — — — — — — — — 9,536,706 — 9,536,706 —
Minority interests — — — — — — — — 692,026 — 692,026 —

TOTAL LIABILITIES
AND EQUITY 100,922,392 30,369,933 27,137,447 348,498 334,944 1,674,160 1,708,250 2,137,044 31,301,147 229,291 196,163,106

On-balance sheet
interest sensitivity gap 14,267,372 (19,529,397) (15,374,340) 7,989,622 6,433,757 3,599,109 2,075,562 6,759,369 (17,824,032) 11,602,978 —
Off-balance sheet
interest sensitivity gap
(interest rate swaps) 391,480 (2,810,423) (257,962) (67,793) (55,773) 1,070,531 1,500,000 229,940 — — —

TOTAL INTEREST
SENSITIVITY GAP 14,658,852 (22,339,820) (15,632,302) 7,921,829 6,377,984 4,669,640 3,575,562 6,989,309 (17,824,032) 11,602,978 —

* This is arrived at after deducting the general allowance and specific allowance from the outstanding gross non-performing loans.
 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
NOTES TO THE FINANCIAL STATEMENTS 325

47. FINANCIAL RISK MANAGEMENT (continued)

(b) Market Risk (continued)
(i) Interest Rate Risk (continued)

<----------------------------------------------------------------- Non trading book ----------------------------------------------------------------->

Non- Effective
Bank Up to > 1 - 3 > 3 - 12 > 1 - 2 > 2 - 3 > 3 - 4 > 4 - 5 Over 5 interest Trading interest
2009 1 month months months years years years years years sensitive book Total rate
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 %

ASSETS
Cash and short-term funds 31,084,709 — — — — — — — 783,917 — 31,868,626 2.00
Deposits and placements
with banks and other
financial institutions — 3,115,967 — — — — — — — — 3,115,967 1.93
Securities held-for-trading — — — — — — — — — 7,655,815 7,655,815 2.19
Securities available-for-sale — — 92,240 3,913,097 311,948 42,710 1,283,288 735,840 4,079,036 — 10,458,159 2.27
Securities held-to-maturity 682,719 597,821 3,231,100 882,313 1,076,628 295,592 598,625 184,166 88,294 — 7,637,258 3.30
Loans, advances
and financing
– performing 75,980,384 6,294,293 7,133,200 5,350,893 4,456,673 3,543,717 2,037,082 4,079,706 — — 108,875,948 5.08
– non-performing * — — — — — — — — (913,141) — (913,141) —
Other non-interest
sensitive balances — — — — — — — — 7,854,582 23,387 7,877,969 —

TOTAL ASSETS 107,747,812 10,008,081 10,456,540 10,146,303 5,845,249 3,882,019 3,918,995 4,999,712 11,892,688 7,679,202 176,576,601

LIABILITIES AND EQUITY

Deposits from customers 66,969,784 27,457,604 23,287,497 254,755 168,135 269,324 172,067 — 16,808,324 — 135,387,490 2.04
Deposits and placements
of banks and other
financial institutions 12,118,917 8,150,076 19,862 273,636 — — — — 221,438 — 20,783,929 1.68
Bills and acceptances
payable 7,481 14,963 — — — — — — 590,286 — 612,730 2.15
Recourse obligations on
loans sold to Cagamas 2,402 2,382 7,848 5,547 3,584 — — — — — 21,763 4.19
Subordinated notes — — — — 1,371,200 1,400,000 473,000 — 111,339 — 3,355,539 2.14
Innovative Tier I
capital securities — — — — — — — 1,885,600 86,733 — 1,972,333 2.71
Non-innovative Tier I
stapled securities — — — — — — — 2,088,000 (16,411) — 2,071,589 5.05
Other non-interest
sensitive balances — — — — — — — — 1,801,880 127,136 1,929,016 —

Total Liabilities 79,098,584 35,625,025 23,315,207 533,938 1,542,919 1,669,324 645,067 3,973,600 19,603,589 127,136 166,134,389
Equity attributable to equity
holders of the Bank — — — — — — — — 10,442,212 — 10,442,212 —

TOTAL LIABILITIES
AND EQUITY 79,098,584 35,625,025 23,315,207 533,938 1,542,919 1,669,324 645,067 3,973,600 30,045,801 127,136 176,576,601

PUBLIC BANK BERHAD
ANNUAL REPORT 2009
326 NOTES TO THE FINANCIAL STATEMENTS

47. FINANCIAL RISK MANAGEMENT (continued)

(b) Market Risk (continued)
(i) Interest Rate Risk (continued)

<----------------------------------------------------------------- Non trading book ----------------------------------------------------------------->

Non- Effective
Bank Up to > 1 - 3 > 3 - 12 > 1 - 2 > 2 - 3 > 3 - 4 > 4 - 5 Over 5 interest Trading interest
2009 1 month months months years years years years years sensitive book Total rate
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 %

On-balance sheet
interest sensitivity gap 28,649,228 (25,616,944) (12,858,667) 9,612,365 4,302,330 2,212,695 3,273,928 1,026,112 (18,153,113) 7,552,066 —
Off-balance sheet
interest sensitivity gap
(interest rate swaps) 713,620 (4,226,840) (1,487,752) 16,620 1,019,252 1,552,000 (929,880) 3,342,980 — — —

TOTAL INTEREST
SENSITIVITY GAP 29,362,848 (29,843,784) (14,346,419) 9,628,985 5,321,582 3,764,695 2,344,048 4,369,092 (18,153,113) 7,552,066 —

* This is arrived at after deducting the general allowance and specific allowance from the outstanding gross non-performing loans.

<----------------------------------------------------------------- Non trading book ----------------------------------------------------------------->

Non- Effective
Bank Up to > 1 - 3 > 3 - 12 > 1 - 2 > 2 - 3 > 3 - 4 > 4 - 5 Over 5 interest Trading interest
2008 1 month months months years years years years years sensitive book Total rate
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 %

ASSETS
Cash and short-term funds 27,458,539 — — — — — — — 2,106,420 — 29,564,959 3.22
Deposits and placements
with banks and other
financial institutions — 2,605,145 1,052,664 — — — — — 176,517 — 3,834,326 3.99
Securities purchased
under resale agreements 3,962,485 799,922 — — — — — — — — 4,762,407 2.91
Securities held-for-trading — — — — — — — — — 10,846,741 10,846,741 3.38
Securities available-for-sale 77,968 — 528,153 161,004 557,770 332,671 — 1,176,513 2,080,065 — 4,914,144 3.46
Securities held-to-maturity 2,578,577 1,919,408 1,291,322 2,589,255 399,220 312,084 122,930 263,451 88,332 — 9,564,579 3.73
Loans, advances and
financing
– performing 65,590,132 3,929,734 6,592,174 4,639,410 3,978,219 3,012,085 2,430,455 3,562,194 — — 93,734,403 5.98
– non-performing * — — — — — — — — (560,112) — (560,112) —
Other non-interest
sensitive balances — — — — — — — — 9,934,833 102,574 10,037,407 —

TOTAL ASSETS 99,667,701 9,254,209 9,464,313 7,389,669 4,935,209 3,656,840 2,553,385 5,002,158 13,826,055 10,949,315 166,698,854

 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
NOTES TO THE FINANCIAL STATEMENTS 327

47. FINANCIAL RISK MANAGEMENT (continued)

(b) Market Risk (continued)
(i) Interest Rate Risk (continued)

<----------------------------------------------------------------- Non trading book ----------------------------------------------------------------->

Non- Effective
Bank Up to > 1 - 3 > 3 - 12 > 1 - 2 > 2 - 3 > 3 - 4 > 4 - 5 Over 5 interest Trading interest
2008 1 month months months years years years years years sensitive book Total rate
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 %

LIABILITIES AND EQUITY

Deposits from customers 69,620,395 16,235,247 23,062,244 208,907 190,523 179,289 256,930 12,560 14,324,764 — 124,090,859 3.08
Deposits and placements
of banks and other
financial institutions 10,742,387 4,438,079 1,403,970 — 266,817 — — — 241,653 — 17,092,906 2.91
Bills and acceptances
payable 848,427 1,392,527 309,942 — — — — — 511,478 — 3,062,374 3.59
Recourse obligations on
loans sold to Cagamas 1,206,190 3,309,160 18,090 3,379 458 — — — — — 4,537,277 3.63
Subordinated notes — — 1,233,361 — — 1,494,279 1,470,580 — — — 4,198,220 3.65
Innovative Tier I
capital securities — — — — — — — 2,124,484 — — 2,124,484 4.33
Other non-interest
sensitive balances — — — — — — — — 1,973,469 227,436 2,200,905 —

Total Liabilities 82,417,399 25,375,013 26,027,607 212,286 457,798 1,673,568 1,727,510 2,137,044 17,051,364 227,436 157,307,025
Equity attributable to equity
holders of the Bank — — — — — — — — 9,391,829 — 9,391,829 —

TOTAL LIABILITIES
AND EQUITY 82,417,399 25,375,013 26,027,607 212,286 457,798 1,673,568 1,727,510 2,137,044 26,443,193 227,436 166,698,854

On-balance sheet
interest sensitivity gap 17,250,302 (16,120,804) (16,563,294) 7,177,383 4,477,411 1,983,272 825,875 2,865,114 (12,617,138) 10,721,879 —
Off-balance sheet
interest sensitivity gap
(interest rate swaps) 166,288 (3,101,777) (174,478) (67,793) 13,517 1,070,531 1,500,000 593,712 — — —

TOTAL INTEREST
SENSITIVITY GAP 17,416,590 (19,222,581) (16,737,772) 7,109,590 4,490,928 3,053,803 2,325,875 3,458,826 (12,617,138) 10,721,879 —

* This is arrived at after deducting the general allowance and specific allowance from the outstanding gross non-performing loans.
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
328 NOTES TO THE FINANCIAL STATEMENTS

47. FINANCIAL RISK MANAGEMENT (continued)

(b) Market Risk (continued)
(i) Interest Rate Risk (continued)
(b) The impact on net interest income is simulated under various interest rate assumptions. The following table
sets out the impact on net interest income based on a 50 bps parallel shift in interest rates at the beginning
of the year from 1 January for a period of 12 months, as follows:

2009 2008
RM’000 RM’000

Group
+/-50bps +/-106,752 +/-81,403

Bank
+/-50bps +/-  95,773 +/-80,214

The 50 bps shock impact on net interest income is based on simplified scenarios, using the Group’s interest
rate risk profile as at the reporting date. It does not take into account actions that would be taken by the
Treasury Division or business units to mitigate the impact of the interest rate risk. In reality, Treasury Division
seeks to proactively change the interest rate risk profile to minimise losses and maximise net revenues. The
projection assumes that interest rates of all maturities move by the same amount and, therefore, do not reflect
the potential impact on net interest income of some rates changing while others remain unchanged. The
projections also assume a constant balance sheet position and that all positions run to maturity.

(ii) Foreign Currency Exchange Risk

Foreign currency exchange risk refers to adverse exchange rate movements on foreign currency positions
originating from treasury money market activities and from the Group’s investments and retained earnings in its
subsidiary companies, branches and associated companies, whose functional currencies are not in Ringgit
Malaysia. The main foreign currencies in which the Group’s businesses are transacted in are Hong Kong Dollars
and US Dollars.

(a) The following table summarises the assets, liabilities and net open position by currency as at the balance
sheet date, which are mainly in Ringgit Malaysia, Hong Kong Dollars and US Dollars. Others mainly include
exposure to Euros, Australian Dollars, Chinese Renminbi, New Zealand Dollars, Sri Lanka Rupees, Great
Britain Pounds and Japanese Yen.
 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
NOTES TO THE FINANCIAL STATEMENTS 329

47. FINANCIAL RISK MANAGEMENT (continued)

(b) Market Risk (continued)
(ii) Foreign Currency Exchange Risk (continued)

Group Malaysian Hong Kong United States

2009 Ringgit Dollars Dollars Others Total
RM’000 RM’000 RM’000 RM’000 RM’000

ASSETS
Cash and short-term funds 40,037,476 1,163,389 1,888,336 391,251 43,480,452
Deposits and placements with banks
and other financial institutions 3,073,105 79,489 — 30,110 3,182,704
Securities purchased under
resale agreements 1,200,243 — — — 1,200,243
Securities held-for-trading 7,957,275 — — — 7,957,275
Securities available-for-sale 9,458,287 3,006 2,697,505 6,979 12,165,777
Securities held-to-maturity 4,703,680 400,144 280,518 1,235,865 6,620,207
Loans, advances and financing 120,846,789 10,543,175 3,540,110 405,710 135,335,784
Derivative financial assets 126,560 5,150 178,601 — 310,311
Other assets 1,194,791 202,783 129,088 231,916 1,758,578
Statutory deposits with Central Banks 716,923 — 305,258 — 1,022,181
Deferred tax assets 496,327 3,227 7,014 39 506,607
Investment in associated companies 1,708 — 126,610 — 128,318
Investment properties 1,850 67,350 127 — 69,327
Prepaid land lease payments 9,335 279,893 — — 289,228
Property and equipment 899,491 63,829 86,797 1,434 1,051,551
Intangible assets 769,251 1,288,360 — — 2,057,611

TOTAL ASSETS 191,493,091 14,099,795 9,239,964 2,303,304 217,136,154

LIABILITIES
Deposits from customers 146,604,285 10,238,536 10,277,105 3,771,663 170,891,589
Deposits and placements of banks
and other financial institutions 20,404,703 28,108 2,053,217 128,272 22,614,300
Bills and acceptances payable 610,861 — 745 1,124 612,730
Recourse obligations on loans
sold to Cagamas 21,763 — — — 21,763
Derivative financial liabilities 85,094 737 184,225 — 270,056
Other liabilities 1,710,983 134,459 319,041 347,274 2,511,757
Borrowings — 653,101 — — 653,101
Subordinated notes 1,883,776 — 1,451,546 — 3,335,322
Innovative Tier I capital securities 1,202,840 — 769,493 — 1,972,333
Non-innovative Tier I
stapled securities 2,071,589 — — — 2,071,589
Provision for tax expense and zakat 453,684 1,522 8,985 99 464,290
Deferred tax liabilities 2,000 — — — 2,000

TOTAL LIABILITIES 175,051,578 11,056,463 15,064,357 4,248,432 205,420,830

Minority interests — 679,834 12,284 — 692,118

On Balance Sheet Open Position 16,441,513 2,363,498 (5,836,677) (1,945,128) 11,023,206
Off Balance Sheet Open Position (5,408,601) (1,379,079) 4,656,034 2,131,646 —

NET OPEN POSITION 11,032,912 984,419 (1,180,643) 186,518 11,023,206

PUBLIC BANK BERHAD
ANNUAL REPORT 2009
330 NOTES TO THE FINANCIAL STATEMENTS

47. FINANCIAL RISK MANAGEMENT (continued)

(b) Market Risk (continued)
(ii) Foreign Currency Exchange Risk (continued)

Group Malaysian Hong Kong United States

2008 Ringgit Dollars Dollars Others Total
RM’000 RM’000 RM’000 RM’000 RM’000

ASSETS
Cash and short-term funds 31,348,350 451,285 3,599,203 1,198,189 36,597,027
Deposits and placements with banks
and other financial institutions 1,756,588 46,943 91,456 46,458 1,941,445
Securities purchased under
resale agreements 5,126,053 — — 15,693 5,141,746
Securities held-for-trading 11,349,842 — — — 11,349,842
Securities available-for-sale 2,669,414 9,623 2,687,159 260,176 5,626,372
Securities held-to-maturity 7,851,780 169,981 93,552 171,406 8,286,719
Loans, advances and financing 103,493,306 10,412,901 4,034,067 446,021 118,386,295
Derivative financial assets 284,771 514 295,338 9,606 590,229
Other assets 600,212 136,487 734,946 77,029 1,548,674
Statutory deposits with Central Banks 2,339,800 — 296,908 — 2,636,708
Deferred tax assets 477,346 751 10,601 157 488,855
Investment in associated companies 1,411 — 126,391 — 127,802
Investment properties 1,850 63,968 194 — 66,012
Prepaid land lease payments 8,910 282,963 — — 291,873
Property and equipment 902,844 62,547 44,494 1,604 1,011,489
Intangible assets 769,251 1,302,767 — — 2,072,018

TOTAL ASSETS 168,981,728 12,940,730 12,014,309 2,226,339 196,163,106

LIABILITIES
Deposits from customers 133,193,051 7,326,696 7,017,389 3,648,162 151,185,298
Deposits and placements of banks
and other financial institutions 11,713,948 309,059 4,385,611 275,527 16,684,145
Bills and acceptances payable 3,062,077 — 28 269 3,062,374
Recourse obligations on loans
sold to Cagamas 4,537,277 — — — 4,537,277
Derivative financial liabilities 173,277 1,855 318,849 1,165 495,146
Other liabilities 1,875,064 161,826 251,264 134,663 2,422,817
Borrowings — 860,234 — — 860,234
Subordinated notes 1,450,555 — 2,727,640 — 4,178,195
Innovative Tier I capital securities 1,276,840 — 847,644 — 2,124,484
Provision for tax expense and zakat 354,796 2,862 24,297 499 382,454
Deferred tax liabilities 1,950 — — — 1,950

TOTAL LIABILITIES 157,638,835 8,662,532 15,572,722 4,060,285 185,934,374

Minority interests — 680,483 11,543 — 692,026

On Balance Sheet Open Position 11,342,893 3,597,715 (3,569,956) (1,833,946) 9,536,706
Off Balance Sheet Open Position (2,909,324) (2,669,166) 3,650,663 1,927,827 —

NET OPEN POSITION 8,433,569 928,549 80,707 93,881 9,536,706

 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
NOTES TO THE FINANCIAL STATEMENTS 331

47. FINANCIAL RISK MANAGEMENT (continued)

(b) Market Risk (continued)
(ii) Foreign Currency Exchange Risk (continued)

Bank Malaysian Hong Kong United States

2009 Ringgit Dollars Dollars Others Total
RM’000 RM’000 RM’000 RM’000 RM’000

ASSETS
Cash and short-term funds 30,361,078 523,705 804,002 179,841 31,868,626
Deposits and placements with banks
and other financial institutions 3,013,340 102,627 — — 3,115,967
Securities held-for-trading 7,655,815 — — — 7,655,815
Securities available-for-sale 8,318,894 — 2,139,204 61 10,458,159
Securities held-to-maturity 7,583,640 — 95 53,523 7,637,258
Loans, advances and financing 106,478,154 397,610 1,045,033 42,010 107,962,807
Derivative financial assets 126,560 — 176,301 — 302,861
Other assets 1,102,966 6,787 114,233 229,554 1,453,540
Statutory deposits with Central Banks 572,400 — 15,962 — 588,362
Deferred tax assets 390,787 — — 39 390,826
Investment in subsidiary companies 1,547,725 1,672,195 474,761 — 3,694,681
Investment in associated companies 30 — 101,295 — 101,325
Prepaid land lease payments 13 — — — 13
Property and equipment 643,424 — 6,110 1,434 650,968
Intangible assets 695,393 — — — 695,393

TOTAL ASSETS 168,490,219 2,702,924 4,876,996 506,462 176,576,601

LIABILITIES
Deposits from customers 131,035,012 179,223 1,815,349 2,357,906 135,387,490
Deposits and placements of banks
and other financial institutions 15,101,777 — 5,624,617 57,535 20,783,929
Bills and acceptances payable 610,861 — 745 1,124 612,730
Recourse obligations on loans
sold to Cagamas 21,763 — — — 21,763
Derivative financial liabilities 85,094 — 158,302 — 243,396
Other liabilities 1,043,668 389 128,476 226,845 1,399,378
Subordinated notes 1,903,993 — 1,451,546 — 3,355,539
Innovative Tier I capital securities 1,202,840 — 769,493 — 1,972,333
Non-innovative Tier I
stapled securities 2,071,589 — — — 2,071,589
Provision for tax expense and zakat 285,825 — — 417 286,242

TOTAL LIABILITIES 153,362,422 179,612 9,948,528 2,643,827 166,134,389

On Balance Sheet Open Position 15,127,797 2,523,312 (5,071,532) (2,137,365) 10,442,212

Off Balance Sheet Open Position (5,408,602) (1,665,471) 4,884,022 2,190,051 —

NET OPEN POSITION 9,719,195 857,841 (187,510) 52,686 10,442,212

PUBLIC BANK BERHAD
ANNUAL REPORT 2009
332 NOTES TO THE FINANCIAL STATEMENTS

47. FINANCIAL RISK MANAGEMENT (continued)

(b) Market Risk (continued)
(ii) Foreign Currency Exchange Risk (continued)

Bank Malaysian Hong Kong United States

2008 Ringgit Dollars Dollars Others Total
RM’000 RM’000 RM’000 RM’000 RM’000

ASSETS
Cash and short-term funds 25,413,556 820,485 2,849,946 480,972 29,564,959
Deposits and placements with banks
and other financial institutions 3,834,326 — — — 3,834,326
Securities purchased under
resale agreements 4,746,714 — — 15,693 4,762,407
Securities held-for-trading 10,846,741 — — — 10,846,741
Securities available-for-sale 2,554,622 — 2,155,459 204,063 4,914,144
Securities held-to-maturity 9,562,928 — 97 1,554 9,564,579
Loans, advances and financing 91,605,875 427,182 1,082,414 58,820 93,174,291
Derivative financial assets 284,771 — 295,338 9,606 589,715
Other assets 1,365,023 34,540 725,733 71,888 2,197,184
Statutory deposits with Central Banks 1,998,200 — — — 1,998,200
Deferred tax assets 387,415 — — 157 387,572
Investment in subsidiary companies 1,272,725 1,672,195 474,761 — 3,419,681
Investment in associated companies 30 — 101,295 — 101,325
Prepaid land lease payments 15 — — — 15
Property and equipment 642,505 118 4,095 1,604 648,322
Intangible assets 695,393 — — — 695,393

TOTAL ASSETS 155,210,839 2,954,520 7,689,138 844,357 166,698,854

LIABILITIES
Deposits from customers 120,792,175 129,188 743,412 2,426,084 124,090,859
Deposits and placements of banks
and other financial institutions 10,777,803 — 6,027,236 287,867 17,092,906
Bills and acceptances payable 3,062,077 — 28 269 3,062,374
Recourse obligations on loans
sold to Cagamas 4,537,277 — — — 4,537,277
Derivative financial liabilities 173,277 — 268,596 781 442,654
Other liabilities 1,176,888 240 212,010 114,295 1,503,433
Subordinated notes 1,470,580 — 2,727,640 — 4,198,220
Innovative Tier I capital securities 1,276,840 — 847,644 — 2,124,484
Provision for tax expense and zakat 254,319 — — 499 254,818

TOTAL LIABILITIES 143,521,236 129,428 10,826,566 2,829,795 157,307,025

On Balance Sheet Open Position 11,689,603 2,825,092 (3,137,428) (1,985,438) 9,391,829

Off Balance Sheet Open Position (2,909,324) (2,051,964) 2,974,349 1,986,939 —

NET OPEN POSITION 8,780,279 773,128 (163,079) 1,501 9,391,829

 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
NOTES TO THE FINANCIAL STATEMENTS 333

47. FINANCIAL RISK MANAGEMENT (continued)

(b) Market Risk (continued)
(ii) Foreign Currency Exchange Risk (continued)
(b) Structural foreign exchange risk
Structural currency exposures represent the Group’s currency exposure in its net investments in overseas
operations and capital funds/retained earnings of overseas branches operations. The Group manages such
risk through funding investments in functional currencies, where possible. The structural currency exposures
of the Group as at the balance sheet date are as follows:

Hedged Unhedged Total

Group RM’000 RM’000 RM’000

2009
United States Dollars 1,469,324 (13,894) 1,455,430
Hong Kong Dollars 2,763,435 — 2,763,435
Others — 45,623 45,623

4,232,759 31,729 4,264,488

2008
United States Dollars 1,129,566 80,809 1,210,375
Hong Kong Dollars 1,695,241 1,011,057 2,706,298
Others — 43,830 43,830

2,824,807 1,135,696 3,960,503

As part of its risk management strategy, the Group has designated certain funding in United States Dollars
to hedge part of its Hong Kong Dollars structural currency exposure, as Hong Kong Dollars are pegged to
United States Dollars.

(c) Sensitivity Analysis

Considering that other risk variables remain constant, the foreign currency revaluation sensitivity for the Group
on its unhedged structural positions as at the balance sheet date is summarised below:

Change in
Currency Revaluation
Rates Sensitivity
Group % RM’000

2009
United States Dollars +/-5 -/+   695
Hong Kong Dollars +/-5 —

2008
United States Dollars +/-5 +/-  4,040
Hong Kong Dollars +/-5 +/-50,553
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
334 NOTES TO THE FINANCIAL STATEMENTS

47. FINANCIAL RISK MANAGEMENT (continued)

(b) Market Risk (continued)
(iii) Equity Price Risk
Equity price risk arises from the impact of changes in equity prices on equity positions taken from time to time.
Decisions concerning such investments are made by the Share Investment Committee and the Sub-Committee on
Share Investment. Equity positions are monitored against pre-determined cut-loss limits.

Considering that other risk variables remain constant, the table below summarises the impact on the carrying
amount of equity positions as at the balance sheet date should there be a change in equity market prices:

Change in
Equity
Market Sensitivity
Prices of Equity
Group % RM’000

2009 +/-20 +/-7,163

2008 +/-20 +/-5,096

(c) Liquidity Risk

Liquidity risk relates to the ability of the Group and the Bank to maintain sufficient liquid assets to meet financial
commitments and obligations when they fall due at a reasonable cost. The Group Assets and Liabilities Management
Committee is the primary party responsible for liquidity management based on guidelines approved by the Group Risk
Management Committee. The management of the Group’s liquidity risk is aligned to the New Liquidity Framework issued
by Bank Negara Malaysia supplemented by liquidity risk management control and limits and a liquidity stress testing
program. Liquidity limits are set for cash flow mismatches. In addition, liquidity trigger limits and concentration ratios
are in place to serve as liquidity early warning indicators. Liquidity stress test programs are used to analyse the cash
flow liquidity under “Systemic Wide Problem” and “Institutional Specific Problem” scenarios.
 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
NOTES TO THE FINANCIAL STATEMENTS 335

47. FINANCIAL RISK MANAGEMENT (continued)

(c) Liquidity Risk (continued)
The following tables show the maturity analysis of the Group’s assets and liabilities incorporating behavioural adjustments
on significant balance sheet items (for Malaysia and Hong Kong). The maturity profile for loans and deposits that do
not have maturity dates and fixed deposits that are frequently rolled-over, is estimated based on the behavioural
patterns of the customers. There may be some differences in the assumptions across geographical locations due to
variation in local conditions.

Group Up to > 7 Days - > 1 - 3 > 3 - 6 > 6 - 12 >1

2009 7 Days 1 Month Months Months Months Year Total
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

ASSETS
Cash, balances and
placements with banks 25,723,947 18,660,902 3,389,230 89,320 — — 47,863,399
Securities 5,658,174 3,445,187 4,818,569 2,058,362 335,004 10,427,963 26,743,259
Loans, advances and financing 1,683,446 3,099,625 6,704,732 6,933,751 11,921,842 104,992,388 135,335,784
Other asset balances — — — — — 7,193,712 7,193,712

TOTAL ASSETS 33,065,567 25,205,714 14,912,531 9,081,433 12,256,846 122,614,063 217,136,154

LIABILITIES
Deposits from customers 20,944,154 15,499,053 18,483,832 10,564,317 4,280,724 101,119,509 170,891,589
Deposits and placements of banks
and other financial institutions 2,001,126 9,536,743 3,273,273 2,582,287 121,331 5,099,540 22,614,300
Recourse obligations on loans
sold to Cagamas — 2,402 2,382 3,363 4,485 9,131 21,763
Borrowings — — — — — 653,101 653,101
Debts issued — — — — — 7,379,244 7,379,244
Other liabilities balances 768 6,713 14,963 — — 3,838,389 3,860,833

TOTAL LIABILITIES 22,946,048 25,044,911 21,774,450 13,149,967 4,406,540 118,098,914 205,420,830

EQUITY
Equity attributable to equity
holders of the Bank — — — — — 11,023,206 11,023,206
Minority interests — — — — — 692,118 692,118

TOTAL EQUITY — — — — — 11,715,324 11,715,324

NET MATURITY MISMATCH 10,119,519 160,803 (6,861,919) (4,068,534) 7,850,306 (7,200,175) —

PUBLIC BANK BERHAD
ANNUAL REPORT 2009
336 NOTES TO THE FINANCIAL STATEMENTS

47. FINANCIAL RISK MANAGEMENT (continued)

(c) Liquidity Risk (continued)

Group Up to > 7 Days - > 1 - 3 > 3 - 6 > 6 - 12 >1

2008 7 Days 1 Month Months Months Months Year Total
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

ASSETS
Cash, balances and
placements with banks 18,148,418 22,898,144 2,454,263 179,393 — — 43,680,218
Securities 2,901,719 5,202,261 10,320,351 1,740,990 483,211 4,614,401 25,262,933
Loans, advances and financing 1,839,664 2,745,763 5,740,966 6,495,467 10,556,888 91,007,547 118,386,295
Other asset balances — — — — — 8,833,660 8,833,660

TOTAL ASSETS 22,889,801 30,846,168 18,515,580 8,415,850 11,040,099 104,455,608 196,163,106

LIABILITIES
Deposits from customers 18,313,652 11,256,429 8,172,850 6,423,572 11,964,270 95,054,525 151,185,298
Deposits and placements of banks
and other financial institutions 6,769,184 1,978,996 542,754 146,878 216,917 7,029,416 16,684,145
Recourse obligations on loans
sold to Cagamas — 1,206,190 3,309,160 8,540 9,550 3,837 4,537,277
Borrowings — — — — 860,234 — 860,234
Debts issued — — — — 1,233,361 5,069,318 6,302,679
Other liabilities balances 168,302 680,125 1,392,527 309,942 — 3,813,845 6,364,741

TOTAL LIABILITIES 25,251,138 15,121,740 13,417,291 6,888,932 14,284,332 110,970,941 185,934,374

EQUITY
Equity attributable to equity
holders of the Bank — — — — — 9,536,706 9,536,706
Minority interests — — — — — 692,026 692,026

TOTAL EQUITY — — — — — 10,228,732 10,228,732

NET MATURITY MISMATCH (2,361,337) 15,724,428 5,098,289 1,526,918 (3,244,233) (16,744,065) —

 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
NOTES TO THE FINANCIAL STATEMENTS 337

47. FINANCIAL RISK MANAGEMENT (continued)

(c) Liquidity Risk (continued)

Bank Up to > 7 Days - > 1 - 3 > 3 - 6 > 6 - 12 >1

2009 7 Days 1 Month Months Months Months Year Total
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

ASSETS
Cash, balances and
placements with banks 20,473,634 11,394,992 3,115,967 — — — 34,984,593
Securities 4,504,081 2,975,162 4,299,062 2,293,483 1,821,950 9,857,494 25,751,232
Loans, advances and financing 1,063,829 1,851,883 5,290,781 5,694,293 9,098,816 84,963,205 107,962,807
Other asset balances — — — — — 7,877,969 7,877,969

TOTAL ASSETS 26,041,544 16,222,037 12,705,810 7,987,776 10,920,766 102,698,668 176,576,601

LIABILITIES
Deposits from customers 13,179,219 8,121,040 9,340,429 6,285,077 1,792,679 96,669,046 135,387,490
Deposits and placements of banks
and other financial institutions 5,444,498 8,165,927 454,105 1,671,468 1,154 5,046,777 20,783,929
Recourse obligations on loans
sold to Cagamas — 2,402 2,382 3,363 4,485 9,131 21,763
Debts issued — — — — — 7,399,461 7,399,461
Other liabilities balances 768 6,713 14,963 — — 2,519,302 2,541,746

TOTAL LIABILITIES 18,624,485 16,296,082 9,811,879 7,959,908 1,798,318 111,643,717 166,134,389

EQUITY
Equity attributable to equity
holders of the Bank — — — — — 10,442,212 10,442,212

TOTAL EQUITY — — — — — 10,442,212 10,442,212

NET MATURITY MISMATCH 7,417,059 (74,045) 2,893,931 27,868 9,122,448 (19,387,261) —

PUBLIC BANK BERHAD
ANNUAL REPORT 2009
338 NOTES TO THE FINANCIAL STATEMENTS

47. FINANCIAL RISK MANAGEMENT (continued)

(c) Liquidity Risk (continued)

Bank Up to > 7 Days - > 1 - 3 > 3 - 6 > 6 - 12 >1

2008 7 Days 1 Month Months Months Months Year Total
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

ASSETS
Cash, balances and
placements with banks 10,557,981 23,145,980 3,405,067 1,052,664 — — 38,161,692
Securities 2,369,791 4,900,050 9,661,001 1,517,062 802,958 6,074,602 25,325,464
Loans, advances and financing 1,202,869 2,004,801 4,269,734 4,941,829 7,944,837 72,810,221 93,174,291
Other asset balances — — — — — 10,037,407 10,037,407

TOTAL ASSETS 14,130,641 30,050,831 17,335,802 7,511,555 8,747,795 88,922,230 166,698,854

LIABILITIES
Deposits from customers 10,605,883 5,047,197 3,270,622 3,396,325 10,196,440 91,574,392 124,090,859
Deposits and placements of banks
and other financial institutions 5,547,776 4,731,788 472,105 124,508 112,045 6,104,684 17,092,906
Recourse obligations on loans
sold to Cagamas — 1,206,190 3,309,160 8,540 9,550 3,837 4,537,277
Debts issued — — — — 1,233,361 5,089,343 6,322,704
Other liabilities balances 168,302 680,125 1,392,527 309,942 — 2,712,383 5,263,279

TOTAL LIABILITIES 16,321,961 11,665,300 8,444,414 3,839,315 11,551,396 105,484,639 157,307,025

EQUITY
Equity attributable to equity
holders of the Bank — — — — — 9,391,829 9,391,829

TOTAL EQUITY — — — — — 9,391,829 9,391,829

NET MATURITY MISMATCH (2,191,320) 18,385,531 8,891,388 3,672,240 (2,803,601) (25,954,238) —

(d) Operational Risk

Operational risk is the risk of loss resulting from inadequate or failed internal processes, people and systems or from
external events. This risk is managed through established operational risk management processes, proper monitoring
and reporting of the business units’ adherence to established risk policies, procedures and limits by independent control
and support units, and oversight provided by the management and the Board.

The operational risk management processes encompass appropriate documentation of processes and procedures within
the framework of system of internal controls, regular disaster recovery and business continuity planning and simulations,
self-compliance audit and internal audit.
 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
NOTES TO THE FINANCIAL STATEMENTS 339

48. FAIR VALUES OF FINANCIAL ASSETS AND LIABILITIES

Financial instruments comprise financial assets, financial liabilities and off-balance sheet financial instruments. Fair value is
the amount at which the financial asset could be exchanged or a financial liability could be settled, between knowledgeable
and willing parties in an arm’s length transaction. The information presented herein represents the best estimates of fair
values as at the balance sheet date.

Where available, quoted and observable market prices or dealer price quotations are used as the measure of fair values.
Where such quoted and observable market prices are not available, fair values are determined using valuation techniques,
which include the use of mathematical models, comparison to similar instruments for which market observable prices exist
and other valuation techniques. In the determination of fair values, assumptions are made regarding risk characteristics of
various financial instruments, discount rates, estimates of future cash flows and other factors. Changes in the assumptions
could materially affect these estimates and the resulting fair value estimates.

Fair value information for non-financial assets and non-financial liabilities are excluded as they do not fall within the scope
of FRS 132 Financial Instruments: Disclosure and Presentation which requires the fair value information to be disclosed.
These include investment in subsidiary companies, investment in associated companies, investment properties, prepaid land
lease payments, property and equipment and intangible assets.

The estimated fair values of the financial instruments of the Group and the Bank approximate their respective carrying
amounts as shown on the balance sheets, except for the following financial assets and financial liabilities:

2009 2008
Carrying Fair Carrying Fair
Amount Value Amount Value
RM’000 RM’000 RM’000 RM’000

Group
Financial assets
Securities held-to-maturity 6,620,207 6,643,917 8,286,719 8,331,232
Loans, advances and financing * 137,387,443 137,296,952 120,145,782 119,797,090

Financial liabilities
Deposits from customers 170,891,589 170,886,669 151,185,298 151,190,768
Deposits and placements of banks and
other financial institutions 22,614,300 22,614,300 16,684,145 16,684,145
Recourse obligations on loans sold to Cagamas 21,763 24,478 4,537,277 4,538,483
Subordinated notes 3,335,322 3,392,188 4,178,195 4,219,502
Innovative Tier I capital securities 1,972,333 1,924,106 2,124,484 1,962,496
Non-innovative Tier I stapled securities 2,071,589 2,154,439 — —

PUBLIC BANK BERHAD
ANNUAL REPORT 2009
340 NOTES TO THE FINANCIAL STATEMENTS

48. FAIR VALUES OF FINANCIAL ASSETS AND LIABILITIES (continued)

The estimated fair values of the financial instruments of the Group and the Bank approximate their respective carrying
amounts as shown on the balance sheets, except for the following financial assets and financial liabilities (continued):

2009 2008
Carrying Fair Carrying Fair
Amount Value Amount Value
RM’000 RM’000 RM’000 RM’000

Bank
Financial assets
Securities held-to-maturity 7,637,258 7,668,386 9,564,579 9,615,605
Loans, advances and financing * 109,607,950 109,440,558 94,594,223 94,353,352

Financial liabilities
Deposits from customers 135,387,490 135,381,943 124,090,859 124,094,341
Deposits and placements of banks and
other financial institutions 20,783,929 20,791,450 17,092,906 17,085,972
Recourse obligations on loans sold to Cagamas 21,763 24,478 4,537,277 4,538,483
Subordinated notes 3,355,539 3,412,644 4,198,220 4,239,600
Innovative Tier I capital securities 1,972,333 1,924,106 2,124,484 1,962,496
Non-innovative Tier I stapled securities 2,071,589 2,154,439 — —

* The general allowance of the Group and the Bank of RM2,051,659,000 (2008 – RM1,759,487,000) and RM1,645,143,000
(2008 – RM1,419,932,000) respectively, are not included in the carrying amounts.

The following methods and assumptions are used to estimate the fair values of the following classes of financial
instruments:

(a) Cash and Short-Term Funds – The carrying amount approximates fair value due to the relatively short maturity of the
financial instruments.

(b) Deposits and Placements with Banks and Other Financial Institutions and Securities Purchased under Resale Agreements
– The fair values of these financial instruments with remaining maturity of less than one year approximate their carrying
amounts due to the relatively short maturity of the financial instruments. For those financial instruments with maturity of
more than one year, the fair values are estimated based on discounted cash flows using market interest rates at which
similar deposits and placements would be made with financial institutions of similar credit risks and remaining period
to maturity.

(c) Securities Held-for-Trading, Securities Available-for-Sale and Securities Held-to-Maturity – The fair values of these
financial instruments are estimated based on quoted or observable market prices. Where such quoted or observable
market prices are not available, the fair values are estimated using pricing models or discounted cash flow techniques.
Where the discounted cash flow technique is used, the expected future cash flows are discounted using market interest
rates for similar instruments.
 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
NOTES TO THE FINANCIAL STATEMENTS 341

48. FAIR VALUES OF FINANCIAL ASSETS AND LIABILITIES (continued)

The following methods and assumptions are used to estimate the fair values of the following classes of financial instruments
(continued):

(d) Loans, Advances and Financing – The fair values of fixed rate loans with remaining maturity of less than one year and
variable rate loans are estimated to approximate their carrying amounts. For fixed rate loans with remaining maturity of
more than one year, the fair values are estimated based on discounted cash flows using market rates of loans of similar
credit risks and maturity.

The fair values of non-performing loans are represented by their carrying amounts, net of specific allowance for bad
and doubtful debts and financing, being the expected recoverable amount.

(e) Derivative Financial Instruments – The fair values of derivative financial instruments are obtained from quoted market
rates in active markets, including recent market transactions and valuation techniques, such as discounted cash flow
models, as appropriate.

(f) Deposits from Customers – The fair values of deposits payable on demand (demand and savings deposits), or deposits
with remaining maturity of less than one year are estimated to approximate their carrying amounts. The fair values of
deposits with remaining maturities of more than one year are estimated using discounted cash flows based on market
rates for similar deposits from customers. The fair values of Islamic deposits are deemed to approximate their carrying
amounts as profit rates are determined at the end of their holding periods based on the profit generated from the assets
invested. The fair values of negotiable instruments of deposit and money market deposits are estimated based on
quoted or observable market prices. Where such quoted or observable market prices are not available, the fair values
of negotiable instruments of deposit and money market deposits are estimated using the discounted cash flow
technique.

(g) Deposits and Placements of Banks and Other Financial Institutions and Bills and Acceptances Payable – The fair values
of these financial instruments with remaining maturity of less than one year approximate their carrying amounts due to
the relatively short maturity of the financial instruments.

(h) Recourse Obligations on Loans Sold to Cagamas – The fair values of recourse obligations on loans sold to Cagamas
with remaining maturity of less than one year are estimated to approximate their carrying amounts. The fair values of
recourse obligations on loans sold to Cagamas with remaining maturity of more than one year are estimated using
discounted cash flows based on prevailing Cagamas rates with similar remaining period to maturity.

(i) Borrowings – The fair values approximate carrying amounts as these are variable rate borrowings.

(j) Subordinated Notes, Innovative Tier I Capital Securities and Non-innovative Tier I Stapled Securities – The fair values of
these financial instruments are estimated based on quoted or observable market prices.
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
342 NOTES TO THE FINANCIAL STATEMENTS

49. OPERATING LEASES

The Group and the Bank as a Lessee
The Group and the Bank leases a number of premises under operating leases. The leases typically run for an initial period
of three years, with an option to renew the leases. None of the leases include contingent rentals. Total future minimum lease
payments under these non-cancellable operating leases are as follows:

Group Bank

2009 2008 2009 2008

RM’000 RM’000 RM’000 RM’000

Within one year 20,093 18,824 1,203 615

Between one and five years 18,251 18,453 1,348 594
More than five years 8,250 5,839 — —

46,594 43,116 2,551 1,209

The Group as a Lessor

The Group leases out its investment properties under operating leases with the term of the leases ranging from one to five
years. None of the leases include contingent rentals. Total future minimum lease payments under these non-cancellable
operating leases are as follows:

Group

2009 2008
RM’000 RM’000

Within one year 3,403 3,982

Between one and five years 1,197 1,891

4,600 5,873

 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
NOTES TO THE FINANCIAL STATEMENTS 343

50. CAPITAL AND OTHER COMMITMENTS

Group Bank

2009 2008 2009 2008

RM’000 RM’000 RM’000 RM’000

Capital expenditure:
Authorised and contracted for:
– Renovations 3,022 3,597 — —
– Office equipment, furniture and fittings 4,464 2,155 3,157 1,925
– Computer equipment and software 18,911 21,920 16,639 19,563
– Motor vehicles 62 — — —

26,459 27,672 19,796 21,488

Authorised but not contracted for:
– Land and buildings 16,500 490,500 — —
– Renovations 3,224 2,342 — —
– Office equipment, furniture and fittings 220 616 — —
– Computer equipment and software 2,596 2,924 — 105
– Motor vehicles 95 — — —
– Additional investment in an
associated company 191,071 217,000 191,071 217,000

213,706 713,382 191,071 217,105

240,165 741,054 210,867 238,593

51. CAPITAL ADEQUACY

(a) The capital adequacy ratios of the Group and the Bank as at 31 December are as follows:

Group Bank

2009 2008 2009 2008

Before deducting second interim/final

dividends*:
Core capital ratio 10.5% 8.3% 13.0% 10.9%
Risk-weighted capital ratio 14.7% 13.7% 14.3% 13.4%

After deducting second interim/final

dividends:
Core capital ratio 9.9% 7.7% 12.4% 10.1%
Risk-weighted capital ratio 14.2% 13.1% 13.6% 12.8%

* In arriving at the capital base used in the ratio calculations of the Group and the Bank, the second interim/final
dividends were not deducted.
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
344 NOTES TO THE FINANCIAL STATEMENTS

51. CAPITAL ADEQUACY (continued)

(a) The capital adequacy ratios of the Group and the Bank as at 31 December are as follows (continued):

The capital adequacy ratios of the Group consist of capital base and risk-weighted assets derived from consolidated
balances of the Bank and its subsidiary companies. The capital adequacy ratios of the Bank consist of capital base
and risk-weighted assets derived from the Bank and from its wholly-owned offshore banking subsidiary company, Public
Bank (L) Ltd.

The capital adequacy ratios of the Group and the Bank are computed in accordance with Bank Negara Malaysia’s
revised Risk-weighted Capital Adequacy Framework (RWCAF-Basel II). The Group and the Bank have adopted the
Standardised Approach for Credit Risk and Market Risk, and the Basic Indicator Approach for Operational Risk. The
minimum regulatory capital adequacy requirement is 8.0% (2008 – 8.0%) for the risk-weighted capital ratio.

The detailed disclosures on the capital base and risk-weighted assets, as set out in Note 51(c) – (f) are presented in
accordance with para 4.3 of Bank Negara Malaysia’s Concept Paper – Risk-Weighted Capital Adequacy Framework
(Basel II) and Capital Adequacy Framework for Islamic Banks (CAFIB) – Disclosure Requirements (Pillar 3).

The capital adequacy ratios of the banking subsidiary companies of the Group are as follows:

Public Public
Islamic Investment Public Public Bank Public Cambodian
Bank Bank Bank (Hong Kong) Finance Public Bank
Berhad 1 Berhad 2 (L) Ltd 3 Limited 4 Limited 4 Plc 5

2009
Before deducting
interim dividends*:
Core capital ratio 11.6% 19.8% 8.9% 15.9% 31.1% N/A
Risk-weighted capital ratio 13.4% 20.1% 9.2% 15.9% 32.2% 20.3%

After deducting
interim dividends*:
Core capital ratio 10.5% 18.7% 8.9% 15.4% 28.6% N/A
Risk-weighted capital ratio 12.3% 19.0% 9.2% 15.4% 29.8% 20.3%

2008
Before deducting
proposed dividends:
Core capital ratio 9.1% 20.6% 8.3% 15.3% 20.6% N/A
Risk-weighted capital ratio 11.0% 20.9% 8.8% 15.3% 21.8% 21.1%

After deducting
proposed dividends:
Core capital ratio 9.1% 19.7% 8.3% 15.3% 20.6% N/A
Risk-weighted capital ratio 11.0% 20.0% 8.8% 15.3% 21.8% 21.1%

* Refers to interim dividends which have been declared subsequent to the financial year end.
 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
NOTES TO THE FINANCIAL STATEMENTS 345

51. CAPITAL ADEQUACY (continued)

(a) The capital adequacy ratios of the Group and the Bank as at 31 December are as follows (continued):

The capital adequacy ratios of the banking subsidiary companies of the Group are as follows (continued):

1
The capital adequacy ratios of Public Islamic Bank Berhad are computed in accordance with Bank Negara
Malaysia’s Capital Adequacy Framework for Islamic Banks (CAFIB), which are based on the Basel II capital accord.
Public Islamic Bank Berhad has adopted the Standardised Approach for Credit and Market Risk and the Basic
Indicator Approach for Operational Risk. The minimum regulatory capital adequacy requirement is 8.0% for the
risk-weighted capital ratio.

2
The capital adequacy ratios of Public Investment Bank Berhad are computed in accordance with Bank Negara
Malaysia’s revised Risk-weighted Capital Adequacy Framework, which are based on the Basel II capital accord.
Public Investment Bank Berhad has adopted the Standardised Approach for Credit and Market Risk and the Basic
Indicator Approach for Operational Risk. The minimum regulatory capital adequacy requirement is 8.0% for the
risk-weighted capital ratio.

3
The capital adequacy ratios of Public Bank (L) Ltd. for capital compliance on a standalone basis are computed in
accordance with the Guidelines on Risk-weighted Capital Adequacy issued by the Labuan Offshore Financial
Services Authority (LOFSA), which is based on the Basel I capital accord. The minimum regulatory capital adequacy
requirements are 4.0% and 8.0% for the core capital ratio and risk-weighted capital ratio respectively.

4
The capital adequacy ratios of these two subsidiary companies, which are located in Hong Kong SAR, are
computed in accordance with the Banking (Capital) Rules under section 98A of the Banking Ordinance issued by
the Hong Kong Monetary Authority, which is based on the Basel II capital accord. These two subsidiary companies
have adopted the Standardised Approach for Credit and Market Risk. Public Bank (Hong Kong) Limited has
adopted the Basic Indicator Approach for Operational Risk and Public Finance Limited has adopted the
Standardised Approach for Operational Risk. The minimum regulatory capital adequacy requirement is 8.0% for the
risk-weighted capital ratio.

5
The amount presented here is the Solvency Ratio of Cambodian Public Bank Plc, which is the nearest equivalent
regulatory compliance ratio. This ratio is computed in accordance with Prakas B7-00-46, B7-04-206 and B7-07-135
issued by the National Bank of Cambodia. This ratio is derived as Cambodian Public Bank Plc’s net worth divided
by its risk-weighted assets and off-balance sheet items. The minimum regulatory Solvency Ratio requirement is
15.0%.
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
346 NOTES TO THE FINANCIAL STATEMENTS

51. CAPITAL ADEQUACY (continued)

(b) The components of Tier I and Tier II Capital of the Group and of the Bank are as follows:

Group Bank

2009 2008 2009 2008

RM’000 RM’000 RM’000 RM’000

Components of Tier I and Tier II Capital:

Tier I Capital
Paid-up share capital 3,531,926 3,531,926 3,531,926 3,531,926
Share premium 1,439,885 2,132,499 1,439,885 2,132,499
Other reserves 3,740,586 3,604,386 3,548,569 3,552,599
Retained profits 2,870,249 1,902,658 2,624,153 1,772,724
Innovative Tier I capital securities 1,883,186 1,439,510 1,883,186 1,541,477
Non-innovative Tier I stapled securities 2,080,878 — 2,080,878 —
Treasury shares (581,638) (1,274,112) (581,638) (1,274,112)
Minority interests 692,118 692,026 — —
Less: Goodwill (2,031,105) (2,045,669) (695,393) (695,393)
Less: Deferred tax assets, net (500,684) (386,484) (384,741) (285,201)

Total Tier I Capital 13,125,401 9,596,740 13,446,825 10,276,519

Tier II Capital
General allowance for bad and
doubtful debts and financing 2,051,659 1,759,487 1,653,936 1,433,444
Subordinated notes 3,217,828 3,968,793 3,238,045 3,988,818
Innovative Tier I capital securities — 450,609 — 348,642

Total Tier II Capital 5,269,487 6,178,889 4,891,981 5,770,904

Total capital funds 18,394,888 15,775,629 18,338,806 16,047,423
Less: Investment in subsidiary
and associated companies (960) (960) (3,593,384) (3,318,384)

Capital base 18,393,928 15,774,669 14,745,422 12,729,039

In arriving at the capital base of the Group and the Bank above, the second interim/final dividends were not
deducted.
 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
NOTES TO THE FINANCIAL STATEMENTS 347

51. CAPITAL ADEQUACY (continued)

(c) The breakdown of risk-weighted assets (“RWA”) by exposures in each major risk category are as follows:

Risk-
Group Gross Net Weighted Capital
2009 Exposures Exposures Assets Requirements
Exposure Class RM’000 RM’000 RM’000 RM’000

(i) Credit Risk

On-Balance Sheet Exposures:
Sovereigns/Central Banks 52,147,725 50,947,482 — —
Public Sector Entities 522,950 522,950 104,590 8,367
Banks, Development Financial Institutions
(“DFIs”) and Multilateral Development
Banks (“MDBs”) 8,038,717 8,038,717 2,084,322 166,746
Insurance companies, Securities Firms
and Fund Managers 171,795 165,750 135,253 10,820
Corporates 38,464,275 36,465,866 32,475,929 2,598,074
Regulatory Retail 70,159,269 69,482,194 52,928,455 4,234,276
Residential Mortgages 30,284,816 30,241,515 12,508,156 1,000,653
Higher Risk Assets 157,279 157,134 235,701 18,856
Other Assets 3,884,280 3,884,280 2,872,284 229,783
Equity Exposures 4,545,222 4,545,222 4,520,464 361,637

Total On-Balance Sheet Exposures 208,376,328 204,451,110 107,865,154 8,629,212

Off-Balance Sheet Exposures:
Credit-related Off-Balance Sheet Exposures 8,150,735 7,763,759 5,572,089 445,767
Derivative Financial Instruments 997,257 997,257 227,612 18,209
Other Treasury-related Off-Balance
Sheet Exposures 91,201 91,201 15,171 1,214

Total Off-Balance Sheet Exposures
(Note 51(e)) 9,239,193 8,852,217 5,814,872 465,190

Total On and Off-Balance Sheet Exposures 217,615,521 213,303,327 113,680,026 9,094,402

(ii) Large Exposure Risk Requirement — — — —

(iii) Market Risk Long Short
Position Position

Interest Rate Risk 20,281,782 (11,104,063) 539,239 43,139
Foreign Currency Risk 520,324 (620,549) 621,165 49,693
Equity Risk 925 — 1,214 97

Total (Note 51(f)) 20,803,031 (11,724,612) 1,161,618 92,929

(iv) Operational Risk 10,436,307 834,905

Total RWA and Capital Requirements 125,277,951 10,022,236

PUBLIC BANK BERHAD
ANNUAL REPORT 2009
348 NOTES TO THE FINANCIAL STATEMENTS

51. CAPITAL ADEQUACY (continued)

(c) The breakdown of risk-weighted assets (“RWA”) by exposures in each major risk category are as follows (continued):

Risk-
Group Gross Net Weighted Capital
2008 Exposures Exposures Assets Requirements
Exposure Class RM’000 RM’000 RM’000 RM’000

(i) Credit Risk

On-Balance Sheet Exposures:
Sovereigns/Central Banks 45,529,703 40,392,203 7,079 566
Public Sector Entities 226,399 226,399 45,280 3,622
Banks, DFIs and MDBs 9,647,008 9,647,008 2,656,110 212,489
Insurance companies, Securities Firms
and Fund Managers 30,192 24,538 14,711 1,177
Corporates 31,587,342 29,788,698 27,412,005 2,192,960
Regulatory Retail 59,098,305 58,514,484 44,325,939 3,546,075
Residential Mortgages 31,354,081 31,331,706 15,754,491 1,260,359
Higher Risk Assets 144,845 144,817 217,225 17,378
Other Assets 3,166,272 3,166,272 2,133,482 170,679
Equity Exposures 2,657,984 2,657,984 2,633,226 210,658

Total On-Balance Sheet Exposures 183,442,131 175,894,109 95,199,548 7,615,963

Off-Balance Sheet Exposures:
Credit-related Off-Balance Sheet Exposures 11,553,542 11,077,426 8,691,505 695,320
Derivative Financial Instruments 1,062,516 1,062,516 269,196 21,536
Other Treasury-related Off-Balance Sheet
Exposures 15,874 15,874 3,175 254

Total Off-Balance Sheet Exposures
(Note 51(e)) 12,631,932 12,155,816 8,963,876 717,110

Total On and Off-Balance Sheet Exposures 196,074,063 188,049,925 104,163,424 8,333,073

(ii) Large Exposure Risk Requirement — — — —

(iii) Market Risk Long Short
Position Position

Interest Rate Risk 20,841,662 (9,101,710) 732,535 58,603
Foreign Currency Risk 1,101,726 (42,943) 1,101,726 88,138
Equity Risk 980 — 1,363 109

Total (Note 51(f)) 21,944,368 (9,144,653) 1,835,624 146,850

(iv) Operational Risk 9,342,863 747,429

Total RWA and Capital Requirements 115,341,911 9,227,352

 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
NOTES TO THE FINANCIAL STATEMENTS 349

51. CAPITAL ADEQUACY (continued)

(c) The breakdown of risk-weighted assets (“RWA”) by exposures in each major risk category are as follows (continued):

Risk-
Bank Gross Net Weighted Capital
2009 Exposures Exposures Assets Requirements
Exposure Class RM’000 RM’000 RM’000 RM’000

(i) Credit Risk

On-Balance Sheet Exposures:
Sovereigns/Central Banks 39,398,350 39,398,350 — —
Public Sector Entities 533 533 107 9
Banks, DFIs and MDBs 7,625,372 7,625,372 3,017,168 241,373
Insurance companies, Securities Firms
and Fund Managers 2,361 2,361 3,365 269
Corporates 34,075,354 32,325,336 28,274,623 2,261,970
Regulatory Retail 53,101,775 52,530,194 40,023,498 3,201,880
Residential Mortgages 25,097,787 25,069,662 10,588,938 847,115
Higher Risk Assets 142,939 142,829 214,244 17,139
Other Assets 2,675,230 2,675,230 1,912,073 152,966
Equity Exposures 4,033,204 4,033,204 4,008,445 320,676

Total On-Balance Sheet Exposures 166,152,905 163,803,071 88,042,461 7,043,397

Off-Balance Sheet Exposures:
Credit-related Off-Balance Sheet Exposures 7,501,979 7,235,546 5,169,292 413,543
Derivative Financial Instruments 982,574 982,574 224,676 17,974
Other Treasury-related Off-Balance Sheet
Exposures 15,344 15,344 — —

Total Off-Balance Sheet Exposures
(Note 51(e)) 8,499,897 8,233,464 5,393,968 431,517

Total On and Off-Balance Sheet Exposures 174,652,802 172,036,535 93,436,429 7,474,914

(ii) Large Exposure Risk Requirement — — — —

(iii) Market Risk Long Short
Position Position

Interest Rate Risk 18,659,428 (11,036,933) 508,288 40,663
Foreign Currency Risk 966,173 (1,571,235) 1,571,478 125,718
Equity Risk 925 — 1,214 97

Total (Note 51(f)) 19,626,526 (12,608,168) 2,080,980 166,478

(iv) Operational Risk 7,815,769 625,262

Total RWA and Capital Requirements 103,333,178 8,266,654

PUBLIC BANK BERHAD
ANNUAL REPORT 2009
350 NOTES TO THE FINANCIAL STATEMENTS

51. CAPITAL ADEQUACY (continued)

(c) The breakdown of risk-weighted assets (“RWA”) by exposures in each major risk category are as follows (continued):

Risk-
Bank Gross Net Weighted Capital
2008 Exposures Exposures Assets Requirements
Exposure Class RM’000 RM’000 RM’000 RM’000

(i) Credit Risk

On-Balance Sheet Exposures:
Sovereigns/Central Banks 37,240,902 32,487,731 7,080 566
Public Sector Entities 687 687 137 11
Banks, DFIs and MDBs 13,097,186 13,097,186 3,554,021 284,322
Insurance companies, Securities Firms
and Fund Managers 2,847 2,847 3,851 308
Corporates 27,739,697 26,119,513 23,717,302 1,897,384
Regulatory Retail 42,385,979 41,844,274 31,731,983 2,538,559
Residential Mortgages 27,421,752 27,404,232 14,149,127 1,131,930
Higher Risk Assets 135,867 135,853 203,779 16,302
Other Assets 2,984,616 2,984,616 2,075,270 166,022
Equity Exposures 2,154,635 2,154,635 2,129,876 170,390

Total On-Balance Sheet Exposures 153,164,168 146,231,574 77,572,426 6,205,794

Off-Balance Sheet Exposures:
Credit-related Off-Balance Sheet Exposures 10,219,352 9,931,894 7,818,361 625,469
Derivative Financial Instruments 1,051,784 1,051,784 267,050 21,364
Other Treasury-related Off-Balance Sheet
Exposures 1,594 1,594 319 26

Total Off-Balance Sheet Exposures
(Note 51(e)) 11,272,730 10,985,272 8,085,730 646,859

Total On and Off-Balance Sheet Exposures 164,436,898 157,216,846 85,658,156 6,852,653

(ii) Large Exposure Risk Requirement — — — —

(iii) Market Risk Long Short
Position Position

Interest Rate Risk 20,082,657 (9,273,390) 827,062 66,165
Foreign Currency Risk 924,347 (306,358) 924,347 73,948
Equity Risk 980 — 1,363 109

Total (Note 51(f)) 21,007,984 (9,579,748) 1,752,772 140,222

(iv) Operational Risk 7,236,385 578,911

Total RWA and Capital Requirements 94,647,313 7,571,786

The Group and the Bank do not have any issuances of Profit-Sharing Investment Account (“PSIA”) used as a risk absorbent.
 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
NOTES TO THE FINANCIAL STATEMENTS 351

51. CAPITAL ADEQUACY (continued)

(d) The breakdown of exposures by risk weights are as follows:

<------------------------------------------------------ Exposures after Netting and Credit Risk Mitigation ------------------------------------------------------>

Insurance Total
Companies, Exposures
Securities after Netting Total
Sovereigns/ Public Banks, Firms Higher and Risk-
Risk Central Sector DFIs and and Fund Regulatory Residential Risk Other Equity Credit Risk Weighted
Weights Banks Entities MDBs Managers Corporates Retail Mortgages Assets Assets Exposures Mitigation Assets
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Group
2009
0% 50,962,829 — — — 25,203 — — — 924,074 — 51,912,106 —
20% — 522,980 7,531,439 — 3,936,830 2,376 — — 109,903 30,948 12,134,476 2,426,895
35% — — — — — — 18,715,667 — — — 18,715,667 6,550,483
50% — — 1,521,093 63,004 2,457,641 28,161 12,551,548 — — — 16,621,447 8,310,724
75% — — — — — 73,109,604 — — — — 73,109,604 54,832,203
100% — — 54,396 102,459 31,520,036 34,186 234,986 — 2,850,303 4,514,274 39,310,640 39,310,640
150% — — — 2,010 227,965 1,102,360 783 166,269 — — 1,499,387 2,249,081

Total Exposures 50,962,829 522,980 9,106,928 167,473 38,167,675 74,276,687 31,502,984 166,269 3,884,280 4,545,222 213,303,327 113,680,026

Risk-Weighted Assets
by Exposures — 104,596 2,321,230 136,976 33,878,170 56,534,485 13,062,418 249,403 2,872,284 4,520,464 113,680,026

Average Risk Weight 0.0% 20.0% 25.5% 81.8% 88.8% 76.1% 41.5% 150.0% 73.9% 99.5% 53.3%

Deduction from
Capital Base — — —

Group
2008
0% 40,456,818 — — — — — — — 1,032,790 — 41,489,608 —
20% 35,397 226,463 8,464,565 — 2,151,182 4,279 — — — 30,948 10,912,834 2,182,567
35% — — — — — — 14,552,057 — — — 14,552,057 5,093,220
50% — — 2,187,727 21,662 2,167,671 33,734 9,066,151 — — — 13,476,945 6,738,473
75% — — — — — 62,145,163 9,917,653 — — — 72,062,816 54,047,112
100% — — 173,029 12,220 29,236,038 30,951 250,134 — 2,133,482 2,627,036 34,462,890 34,462,890
150% — — — 2,010 94,190 587,946 253,351 155,278 — — 1,092,775 1,639,162

Total Exposures 40,492,215 226,463 10,825,321 35,892 33,649,081 62,802,073 34,039,346 155,278 3,166,272 2,657,984 188,049,925 104,163,424

Risk-Weighted Assets
by Exposures 7,079 45,293 2,959,805 26,066 30,891,395 47,539,467 17,694,694 232,917 2,133,482 2,633,226 104,163,424

Average Risk Weight 0.0% 20.0% 27.3% 72.6% 91.8% 75.7% 52.0% 150.0% 67.4% 99.1% 55.4%

Deduction from
Capital Base — — —

PUBLIC BANK BERHAD
ANNUAL REPORT 2009
352 NOTES TO THE FINANCIAL STATEMENTS

51. CAPITAL ADEQUACY (continued)

(d) The breakdown of exposures by risk weights are as follows (continued):

<------------------------------------------------------ Exposures after Netting and Credit Risk Mitigation ------------------------------------------------------>

Insurance Total
Companies, Exposures
Securities after Netting Total
Sovereigns/ Public Banks, Firms Higher and Risk-
Risk Central Sector DFIs and and Fund Regulatory Residential Risk Other Equity Credit Risk Weighted
Weights Banks Entities MDBs Managers Corporates Retail Mortgages Assets Assets Exposures Mitigation Assets
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Bank
2009
0% 39,413,697 — — — 10,115 — — — 763,157 — 40,186,969 —
20% — 563 3,641,997 — 3,921,760 2,376 — — — 30,948 7,597,644 1,519,529
35% — — — — — — 14,168,172 — — — 14,168,172 4,958,860
50% — — 4,906,954 — 2,511,314 22,663 11,892,036 — — — 19,332,967 9,666,484
75% — — — — — 56,050,351 — — — — 56,050,351 42,037,763
100% — — 54,093 2,073 27,391,296 19,917 212,003 — 1,912,073 4,002,256 33,593,711 33,593,711
150% — — — 2,010 105,797 847,883 65 150,966 — — 1,106,721 1,660,082

Total Exposures 39,413,697 563 8,603,044 4,083 33,940,282 56,943,190 26,272,276 150,966 2,675,230 4,033,204 172,036,535 93,436,429

Risk-Weighted Assets
by Exposures — 113 3,235,969 5,088 29,590,002 43,341,311 11,116,979 226,449 1,912,073 4,008,445 93,436,429

Average Risk Weight 0.0% 20.0% 37.6% 124.6% 87.2% 76.1% 42.3% 150.0% 71.5% 99.4% 54.3%

Deduction from
Capital Base — — —

Bank
2008
0% 32,552,345 — — — — — — — 909,346 — 33,461,691 —
20% 35,398 752 11,100,934 — 2,131,356 4,279 — — — 30,948 13,303,667 2,660,733
35% — — — — — — 11,203,232 — — — 11,203,232 3,921,131
50% — — 3,034,047 — 2,192,488 28,245 8,590,767 — — — 13,845,547 6,922,774
75% — — — — — 45,386,825 9,413,940 — — — 54,800,765 41,100,574
100% — — 115,504 12,191 25,127,046 18,751 227,493 — 2,075,271 2,123,687 29,699,943 29,699,943
150% — — — 2,010 59,689 468,289 227,444 144,569 — — 902,001 1,353,001

Total Exposures 32,587,743 752 14,250,485 14,201 29,510,579 45,906,389 29,662,876 144,569 2,984,617 2,154,635 157,216,846 85,658,156

Risk-Weighted Assets
by Exposures 7,080 150 3,852,714 15,206 26,739,095 34,776,282 15,845,630 216,853 2,075,270 2,129,876 85,658,156

Average Risk Weight 0.0% 20.0% 27.0% 107.1% 90.6% 75.8% 53.4% 150.0% 69.5% 98.9% 54.5%

Deduction from
Capital Base — — —

 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
NOTES TO THE FINANCIAL STATEMENTS 353

51. CAPITAL ADEQUACY (continued)

(e) The Off-Balance Sheet exposures and their related counterparty credit risk of the Group and the Bank are as follows:

Positive
Fair Value Credit Risk-
Principal of Derivative Equivalent Weighted
2009 Amount Contracts Amount Assets
Group RM’000 RM’000 RM’000 RM’000

Credit-related Exposures
Direct credit substitutes 1,439,868 1,439,868 864,160
Transaction-related contingent items 627,016 313,508 181,889
Short term self-liquidating trade-related
contingencies 567,838 113,568 81,594
Obligations under an on-going underwriting
agreement 75,000 37,500 37,500
Other commitments, such as formal standby
facilities and credit lines, with an original
maturity of:
– exceeding one year 13,477,346 5,598,305 3,920,956
– not exceeding one year 19,148,076 — —
Unutilised credit card lines 3,239,933 647,986 485,990

38,575,077 8,150,735 5,572,089

Derivative Financial Contracts

Foreign exchange related contracts:
– less than one year 11,203,156 41,303 165,755 47,586
– one year to less than five years 5,062 40 293 293
Interest rate related contracts:
– less than one year 166,552 2,623 2,964 593
– one year to less than five years 5,962,948 151,373 318,358 64,546
– five years and above 4,947,020 92,859 449,300 91,916
Commodity related contracts:
– less than one year 3,767 17 55 55
Equity related contracts:
– one year to less than five years 480,456 22,096 60,532 22,623

22,768,961 310,311 997,257 227,612

Other Treasury-related Exposures

Forward asset purchases 91,201 91,201 15,171

61,435,239 310,311 9,239,193 5,814,872

Note 10 Note 51 (c)

PUBLIC BANK BERHAD
ANNUAL REPORT 2009
354 NOTES TO THE FINANCIAL STATEMENTS

51. CAPITAL ADEQUACY (continued)

(e) The Off-Balance Sheet exposures and their related counterparty credit risk of the Group and the Bank were as follows
(continued):

Positive
Fair Value Credit Risk-
Principal of Derivative Equivalent Weighted
2008 Amount Contracts Amount Assets
Group RM’000 RM’000 RM’000 RM’000

Credit-related Exposures
Direct credit substitutes 1,707,324 1,707,324 967,059
Transaction-related contingent items 597,837 298,918 179,717
Short term self-liquidating trade-related
contingencies 662,108 132,422 82,666
Assets sold with recourse 341,988 341,988 163,770
Obligations under an on-going underwriting
agreement 75,000 37,500 37,500
Other commitments, such as formal standby
facilities and credit lines, with an original
maturity of:
– exceeding one year 9,939,339 4,969,670 3,959,368
– not exceeding one year 17,418,621 3,483,724 2,864,928
Unutilised credit card lines 2,909,982 581,996 436,497

33,652,199 11,553,542 8,691,505

Derivative Financial Contracts

Foreign exchange related contracts:
– less than one year 9,115,195 90,945 184,974 78,183
– one year to less than five years 37,532 592 2,468 1,234
Interest rate related contracts:
– less than one year 2,177,466 32,880 37,557 7,533
– one year to less than five years 4,040,636 216,196 342,340 68,572
– five years and above 3,555,860 234,366 458,159 95,165
Equity related contracts:
– one year to less than five years 272,106 15,250 37,018 18,509

19,198,795 590,229 1,062,516 269,196

Other Treasury-related Exposures

Forward asset purchases 15,874 15,874 3,175

52,866,868 590,229 12,631,932 8,963,876

Note 10 Note 51 (c)
 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
NOTES TO THE FINANCIAL STATEMENTS 355

51. CAPITAL ADEQUACY (continued)

(e) The Off-Balance Sheet exposures and their related counterparty credit risk of the Group and the Bank are as follows
(continued):

Positive
Fair Value Credit Risk-
Principal of Derivative Equivalent Weighted
2009 Amount Contracts Amount Assets
Bank RM’000 RM’000 RM’000 RM’000

(Excluding of Public Bank (L) Ltd.)
Credit-related Exposures
Direct credit substitutes 1,321,526 1,321,526 836,660
Transaction-related contingent items 577,945 288,973 166,195
Short term self-liquidating trade-related
contingencies 422,644 84,529 77,505
Obligations under an on-going underwriting
agreement 75,000 37,500 37,500
Other commitments, such as formal standby
facilities and credit lines, with an original
maturity of:
– exceeding one year 12,381,050 5,137,648 3,572,009
– not exceeding one year 17,481,585 — —
Unutilised credit card lines 3,047,607 609,521 457,141

35,307,357 7,479,697 5,147,010

Derivative Financial Contracts

Foreign exchange related contracts:
– less than one year 10,521,767 36,153 151,072 44,650
– one year to less than five years 5,062 40 293 293
Interest rate related contracts:
– less than one year 166,552 2,623 2,964 593
– one year to less than five years 5,774,408 151,373 312,873 63,398
– five years and above 4,604,220 90,559 425,746 87,206
Commodity related contracts:
– less than one year 3,767 17 55 55
Equity related contracts:
– one year to less than five years 480,456 22,096 60,532 22,623

21,556,232 302,861 953,535 218,818

Other Treasury-related Exposures

Forward asset purchases 15,344 15,344 —

56,878,933 302,861 8,448,576 5,365,828

Note 10
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
356 NOTES TO THE FINANCIAL STATEMENTS

51. CAPITAL ADEQUACY (continued)

(e) The Off-Balance Sheet exposures and their related counterparty credit risk of the Group and the Bank are as follows
(continued):

Positive
Fair Value Credit Risk-
Principal of Derivative Equivalent Weighted
2009 Amount Contracts Amount Assets
Bank (continued) RM’000 RM’000 RM’000 RM’000

Public Bank (L) Ltd.

Credit-related Exposures
Direct credit substitutes 5,142 5,142 5,142
Other commitments, such as formal standby
facilities and credit lines, with an original
maturity of:
– exceeding one year 34,280 17,140 17,140
– not exceeding one year 16,538 — —

55,960 22,282 22,282

Derivative Financial Contracts

Interest rate related contracts:
– one year to less than five years 188,540 — 5,485 1,147
– five years and above 342,800 2,300 23,554 4,711

531,340 2,300 29,039 5,858

587,300 2,300 51,321 28,140

57,466,233 305,161 8,499,897 5,393,968

Note 51 (c)

The Off-Balance Sheet exposures of the Bank include those of its wholly-owned offshore banking subsidiary, Public
Bank (L) Ltd, for capital adequacy compliance purposes.
 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
NOTES TO THE FINANCIAL STATEMENTS 357

51. CAPITAL ADEQUACY (continued)

(e) The Off-Balance Sheet exposures and their related counterparty credit risk of the Group and the Bank are as follows
(continued):

Positive
Fair Value Credit Risk-
Principal of Derivative Equivalent Weighted
2008 Amount Contracts Amount Assets
Bank RM’000 RM’000 RM’000 RM’000

(Excluding Public Bank (L) Ltd.)
Credit-related Exposures
Direct credit substitutes 1,564,420 1,564,420 997,053
Transaction-related contingent items 549,206 274,603 162,481
Short term self-liquidating trade-related
contingencies 498,861 99,773 63,237
Obligations under an on-going underwriting
agreement 75,000 37,500 37,500
Other commitments, such as formal standby
facilities and credit lines, with an original
maturity of:
– exceeding one year 9,224,333 4,612,166 3,666,939
– not exceeding one year 15,380,577 3,076,116 2,473,726
Unutilised credit card lines 2,740,982 548,196 411,147

30,033,379 10,212,774 7,812,083

Derivative Financial Contracts

Foreign exchange related contracts:
– less than one year 8,254,482 90,431 174,241 76,038
– one year to less than five years 37,532 592 2,468 1,234
Interest rate related contracts:
– less than one year 1,990,047 32,880 37,214 7,443
– one year to less than five years 3,971,345 216,196 340,955 68,191
– five years and above 3,192,087 234,366 437,545 91,042
Equity related contracts:
– one year to less than five years 272,106 15,250 37,018 18,509

17,717,599 589,715 1,029,441 262,457

Other Treasury-related Exposures

Forward asset purchases 1,594 1,594 319

47,752,572 589,715 11,243,809 8,074,859

Note 10
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
358 NOTES TO THE FINANCIAL STATEMENTS

51. CAPITAL ADEQUACY (continued)

(e) The Off-Balance Sheet exposures and their related counterparty credit risk of the Group and the Bank are as follows
(continued):

Positive
Fair Value Credit Risk-
Principal of Derivative Equivalent Weighted
2008 Amount Contracts Amount Assets
Bank (continued) RM’000 RM’000 RM’000 RM’000

Public Bank (L) Ltd.
Credit-related Exposures
Direct credit substitutes 2,772 2,772 2,772
Other commitments, such as formal standby
facilities and credit lines, with an original
maturity of:
– not exceeding one year 19,032 3,806 3,506

21,804 6,578 6,278

Derivative Financial Contracts

Interest rate related contracts:
– less than one year 187,419 — 343 89
– one year to less than five years 69,291 — 1,386 381
– five years and above 363,773 — 20,614 4,123

620,483 — 22,343 4,593

642,287 — 28,921 10,871

48,394,859 589,715 11,272,730 8,085,730

Note 51 (c)

The Off-Balance Sheet exposures of the Bank include those of its wholly-owned offshore banking subsidiary, Public
Bank (L) Ltd, for capital adequacy compliance purposes.
 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
NOTES TO THE FINANCIAL STATEMENTS 359

51. CAPITAL ADEQUACY (continued)

(f) The risk-weighted assets and capital requirements for the various categories of risk under Market Risk are as follows:

2009 2008
Risk-weighted Risk-weighted
Assets Capital Assets Capital
Equivalent Required Equivalent Required
RM’000 RM’000 RM’000 RM’000
Group
Interest rate risk
– General interest rate risk 319,689 25,575 403,760 32,301
– Specific interest rate risk 219,550 17,564 328,775 26,302

539,239 43,139 732,535 58,603

Equity position risk
– General risk 925 74 975 78
– Specific risk 289 23 388 31

1,214 97 1,363 109

Foreign exchange risk 621,165 49,693 1,101,726 88,138

Total (Note 51(c)) 1,161,618 92,929 1,835,624 146,850

Bank
Interest rate risk
– General interest rate risk 309,713 24,777 519,612 41,569
– Specific interest rate risk 198,575 15,886 307,450 24,596

508,288 40,663 827,062 66,165

Equity position risk
– General risk 925 74 975 78
– Specific risk 289 23 388 31

1,214 97 1,363 109

Foreign exchange risk 1,571,478 125,718 924,347 73,948

Total (Note 51(c)) 2,080,980 166,478 1,752,772 140,222

PUBLIC BANK BERHAD
ANNUAL REPORT 2009
360 NOTES TO THE FINANCIAL STATEMENTS

52. CAPITAL MANAGEMENT

The Group actively manages its capital to support underlying risks in its business activities and to enable future business
growth. The Group’s capital management strategy is to continue to maximise shareholder value via an efficient capital
structure, whilst ensuring that it complies with regulatory capital requirements. The allocation of capital resources represents
part of the Group’s strategic planning review and is subject to the approval of the Board of Directors.

The Group’s capital is managed in line with the objectives of the Group Capital Management Framework. The key objectives
under the framework include meeting regulatory capital requirements, optimising return to shareholders, maintaining adequate
levels and optimum mix of capital, maintaining strong external credit ratings and allocation of capital across business units
and subsidiaries. In order to meet these objectives, the Group actively manages its capital structure and makes adjustments
to address changes in the economic environment and risk characteristics inherent in its business operations. These initiatives
include issuances of capital securities, share buy-back activities, adjustments to the amount of dividends distributed to
shareholders and a focus on growth in non-interest income and other less capital-intensive business activities.

The Group’s and Bank’s regulatory capital are determined under Bank Negara Malaysia’s revised Risk-weighted Capital
Adequacy Framework and their capital ratios have complied with the minimum requirements set under this guideline.
Information on the Group’s and Bank’s capital adequacy ratios, regulatory minimum capital requirements and the components
of capital base are disclosed in Note 51 (a) and (b).

53. SEGMENT INFORMATION

The following segment information has been prepared in accordance with FRS 8 Operating Segments, which defines the
requirements for the disclosure of financial information of an entity’s operating segments. It is prepared on the basis of the
“management approach”, which requires presentation of the segments on the basis of internal reports about the components
of the entity which are regularly reviewed by the chief operating decision-maker in order to allocate resources to a segment
and to assess its performance.

The Group’s operating and reportable segments are business units engaged in providing different products or services and
business units operating in different geographical locations. These businesses are managed and assessed separately as each
requires a differentiated strategy focused on the specific products and services provided for the economic, competitive,
geographical and regulatory environment in which it operates. For each operating segment, the Board Executive Committee
reviews the internal management reports monthly in order to assess their performance.

During the current financial year, the presentation of the Group’s operating segments has been realigned to the Group’s
overall basis for assessment of segment performance.

The Group’s domestic business, which also includes Islamic banking business, is organised into the following key operating
segments:

(i) Hire Purchase

The hire purchase operations is focused on the provision of passenger vehicle financing to all levels of customers.

(ii) Retail Operations

Retail operations focuses on providing products and services to individual customers and small- and medium-sized
enterprises. The products and services offered to customers include credit facilities (mortgages, trade and personal
loans), credit cards, remittance services, deposit collection and investment products.

(iii) Corporate Lending

The corporate lending operations caters to the funding needs of large corporate customers which are primarily public
listed companies and their related corporations.
 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
NOTES TO THE FINANCIAL STATEMENTS 361

53. SEGMENT INFORMATION (Continued)

The Group’s domestic business, which also includes Islamic banking business, is organised into the following key operating
segments (continued):

(iv) Treasury and Capital Market Operations

The treasury and capital market operations is involved in proprietary trading in treasury related products and services
such as foreign exchange, money market operations and securities trading. Income from customer trading is reflected
under Retail Operations.

(v) Investment Banking

The investment banking operations caters to the business needs of large corporate customers through the provision of
financial solutions and direct lending. The services offered include structured financing, corporate advisory services,
merger and acquisition, share-broking and debt restructuring advisory services.

(vi) Fund Management

The fund management operations consists of sale of trust units and the management of unit trust funds as conducted
by the Bank’s wholly owned subsidiary company, Public Mutual Berhad.

(vii) Others
Others refer mainly to non-core operations such as property holding.

The Group’s overseas business operations is organised according to the following geographical locations:

(i) Hong Kong SAR

This includes all business operations conducted by the Group’s subsidiaries in Hong Kong SAR and the People’s
Republic of China, including retail and commercial banking and lending, wealth management services, stockbroking and
other related financial services.

(ii) Cambodia
This comprises all business operations conducted by the Group’s subsidiary companies in Cambodia, which includes
mainly financing, deposit-taking and general insurance businesses.

(iii) Other Countries

This refers to the Group’s banking business operations in Vietnam, Laos and Sri Lanka.

Measurement and Evaluation of Segment Performance

The Board Executive Committee evaluates operating segments’ performance on the basis of revenue, profit, cost-to-income
ratio, loans and deposit growth and asset quality. Expenses directly associated with each operating segment are included in
determining their respective profit. Transactions between operating segments are based on mutually agreed allocation bases.
In addition to the operating segments, the segment information disclosed also includes internal service providers (head office),
which operate on a non-profit basis, and inter-segment eliminations.

Major Customers
Revenues from no one single customer amounted to greater than 10% of the Group’s revenues for the current financial year
(2008 – none).
 362
53. SEGMENT INFORMATION (continued)
By Business Segments:

<------------------------------------- Domestic Operating Segments -------------------------------------> <--- Overseas Operating Segments --->
Treasury
and Capital Total Total Inter-
ANNUAL REPORT
PUBLIC BANK BERHAD

Hire Retail Corporate Market Investment Fund Head Domestic Hong Kong Other Overseas segment Group
2009 Purchase Operations Lending Operations Banking Management Others Office Operations SAR Cambodia Countries Operations Elimination Total
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

External revenue 1,641,665 4,264,940 544,676 1,261,726 194,142 437,049 4,482 263,132 8,611,812 782,077 283,106 38,573 1,103,756 — 9,715,568
2009

Revenue from other segments — 819,292 8,576 268,613 35,875 (13,519) 27,401 885,179 2,031,417 242,802 10,084 80,740 333,626 (2,365,043) —
NOTES TO THE FINANCIAL STATEMENTS

Total revenue 1,641,665 5,084,232 553,252 1,530,339 230,017 423,530 31,883 1,148,311 10,643,229 1,024,879 293,190 119,313 1,437,382 (2,365,043) 9,715,568

Net interest income and

Islamic banking income 842,519 2,699,590 202,109 137,432 17,215 1,100 (3,274) 144,064 4,040,755 533,615 125,804 27,859 687,278 — 4,728,033
Other operating income 3,244 491,415 47,285 131,341 68,936 423,161 31,705 100,615 1,297,702 129,346 40,472 2,938 172,756 (73,523) 1,396,935

Net income 845,763 3,191,005 249,394 268,773 86,151 424,261 28,431 244,679 5,338,457 662,961 166,276 30,797 860,034 (73,523) 6,124,968
Other operating expenses (132,926) (1,156,738) (6,662) (18,033) (40,989) (211,323) (14,214) (249,665) (1,830,550) (292,755) (49,968) (10,163) (352,886) 73,523 (2,109,913)
of which:
Depreciation and amortisation (1,625) (61,118) (817) (429) (665) (5,870) (4,564) (38,754) (113,842) (13,868) (4,251) (1,534) (19,653) — (133,495)
Allowance for losses on loans,
advances and financing excluding
general allowance (56,237) (73,998) (3,076) — 512 — — — (132,799) (216,714) (48,047) 197 (264,564) — (397,363)
Impairment loss — (9,536) — — (5,443) (100) — — (15,079) — — — — — (15,079)

Profit by segments 656,600 1,950,733 239,656 250,740 40,231 212,838 14,217 (4,986) 3,360,029 153,492 68,261 20,831 242,584 — 3,602,613

Reconciliation of segment profits

to consolidated profits:
General allowance (278,754) (14,853) (293,607)
Share of profit after tax of equity
accounted associated companies 297 12,130 12,427

Profit before tax
expense and zakat 3,081,572 239,861 3,321,433

53. SEGMENT INFORMATION (continued)
By Business Segments (continued):

<------------------------------------- Domestic Operating Segments -------------------------------------> <--- Overseas Operating Segments --->
Treasury
and Capital Total Total Inter-
Hire Retail Corporate Market Investment Fund Head Domestic Hong Kong Other Overseas segment Group
2009 Purchase Operations Lending Operations Banking Management Others Office Operations SAR Cambodia Countries Operations Elimination Total
(continued) RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Cost-to-income ratio 15.7% 36.2% 2.7% 6.7% 47.6% 49.8% 50.0% 102.0% 34.3% 44.2% 30.1% 33.0% 41.0% 34.4%
Gross loans 29,915,177 78,189,838 15,985,587 — 235,494 34,372 2,018 — 124,362,486 10,919,276 2,079,069 249,596 13,247,941 — 137,610,427
Net non-performing loans 103,972 721,393 13,468 — — — — — 838,833 163,598 93,780 432 257,810 — 1,096,643
Deposits from customers — 105,132,084 304,110 46,174,346 4,199,258 — — — 155,809,798 12,761,056 2,072,737 247,998 15,081,791 — 170,891,589
Addition to non-current assets 2,076 98,098 178 1,050 1,160 6,466 185 4,017 113,230 13,231 45,034 3,424 61,689 — 174,919
Segment assets 29,632,808 108,792,451 15,732,505 67,347,468 6,671,519 279,817 256,640 11,547,524 240,260,732 16,127,527 3,227,460 421,834 19,776,821 (46,003,504) 214,034,049

Reconciliation of segment assets

to consolidated assets:
Investment in associated companies 1,712 126,606 128,318
Unallocated assets 916,176 — 916,176
Intangible assets 769,251 1,288,360 2,057,611

Total assets 241,947,871 21,191,787 217,136,154

ANNUAL REPORT
PUBLIC BANK BERHAD

NOTES TO THE FINANCIAL STATEMENTS

363
2009
 364
53. SEGMENT INFORMATION (continued)
By Business Segments (continued):

<------------------------------------- Domestic Operating Segments -------------------------------------> <--- Overseas Operating Segments --->
Treasury
and Capital Total Total Inter-
ANNUAL REPORT
PUBLIC BANK BERHAD

Hire Retail Corporate Market Investment Fund Head Domestic Hong Kong Other Overseas segment Group
2008 Purchase Operations Lending Operations Banking Management Others Office Operations SAR Cambodia Countries Operations Elimination Total
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

External revenue 1,502,996 4,421,113 556,460 2,042,254 229,060 396,949 5,891 208,449 9,363,172 875,867 234,232 27,036 1,137,135 — 10,500,307
Revenue from other segments — 1,026,378 20,204 451,338 27,475 (24,149) 25,674 918,713 2,445,633 14,976 6,776 1,809 23,561 (2,469,194) —
2009

NOTES TO THE FINANCIAL STATEMENTS

Total revenue 1,502,996 5,447,491 576,664 2,493,592 256,535 372,800 31,565 1,127,162 11,808,805 890,843 241,008 28,845 1,160,696 (2,469,194) 10,500,307

Net interest income and

Islamic banking income 422,479 2,814,987 110,334 155,085 10,936 (1,386) (5,631) 179,153 3,685,957 453,027 124,770 21,975 599,772 — 4,285,729
Other operating income 4,083 667,273 34,018 136,343 56,643 369,925 33,036 39,711 1,341,032 137,357 43,604 (821) 180,140 (67,645) 1,453,527

Net income 426,562 3,482,260 144,352 291,428 67,579 368,539 27,405 218,864 5,026,989 590,384 168,374 21,154 779,912 (67,645) 5,739,256
Other operating expenses (119,773) (993,009) (15,623) (14,868) (33,571) (185,214) (14,296) (204,144) (1,580,498) (235,770) (35,252) (7,226) (278,248) 67,645 (1,791,101)
of which:
Depreciation and amortisation (1,353) (56,512) (1,292) (484) (493) (6,886) (5,672) (31,734) (104,426) (10,356) (2,908) (1,169) (14,433) — (118,859)
Allowance for losses on loans,
advances and financing excluding
general allowance (87,484) (53,527) (21,940) — 446 — — — (162,505) (153,663) (60) (233) (153,956) — (316,461)
Impairment loss — (3,665) — — — — — — (3,665) (29,197) — — (29,197) — (32,862)

Profit by segments 219,305 2,432,059 106,789 276,560 34,454 183,325 13,109 14,720 3,280,321 171,754 133,062 13,695 318,511 — 3,598,832

Reconciliation of segment profits

to consolidated profits:
General allowance (222,315) (9,786) (232,101)
Share of profit after tax of equity
accounted associated companies 155 12,302 12,457

Profit before tax
expense and zakat 3,058,161 321,027 3,379,188

53. SEGMENT INFORMATION (continued)
By Business Segments (continued):

<------------------------------------- Domestic Operating Segments -------------------------------------> <--- Overseas Operating Segments --->
Treasury
and Capital Total Total Inter-
Hire Retail Corporate Market Investment Fund Head Domestic Hong Kong Other Overseas segment Group
2008 Purchase Operations Lending Operations Banking Management Others Office Operations SAR Cambodia Countries Operations Elimination Total
(continued) RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Cost-to-income ratio 28.1% 28.5% 10.8% 5.1% 49.7% 50.3% 52.2% 93.3% 31.4% 39.9% 20.9% 34.2% 35.7% 31.2%
Gross loans 27,603,883 66,418,999 12,155,796 — 237,747 23,049 1,977 — 106,441,451 11,419,055 2,230,626 227,452 13,877,133 — 120,318,584
Net non-performing loans 126,361 828,793 15,589 — — — — — 970,743 66,435 — 119 66,554 — 1,037,297
Deposits from customers — 95,615,974 — 40,549,900 3,328,134 — — — 139,494,008 10,193,519 1,286,625 211,146 11,691,290 — 151,185,298
Addition to non-current assets 2,905 189,657 558 556 943 15,758 3 3,954 214,334 37,738 34,008 4,058 75,804 — 290,138
Segment assets 27,268,706 101,964,329 11,968,047 53,606,494 4,867,926 260,965 186,358 10,789,710 210,912,535 14,935,815 3,441,080 248,154 18,625,049 (36,211,503) 193,326,081

Reconciliation of segment assets

to consolidated assets:
Investment in associated companies 1,414 126,388 127,802
Unallocated assets 637,205 — 637,205
Intangible assets 769,251 1,302,767 2,072,018

Total assets 212,320,405 20,054,204 196,163,106

ANNUAL REPORT
PUBLIC BANK BERHAD

NOTES TO THE FINANCIAL STATEMENTS

365
2009
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
366 NOTES TO THE FINANCIAL STATEMENTS

54. RATING STATEMENT

As at 31 December 2009, the Bank was accorded the following ratings:

Agencies Date accorded/Reaffirmed Ratings

Rating Agency 22 April 2009 (Reaffirmed) Long-Term Rating: AAA
Malaysia Berhad 22 April 2009 (Reaffirmed) Short-Term Rating: P1
22 April 2009 (Reaffirmed) Outlook: Stable
22 April 2009 (Reaffirmed) Subordinated Medium-Term Notes Programme: AA1
22 April 2009 (Reaffirmed) Innovative Tier I Capital Securities: AA2
22 April 2009 (Assigned) Non-Cumulative Perpetual Capital
Securities Programme: AA2
Moody’s Investors 3 December 2009 (Reaffirmed) Long-Term Deposits Rating: A3
Services 3 December 2009 (Reaffirmed) Short-Term Deposits Rating: P-1
3 December 2009 (Reaffirmed) Financial Strength: C
3 December 2009 (Reaffirmed) Outlook: Stable
3 December 2009 (Reaffirmed) Subordinated notes: A3
Standard & Poor’s 23 November 2009 (Reaffirmed) Long-Term Rating: A-
23 November 2009 (Reaffirmed) Short-Term Rating: A-2
Asean Regional Scale Rating:
3 May 2009 (Assigned) Long-Term Rating: axAA
3 May 2009 (Assigned) Short-Term Rating: axA-1
23 November 2009 (Reaffirmed) Bank Fundamental Strength: B
23 November 2009 (Reaffirmed) Outlook: Stable
30 May 2006 (Affirmed) Subordinated Notes (due 2017): BBB+
30 May 2006 (Assigned) Innovative Tier-1 Capital Securities: BBB

55. SIGNIFICANT EVENTS

(a) Non-Innovative Tier I Stapled Securities Programme
On 16 March 2009, the Bank had obtained the approval of Bank Negara Malaysia for the issuance of up to RM5.0
billion of Non-Cumulative Perpetual Capital Securities which are stapled to Subordinated Notes issued by a wholly-
owned subsidiary company, PBFIN Berhad. The issuance structure is collectively referred to as the ‘Stapled Securities’.
Approval was also obtained for these Stapled Securities to be classified as Tier I Capital for inclusion in the computation
of the risk-weighted capital adequacy ratios for the Group and the Bank. The approval of the Securities Commission
for the above programme was obtained on 5 May 2009.

On 5 June 2009, the Bank issued its first tranche of Stapled Securities amounting to RM1,200 million under this Non-
Innovative Tier I Stapled Securities Programme (Note 29). The Bank subsequently issued its second tranche of Stapled
Securities amounting to RM888 million on 13 November 2009.

(b) Subordinated Notes

On 22 September 2009, the Bank fully redeemed the USD350 million Subordinated Notes together with accrued interest.

Subsequently, the Bank issued the following tranches of Subordinated Notes under its RM5.0 billion Subordinated
Medium Term Note Programme:
(i) Second tranche of RM200 million issued on 6 November 2009;
(ii) Third tranche of RM223 million issued on 10 December 2009; and
(iii) Fourth tranche of RM50 million issued on 31 December 2009.

56. SUBSEQUENT EVENTS

There were no material events subsequent to the balance sheet date that require disclosure or adjustments to the financial
statements.
 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
NOTES TO THE FINANCIAL STATEMENTS 367

57. ISLAMIC BANKING BUSINESS

The state of affairs as at 31 December 2009 and results for the financial year ended on this date under the Islamic banking
business of the Group, which is conducted by its wholly-owned subsidiary Public Islamic Bank Berhad, are summarised as
follows:

Balance Sheets as at 31 December 2009

Group

2009 2008
Note RM’000 RM’000

ASSETS
Cash and short-term funds (c) 6,727,664 3,323,580
Securities held-for-trading (d) 79,988 382,296
Securities available-for-sale (e) 1,274,512 400,454
Securities held-to-maturity (f) 5,022 —
Financing and advances (g) 14,472,828 12,023,665
Other assets (h) 70,551 65,039
Statutory deposits with Bank Negara Malaysia 144,000 341,600
Deferred tax assets (i) 84,102 72,304
Property and equipment 464 359

Total Assets 22,859,131 16,609,297

LIABILITIES AND ISLAMIC BANKING FUNDS

Deposits from customers (j) 13,073,701 9,622,325
Deposits and placements of banks and other financial institutions (k) 8,051,182 4,864,825
Other liabilities (l) 48,915 974,266
Provision for zakat and taxation (m) 50,921 44,013

Total Liabilities 21,224,719 15,505,429
Islamic Banking Funds 1,634,412 1,103,868

Total Liabilities and Islamic Banking Funds 22,859,131 16,609,297

OFF-BALANCE SHEET EXPOSURES (t) 1,144,291 1,050,966

The accompanying notes form an integral part of the financial statements

PUBLIC BANK BERHAD
ANNUAL REPORT 2009
368 NOTES TO THE FINANCIAL STATEMENTS

57. ISLAMIC BANKING BUSINESS (continued)

Income Statements for the financial year ended 31 December 2009

Group

2009 2008
Note RM’000 RM’000

Income derived from investment of depositors’ funds and others (n) 916,568 751,646
Allowance for losses on financing and advances (o) (68,263) (64,372)

– General allowances (32,302) (25,651)

– Other financing loss allowances (35,961) (38,721)

Transfer from/(to) Profit Equalisation Reserves, net (l) 22,908 (22,059)

Total attributable income 871,213 665,215
Income attributable to the depositors (p) (320,825) (276,778)

Income attributable to the reporting institution 550,388 388,437
Income derived from investment of Islamic Banking Funds (q) 72,940 105,608

Total net income 623,328 494,045
Other operating expenses (r) (154,407) (152,631)

Profit before zakat and taxation 468,921 341,414
Zakat (s) (250) (179)
Taxation (s) (112,942) (90,316)

Profit for the year 355,729 250,919

The accompanying notes form an integral part of the financial statements

 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
NOTES TO THE FINANCIAL STATEMENTS 369

57. ISLAMIC BANKING BUSINESS (continued)

Income Statements for the financial year ended 31 December 2009 (continued)

Net income from Islamic banking business as reported in the income statements of the Group is derived as follows:-

Group

2009 2008
Note RM’000 RM’000

Income derived from investment of depositors’ funds and others (n) 916,568 751,646
Income derived from investment of Islamic Banking Funds (q) 72,940 105,608
Income attributable to the depositors (p) (320,825) (276,778)
Transfer from/(to) Profit Equalisation Reserves, net (l) 22,908 (22,059)

Net income from Islamic banking business reported
in the income statement of the Group 691,591 558,417

The accompanying notes form an integral part of the financial statements

PUBLIC BANK BERHAD
ANNUAL REPORT 2009
370 NOTES TO THE FINANCIAL STATEMENTS

57. ISLAMIC BANKING BUSINESS (continued)

Statements of Changes in Islamic Banking Funds for the year ended 31 December 2009

Distributable
<------ Non-distributable Reserves ------> Reserves
Capital Share Statutory Revaluation Retained
Funds Premium Reserves Reserves Profits Total
Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

At 1 January 2008 924,140 — — — 888,716 1,812,856

Existing share capital and reserves of
Islamic banking subsidiary company,
Public Islamic Bank Berhad 127,717 — — — 3,736 131,453
Issuance of share capital by
Public Islamic Bank Berhad
upon commencement of
Islamic banking operations 31,500 773,500 — — — 805,000
Net gain on revaluation of
securities available-for-sale — — — 341 — 341
Net profit for the year — — — — 250,919 250,919
Transfer to statutory reserves — — 23,819 — (23,819) —
Amount retained by the Bank (804,140) — — — (1,092,561) (1,896,701)

At 31 December 2008 279,217 773,500 23,819 341 26,991 1,103,868
Net gain on revaluation of securities
available-for-sale — — — 145 — 145
Net profit for the year — — — — 355,729 355,729
Issue of shares 11,000 264,000 — — — 275,000
Transfer to statutory reserves — — 116,555 — (116,555) —
Dividends paid — — — — (100,330) (100,330)

At 31 December 2009 290,217 1,037,500 140,374 486 165,835 1,634,412

The accompanying notes form an integral part of the financial statements

 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
NOTES TO THE FINANCIAL STATEMENTS 371

57. ISLAMIC BANKING BUSINESS (continued)

Cash Flow Statements for the year ended 31 December 2009
Group

2009 2008
RM’000 RM’000

Cash flows from operating activities
Profit before zakat and taxation 468,921 341,414
Adjustments for:
Depreciation 124 72
Allowance for losses on financing and advances 94,457 92,417
Write-back of allowance for losses on financing and advances (15,877) (18,589)
Amortisation of premium less accretion of discount 6,738 130
Net gain arising from sale of securities available-for-sale (117) —
Dividends from securities available-for-sale (8,838) —
Unrealised gain on revaluation of securities held-for-trading (83) —
Pension cost – defined benefit plan 208 —
Transfer (from)/to Profit Equalisation Reserves, net (22,908) 22,059

Operating profit before working capital changes 522,625 437,503
Decrease/(Increase) in operating assets:
Securities held-for-trading 302,263 8,873
Financing and advances (2,527,743) (1,696,264)
Statutory deposits with Bank Negara Malaysia 197,600 45,400
Other assets (5,512) 456,670
Increase/(Decrease) in operating liabilities:
Deposits from customers 3,451,376 6,193,126
Deposits and placements of banks and other financial institutions 3,186,357 (3,454,552)
Bills and acceptances payable — (46,942)
Other liabilities (950,835) 918,182

Cash generated from operations 4,176,131 2,861,996
Tax expense and zakat paid (69,946) (187,262)

Net cash generated from operating activities 4,106,185 2,674,734

Cash flows from investing activities
Purchase of property and equipment (229) (175)
Dividends received from securities 8,838 —
Net purchase of securities (885,380) (398,629)

Net cash used in investing activities (876,771) (398,804)

Cash flows from financing activities
Proceeds from issuance of shares 275,000 936,453
Net capital funds transferred to conventional business — (1,896,701)
Dividend paid (100,330) —

Net cash generated from/(used in) financing activities 174,670 (960,248)

Net increase in cash and cash equivalents 3,404,084 1,315,682
Cash and cash equivalents at beginning of year 3,323,580 2,007,898

Cash and cash equivalents at end of year 6,727,664 3,323,580

The accompanying notes form an integral part of the financial statements

PUBLIC BANK BERHAD
ANNUAL REPORT 2009
372 NOTES TO THE FINANCIAL STATEMENTS

57. ISLAMIC BANKING BUSINESS (continued)

Notes to the Financial Statements for the financial year ended 31 December 2009

(a) Significant Accounting Policies

The accounting policies adopted by the Islamic banking business are consistent with those adopted by the Group and
the Bank as disclosed in Note 2 to the financial statements of the Group and the Bank. The significant accounting
policies and methods of computation are consistent with those adopted in previous years.

(b) Basis of Accounting

The financial statements of the Islamic banking business have been prepared on a basis consistent with that of the
Group and the Bank as disclosed in Note 2 to the financial statements of the Group and the Bank, and have been
prepared under the accrual basis of accounting.

(c) Cash and Short-Term Funds

Group

2009 2008
RM’000 RM’000

Cash and balances with banks and other financial institutions 113,654 14,760
Money at call and deposit placements maturing within one month 6,614,010 3,308,820

6,727,664 3,323,580

(d) Securities Held-for-Trading

Group

2009 2008
RM’000 RM’000

At Fair Value
Money market instruments:
Malaysian Government Investment Certificates 30,305 —
Cagamas bonds — 382,296
Negotiable instruments of deposit 49,683 —

79,988 382,296

(e) Securities Available-for-Sale

Group

2009 2008
RM’000 RM’000

At fair value
Money market instruments:
Malaysian Government Investment Certificates 866,287 —

Quoted securities:
Trust units in Malaysia 408,225 400,454

1,274,512 400,454

 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
NOTES TO THE FINANCIAL STATEMENTS 373

57. ISLAMIC BANKING BUSINESS (continued)

Notes to the Financial Statements for the financial year ended 31 December 2009 (continued)

(f) Securities Held-to-Maturity

Group

2009 2008
RM’000 RM’000

At Amortised Cost
Unquoted securities:
Private debt securities in Malaysia 5,022 —

(g) Financing and Advances

(i) Net financing and advances analysed by type are as follows:
Group

2009 2008
RM’000 RM’000

Cash line 143,949 109,713

Term financing
House financing 2,783,550 2,680,000
Syndicated financing 366,469 —
Hire purchase receivables 9,753,338 9,345,331
Other term financing 5,306,869 3,735,357
Revolving credit 5,607 2,104

18,359,782 15,872,505
Less: Unearned income (3,642,736) (3,284,067)

Gross financing and advances
(including Islamic house financing sold to Cagamas) 14,717,046 12,588,438
Less: Islamic house financing sold to Cagamas — (350,009)

Gross financing and advances
(excluding Islamic house financing sold to Cagamas) 14,717,046 12,238,429
Less: Allowance for losses on financing and advances
– General (223,048) (190,746)
– Specific (21,170) (24,018)

Net financing and advances 14,472,828 12,023,665

PUBLIC BANK BERHAD
ANNUAL REPORT 2009
374 NOTES TO THE FINANCIAL STATEMENTS

57. ISLAMIC BANKING BUSINESS (continued)

Notes to the Financial Statements for the financial year ended 31 December 2009 (continued)

(g) Financing and Advances (continued)

(ii) The maturity structure of gross financing and advances are as follows:
Group

2009 2008
RM’000 RM’000

Maturity within one year 331,615 277,105

More than one year to three years 1,429,739 1,188,316
More than three years to five years 2,649,174 2,587,214
More than five years 10,306,518 8,535,803

14,717,046 12,588,438
Less: Islamic house financing sold to Cagamas — (350,009)

Gross financing and advances 14,717,046 12,238,429

(iii) Gross financing and advances analysed by contract are as follows:

Group

2009 2008
RM’000 RM’000

Bai’ Bithaman Ajil-i (deferred payment sale) 3,832,218 2,911,232

Ijarah Thamma Al-Bai’-i (leasing) 8,358,519 8,057,261
Ijarah Muntahia Bittamlik 66,105 —
Bai-Al-Einah-i 2,460,204 1,619,945

14,717,046 12,588,438
Less: Islamic house financing sold to Cagamas — (350,009)

14,717,046 12,238,429

 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
NOTES TO THE FINANCIAL STATEMENTS 375

57. ISLAMIC BANKING BUSINESS (continued)

Notes to the Financial Statements for the financial year ended 31 December 2009 (continued)

(g) Financing and Advances (continued)

(iv) Gross financing and advances analysed by type of customer are as follows:
Group

2009 2008
RM’000 RM’000

Other domestic non-bank financial institutions 9,380 655

Domestic business enterprises
– Small and medium enterprises 991,172 906,855
– Others 514,489 335,575
Government and statutory authorities 315,819 87
Individuals 12,840,659 11,308,252
Other domestic entities 2,925 1,413
Foreign customers 42,602 35,601

14,717,046 12,588,438
Less: Islamic house financing sold to Cagamas — (350,009)

14,717,046 12,238,429

(v) Gross financing and advances analysed by profit rate sensitivity are as follows:
Group

2009 2008
RM’000 RM’000

Fixed rate
– House financing 1,043,782 1,385,679
– Hire purchase receivables 8,358,519 8,057,261
– Other fixed rate financing 3,176,146 2,416,985
Variable rate
– BFR plus 1,679,479 652,083
– Cost plus 459,120 76,430

14,717,046 12,588,438
Less: Islamic house financing sold to Cagamas — (350,009)

14,717,046 12,238,429

PUBLIC BANK BERHAD
ANNUAL REPORT 2009
376 NOTES TO THE FINANCIAL STATEMENTS

57. ISLAMIC BANKING BUSINESS (continued)

Notes to the Financial Statements for the financial year ended 31 December 2009 (continued)

(g) Financing and Advances (continued)

(vi) Gross financing and advances analysed by economic purpose are as follows:
Group

2009 2008
RM’000 RM’000

Purchase of securities 12 799

Purchase of transport vehicles 8,361,467 8,060,891
Purchase of landed properties 2,898,826 2,535,370

(of which: – residential 1,970,676 1,704,867

– non-residential) 928,150 830,503

Purchase of fixed assets (excluding landed properties) 72,898 7,521

Personal use 2,538,796 1,700,566
Purchase of consumer durables 3,851 17,211
Construction 19,452 9,822
Working capital 471,747 140,490
Other purpose 349,997 115,768

14,717,046 12,588,438
Less: Islamic house financing sold to Cagamas — (350,009)

14,717,046 12,238,429

 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
NOTES TO THE FINANCIAL STATEMENTS 377

57. ISLAMIC BANKING BUSINESS (continued)

Notes to the Financial Statements for the financial year ended 31 December 2009 (continued)

(g) Financing and Advances (continued)

(vii) Gross financing and advances analysed by sectors are as follows:
Group

2009 2008
RM’000 RM’000

Agriculture, hunting, forestry and fishing 218,135 186,364

Mining and quarrying 7,305 7,298
Manufacturing 115,199 138,351
Electricity, gas and water 937 921
Construction 232,114 230,762
Wholesale & retail trade and restaurants & hotels 280,053 310,519
Transport, storage and communication 60,758 51,056
Finance, insurance and business services 124,889 124,697
Real estate 378,113 94,723
Community, social and personal services 376,589 63,125
Households 12,883,031 11,343,522

(of which: – purchase of residential properties 1,946,466 1,676,028

– purchase of transport vehicles 7,872,414 7,494,181
– others) 3,064,151 2,173,313

Others 39,923 37,100

14,717,046 12,588,438
Less: Islamic house financing sold to Cagamas — (350,009)

14,717,046 12,238,429

PUBLIC BANK BERHAD
ANNUAL REPORT 2009
378 NOTES TO THE FINANCIAL STATEMENTS

57. ISLAMIC BANKING BUSINESS (continued)

Notes to the Financial Statements for the financial year ended 31 December 2009 (continued)

(g) Financing and Advances (continued)

(viii) Movements in non-performing financing and advances (“NPF”) are as follows:
Group

2009 2008
RM’000 RM’000

At 1 January 144,359 169,490

Non-performing during the year 339,566 350,014
Reclassified as performing (266,451) (295,926)
Recoveries (28,844) (27,151)
Amount written off (49,587) (52,068)
Financing converted to foreclosed properties (979) —

At 31 December 138,064 144,359
Specific allowance (21,170) (24,018)

Net non-performing financing and advances 116,894 120,341

Net NPF as % of gross financing and advances

(including Islamic house financing sold to Cagamas)
less specific allowance 0.80% 0.96%

Non-performing financing and advances by classifications are as follows:

Group

2009 2008
RM’000 RM’000

Substandard ( > 3-9 months) 84,463 81,135

Doubtful ( > 9-12 months) 18,497 16,551
Bad ( > 12 months) 35,104 46,673

138,064 144,359

 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
NOTES TO THE FINANCIAL STATEMENTS 379

57. ISLAMIC BANKING BUSINESS (continued)

Notes to the Financial Statements for the financial year ended 31 December 2009 (continued)

(g) Financing and Advances (continued)

(ix) Movements in the allowance for losses on financing and advances are as follows:
Group

2009 2008
RM’000 RM’000

General allowance
At 1 January 190,746 165,095
Allowance made during the year (Note 57(o)) 32,302 25,651

At 31 December 223,048 190,746

As % of gross financing and advances

(including Islamic house financing sold to Cagamas)
less specific allowance 1.52% 1.52%

Specific allowance
At 1 January 24,018 27,883
Allowance made during the year (Note 57(o)) 62,155 66,766
Amount written back (Note 57(o)) (15,877) (18,589)
Amount written off (49,587) (52,068)
Reinstatement of amount written off previously due to
restructuring/rescheduling, now being classified as performing financing 541 51
Amount transferred to accumulated impairment losses
in value of foreclosed properties (80) (25)

At 31 December 21,170 24,018

PUBLIC BANK BERHAD
ANNUAL REPORT 2009
380 NOTES TO THE FINANCIAL STATEMENTS

57. ISLAMIC BANKING BUSINESS (continued)

Notes to the Financial Statements for the financial year ended 31 December 2009 (continued)

(g) Financing and Advances (continued)

(x) Non-performing financing and advances by purpose
Group

2009 2008
RM’000 RM’000

Purchase of transport vehicles 49,677 61,939

Purchase of landed properties 60,767 64,969

(of which: – residential 51,722 55,656

– non-residential) 9,045 9,313

Purchase of fixed assets (excluding landed properties) 178 124

Personal use 25,382 16,349
Purchase of consumer durables 20 175
Working capital 1,766 561
Other purpose 274 242

138,064 144,359

Non-performing financing and advances by sectors

Agriculture, hunting, forestry and fishing 118 52

Manufacturing 5,675 1,546
Electricity, gas and water 39 44
Construction 999 1,266
Wholesale & retail trade and restaurants & hotels 2,138 3,395
Transport, storage and communication 245 233
Finance, insurance and business services 1,214 338
Real estate — 795
Community, social and personal services 51 656
Households 127,572 135,813

(of which: – purchase of residential properties 51,588 55,477

– purchase of transport vehicles 46,018 57,981
– others) 29,966 22,355

Others 13 221

138,064 144,359

 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
NOTES TO THE FINANCIAL STATEMENTS 381

57. ISLAMIC BANKING BUSINESS (continued)

Notes to the Financial Statements for the financial year ended 31 December 2009 (continued)

(h) Other Assets

Group

2009 2008
RM’000 RM’000

Deferred handling fees * 54,742 51,745

Income receivable 7,773 388
Other receivables, deposits and prepayments 7,137 12,906
Foreclosed properties # 899 —

70,551 65,039

# Stated net of accumulated allowance for impairment loss amounting to 413 —

* This represents the unamortised balance of handling fees paid to motor vehicle dealers for hire purchase
financing.

(i) Deferred Tax Assets

Group

2009 2008
RM’000 RM’000

At 1 January 72,304 32,798

Existing deferred tax assets of Islamic banking subsidiary company,
Public Islamic Bank Berhad — 24,807
Recognised in income statement (Note 57(s))
– relating to origination and reversal of temporary difference 11,846 14,813
Recognised in equity (48) (114)

At 31 December 84,102 72,304

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set-off current tax assets against
current tax liabilities and when the deferred income taxes relate to the same tax authority. The net deferred tax assets
shown on the balance sheet is as follows:
Group

2009 2008
RM’000 RM’000

Deferred tax assets 84,002 80,626

Deferred tax liabilities 100 (8,322)

Deferred tax assets, net 84,102 72,304

PUBLIC BANK BERHAD
ANNUAL REPORT 2009
382 NOTES TO THE FINANCIAL STATEMENTS

57. ISLAMIC BANKING BUSINESS (continued)

Notes to the Financial Statements for the financial year ended 31 December 2009 (continued)

(i) Deferred Tax Assets (continued)

The components and movements in deferred tax assets and liabilities during the financial year prior to offsetting are as
follows:

Allowance
for Losses Profit
on Financing Equalisation Tax
and Advances Reserves Losses Total
Deferred tax assets of the Group RM’000 RM’000 RM’000 RM’000

At 1 January 2008 41,274 3,182 — 44,456

Existing deferred tax assets of
Islamic banking subsidiary company,
Public Islamic Bank Berhad — — 24,807 24,807
Recognised in income statement (Note 57(s))
– relating to origination and reversal
of temporary difference 5,849 5,514 — 11,363

At 31 December 2008 47,123 8,696 24,807 80,626
Recognised in income statement (Note 57(s))
– relating to origination and reversal
of temporary difference 9,103 (5,727) — 3,376

At 31 December 2009 56,226 2,969 24,807 84,002

Excess of
Capital
Allowances Deferred Other
Over Handling Temporary
Depreciation Fees Differences Total
Deferred tax liabilities of the Group RM’000 RM’000 RM’000 RM’000

At 1 January 2008 — 11,655 3 11,658

Recognised in income statement (Note 57(s))
– relating to origination and reversal
of temporary difference (11) 1,281 (4,720) (3,450)
Recognised in equity — — 114 114

At 31 December 2008 (11) 12,936 (4,603) 8,322
Recognised in income statement (Note 57(s))
– relating to origination and reversal
of temporary difference 101 (12,936) 4,365 (8,470)
Recognised in equity — — 48 48

At 31 December 2009 90 — (190) (100)

 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
NOTES TO THE FINANCIAL STATEMENTS 383

57. ISLAMIC BANKING BUSINESS (continued)

Notes to the Financial Statements for the financial year ended 31 December 2009 (continued)

(j) Deposits From Customers

Group

2009 2008
RM’000 RM’000

(i) By type of deposit:

Non-Mudharabah Fund
Wadiah current deposits-i 1,999,422 1,816,947
Wadiah savings deposits-i 3,591,720 3,232,046
Negotiable instruments of deposit-i 1,326,084 1,681,055

6,917,226 6,730,048

Mudharabah Fund
Mudharabah savings deposits-i 78,626 74,033
Mudharabah general investment deposits-i 3,795,302 2,350,894
Mudharabah special investment deposits-i 2,282,547 467,350

6,156,475 2,892,277

13,073,701 9,622,325

(ii) By type of customers:

Federal and state governments 486,214 312,476
Local government and statutory authorities 677,386 537,577
Business enterprises 3,413,567 1,980,917
Individuals 3,998,549 3,604,440
Foreign customers 89,632 79,812
Others 4,408,353 3,107,103

13,073,701 9,622,325

(iii) The maturity structure of Negotiable instruments of deposit-i and Mudharabah general and special investment
deposits-i are as follows:
Group

2009 2008
RM’000 RM’000

Due within six months 6,673,520 4,279,608

More than six months to one year 609,714 106,040
More than one year to three years 118,568 112,477
More than three years to five years 2,131 1,174

7,403,933 4,499,299

PUBLIC BANK BERHAD
ANNUAL REPORT 2009
384 NOTES TO THE FINANCIAL STATEMENTS

57. ISLAMIC BANKING BUSINESS (continued)

Notes to the Financial Statements for the financial year ended 31 December 2009 (continued)

(k) Deposits and Placements of Banks and Other Financial Institutions

Group

2009 2008
RM’000 RM’000

Non-Mudharabah Fund
Licensed banks 3,924,019 2,261,456
Licensed Islamic banks 1,923,325 149,852
Licensed investment banks 508,496 395,607
Other financial institutions 306,713 —

6,662,553 2,806,915

Mudharabah Fund
Licensed banks — 700,576
Licensed investment banks 20 62
Bank Negara Malaysia 3,651 2,835
Other financial institutions 1,384,958 1,354,437

1,388,629 2,057,910

8,051,182 4,864,825

(l) Other Liabilities

Group

2009 2008
RM’000 RM’000

Income payable 15,690 16,126

Other payables and accruals 22,656 924,871
Employee benefits (1,307) (1,515)
Profit Equalisation Reserves (Note 24) 11,876 34,784

48,915 974,266

The movements in Profit Equalisation Reserves are as follows:

At 1 January 34,784 12,725
Net (decrease)/increase: (22,908) 22,059

– Amount arising during the year 10,107 25,059

– Amount written back (33,015) (3,000)

At 31 December 11,876 34,784

 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
NOTES TO THE FINANCIAL STATEMENTS 385

57. ISLAMIC BANKING BUSINESS (continued)

Notes to the Financial Statements for the financial year ended 31 December 2009 (continued)

(m) Provision for Zakat and Taxation

Group

2009 2008
RM’000 RM’000

Tax expense 50,691 43,843

Zakat 230 170

50,921 44,013

(n) Income Derived from Investment of Depositors’ Funds and Others

Group

2009 2008
RM’000 RM’000

Income derived from investment of:

(i) General investment deposits 280,010 164,802
(ii) Other deposits 636,558 586,844

916,568 751,646

(i) Income derived from investment of general investment deposits:

Finance income and Hibah

Financing and advances 240,468 143,079
Securities held-for-trading 1,614 1,294
Securities available-for-sale 4,823 —
Securities held-to-maturity 6 —
Money at call and deposits with financial institutions 28,313 18,746

275,224 163,119
Amortisation of premium less accretion of discount (1,925) (26)

Total finance income and Hibah 273,299 163,093

Other operating income

Fee income 4,087 1,524
Gross dividend income from securities available-for-sale 2,525 —
Other income 99 185

6,711 1,709

280,010 164,802
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
386 NOTES TO THE FINANCIAL STATEMENTS

57. ISLAMIC BANKING BUSINESS (continued)

Notes to the Financial Statements for the financial year ended 31 December 2009 (continued)

(n) Income Derived from Investment of Depositors’ Funds and Others (continued)
Group

2009 2008
RM’000 RM’000

(ii) Income derived from investment of other deposits:

Finance income and Hibah

Financing and advances 546,665 508,829
Securities held-for-trading 3,669 4,670
Securities available-for-sale 10,964 —
Securities held-to-maturity 15 —
Money at call and deposits with financial institutions 64,365 67,361

625,678 580,860
Amortisation of premium less accretion of discount (4,377) (89)

Total finance income and Hibah 621,301 580,771

Other operating income

Fee income 9,290 5,370
Gross dividend income from securities available-for-sale 5,741 —
Other income 226 703

15,257 6,073

636,558 586,844

(o) Allowance for Losses on Financing and Advances

Group

2009 2008
RM’000 RM’000

Allowance for bad and doubtful financing

– general allowance (Note 57(g)(ix)) 32,302 25,651
– specific allowance (Note 57(g)(ix)) 62,155 66,766
– specific allowance written back (Note 57(g)(ix)) (15,877) (18,589)
Bad financing recovered (10,467) (9,686)
Bad financing written off 150 230

68,263 64,372

 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
NOTES TO THE FINANCIAL STATEMENTS 387

57. ISLAMIC BANKING BUSINESS (continued)

Notes to the Financial Statements for the financial year ended 31 December 2009 (continued)

(p) Income Attributable to the Depositors

Group

2009 2008
RM’000 RM’000

Deposits from customers

– Mudharabah fund 97,932 92,004
– Non-Mudharabah fund 66,676 59,472
Deposits and placements of banks and other financial institutions
– Mudharabah fund 27,216 62,506
– Non-Mudharabah fund 129,001 62,796

320,825 276,778

(q) Income Derived from Investment of Islamic Banking Funds

Group

2009 2008
RM’000 RM’000

Finance Income and Hibah

Financing and advances 63,968 91,384
Securities held-for-trading 366 867
Securities available-for-sale 1,093 —
Securities held-to-maturity 1 —
Money at call and deposits with financial institutions 6,419 12,306

71,847 104,557
Amortisation of premium less accretion of discount (436) (15)

Total finance income and Hibah 71,411 104,542

Operating Income
Fee income 934 916
Gross dividend income from securities available-for-sale 572 —
Other income 23 150

1,529 1,066

72,940 105,608

PUBLIC BANK BERHAD
ANNUAL REPORT 2009
388 NOTES TO THE FINANCIAL STATEMENTS

57. ISLAMIC BANKING BUSINESS (continued)

Notes to the Financial Statements for the financial year ended 31 December 2009 (continued)

(r) Other Operating Expenses

Group

2009 2008
RM’000 RM’000

Personnel costs
– Salaries, allowances and bonuses 11,588 6,068
– Pension costs 1,547 615
– Others 1,271 483

14,406 7,166

Establishment costs
– Depreciation 124 72
– Rental 265 241
– Insurance 497 314
– Water and electricity 88 50
– General repairs and maintenance 78 36
– Others 48 64

1,100 777

Marketing expenses
– Advertisement and publicity 1,080 1,072
– Others 7,345 3,656

8,425 4,728

Administration and general expenses
– Communication expenses 1,673 923
– Legal and professional fees 4,046 3,465
– Others 963 1,627

6,682 6,015

Shared service cost charged 136,415 143,226
Recovery of expenses (12,621) (9,281)

154,407 152,631

Included in other operating expenses of the Group is the Shariah Committee’s remuneration of RM82,500 (2008 –
RM63,000).
 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
NOTES TO THE FINANCIAL STATEMENTS 389

57. ISLAMIC BANKING BUSINESS (continued)

Notes to the Financial Statements for the financial year ended 31 December 2009 (continued)

(s) Zakat and Taxation

Group

2009 2008
RM’000 RM’000

Malaysian income tax 124,788 105,129

Deferred tax expense (Note 57(i))
– relating to origination and reversal of temporary differences arising from: (11,846) (14,813)

• allowance for losses on financing and advances (9,103) (5,849)

• profit equalisation reserves 5,727 (5,514)
• excess of capital allowances over depreciation 101 (11)
• deferred handling fees (12,936) 1,281
• other temporary differences 4,365 (4,720)

Tax expense 112,942 90,316
Zakat 250 179

113,192 90,495

(t) Capital Adequacy

The capital adequacy ratios under the Islamic banking business of the Group as at 31 December are as follows:

Group

2009 2008

Core capital ratio 12.2% 9.5%

Risk-weighted capital ratio 13.9% 11.2%

The capital adequacy ratios of the Islamic banking business of the Group are computed in accordance with the Capital
Adequacy Framework for Islamic Banks (CAFIB). The Group’s Islamic banking business has adopted the Standardised
Approach for Credit Risk and Market Risk, and the Basic Indicator Approach for Operational Risk.
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
390 NOTES TO THE FINANCIAL STATEMENTS

57. ISLAMIC BANKING BUSINESS (continued)

Notes to the Financial Statements for the financial year ended 31 December 2009 (continued)

(t) Capital Adequacy (continued)

Components of Tier I and Tier II Capital:

Group

2009 2008
RM’000 RM’000

Tier I Capital
Capital funds 290,217 279,217
Share premium 1,037,500 773,500
Other reserves 140,374 23,819
Retained profits 165,835 26,991
Less: Deferred tax assets, net (84,264) (72,418)

Total Tier I Capital 1,549,662 1,031,109

Tier II Capital
General allowance for bad and doubtful debts 223,048 190,746

Total Tier II Capital 223,048 190,746

Capital base 1,772,710 1,221,855

 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
NOTES TO THE FINANCIAL STATEMENTS 391

57. ISLAMIC BANKING BUSINESS (continued)

Notes to the Financial Statements for the financial year ended 31 December 2009 (continued)

(t) Capital Adequacy (continued)

The breakdown of risk-weighted assets (“RWA”) by exposures in each major risk category are as follows:

Risk-
Group Gross Net Weighted Capital
2009 Exposures Exposures Assets Requirements
Exposure Class RM’000 RM’000 RM’000 RM’000

(i) Credit Risk

On-Balance Sheet Exposures:
Sovereigns/Central Banks 7,131,951 7,131,951 — —
Public Sector Entities 315,819 315,819 63,164 5,053
Banks, Development Financial Institutions
(“DFIs”) and Multilateral Development
Banks (“MDBs”) 613,773 613,773 122,755 9,820
Insurance companies, Securities Firms
and Fund Managers 6 6 6 —
Corporates 742,675 741,404 731,267 58,501
Regulatory Retail 12,308,884 12,303,459 9,346,760 747,741
Residential Mortgages 1,322,340 1,319,723 562,600 45,008
Higher Risk Assets 11,175 11,138 16,707 1,337
Other Assets 63,805 63,805 59,760 4,781
Equity Exposures 408,225 408,225 408,225 32,658

Total On-Balance Sheet Exposures 22,918,653 22,909,303 11,311,244 904,899

Off-Balance Sheet Exposures:
Credit-related Off-Balance Sheet Exposures 446,522 446,522 334,398 26,752

Total Off-Balance Sheet Exposures 446,522 446,522 334,398 26,752

Total On and Off Balance Sheet Exposures 23,365,175 23,355,825 11,645,642 931,651

(ii) Large Exposure Risk Requirement — — — —

(iii) Market Risk Long Short
Position Position

Profit Rate Risk 79,988 — 11,855 948
Foreign Exchange/Gold Position Risk 373 — 373 30

80,361 — 12,228 978

(iv) Operational Risk 1,079,201 86,336

Total RWA and Capital Requirements 12,737,071 1,018,965

The Group does not have any issuances of Profit-Sharing Investment Account (“PSA”) used as a risk absorbent.
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
392 NOTES TO THE FINANCIAL STATEMENTS

57. ISLAMIC BANKING BUSINESS (continued)

Notes to the Financial Statements for the financial year ended 31 December 2009 (continued)

(t) Capital Adequacy (continued)

The breakdown of risk-weighted assets (“RWA”) by exposures in each major risk category are as follows (continued):

Risk-
Group Gross Net Weighted Capital
2008 Exposures Exposures Assets Requirements
Exposure Class RM’000 RM’000 RM’000 RM’000

(i) Credit Risk

On-Balance Sheet Exposures:
Sovereigns/Central Banks 3,650,858 3,650,858 — —
Public Sector Entities 87 87 17 1
Banks, DFIs and MDBs 14,710 14,710 2,942 235
Insurance companies, Securities Firms
and Fund Managers 29 29 29 2
Corporates 383,239 381,571 382,355 30,588
Regulatory Retail 10,544,896 10,535,615 7,970,906 637,672
Residential Mortgages 1,276,764 1,275,578 683,986 54,719
Higher Risk Assets 9,397 9,384 14,075 1,126
Other Assets 65,009 65,009 54,658 4,373
Equity Exposures 400,454 400,454 400,454 32,036

Total On-Balance Sheet Exposures 16,345,443 16,333,295 9,509,422 760,752

Off-Balance Sheet Exposures:
Credit-related Off-Balance Sheet Exposures 658,875 658,875 409,331 32,746

Total Off-Balance Sheet Exposures 658,875 658,875 409,331 32,746

Total On and Off Balance Sheet Exposures 17,004,318 16,992,170 9,918,753 793,498

(ii) Large Exposure Risk Requirement — — — —

(iii) Market Risk Long Short
Position Position

Profit Rate Risk 382,296 — 21,504 1,720
Foreign Exchange/Gold Position Risk 297 — 297 24

382,593 — 21,801 1,744

(iv) Operational Risk 947,972 75,838

Total RWA and Capital Requirements 10,888,526 871,080

The Group does not have any issuances of Profit-Sharing Investment Account (“PSA”) used as a risk absorbent.
 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
NOTES TO THE FINANCIAL STATEMENTS 393

57. ISLAMIC BANKING BUSINESS (continued)

Notes to the Financial Statements for the financial year ended 31 December 2009 (continued)

(t) Capital Adequacy (continued)

The breakdown of exposures by risk weights for the current financial year are as follows:

<------------------------------------------------------ Exposures after Netting and Credit Risk Mitigation ------------------------------------------------------>

Insurance Total
Companies, Exposures
Securities after Netting Total
Sovereigns/ Public Banks, Firms Higher and Risk-
Risk Central Sector DFIs and and Fund Regulatory Residential Risk Other Equity Credit Risk Weighted
Weights Banks Entities MDBs Managers Corporates Retail Mortgages Assets Assets Exposures Mitigation Assets
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Group
2009
0% 7,131,951 — — — — — — — 373 — 7,132,324 —
20% — 315,819 613,773 — 5,022 — — — 4,590 — 939,204 187,841
35% — — — — — — 749,435 — — — 749,435 262,302
50% — — — — 15,000 5,498 605,246 — — — 625,744 312,872
75% — — — — — 12,454,139 — — — — 12,454,139 9,340,604
100% — — — 6 775,653 14,269 23,896 — 58,842 408,225 1,280,891 1,280,891
150% — — — — 2,761 159,117 — 12,210 — — 174,088 261,132

Total Exposures 7,131,951 315,819 613,773 6 798,436 12,633,023 1,378,577 12,210 63,805 408,225 23,355,825 11,645,642

Risk-Weighted Assets
by Exposures — 63,164 122,755 6 788,298 9,596,298 588,821 18,315 59,760 408,225 11,645,642

Average Risk Weight 0.0% 20.0% 20.0% 100.0% 98.7% 76.0% 42.7% 150.0% 93.7% 100.0% 49.9%

Deduction from
Capital Base — — —

Group
2008
0% 3,650,858 — — — — — — — 297 — 3,651,155 —
20% — 87 14,710 — — — — — 12,569 — 27,366 5,473
35% — — — — — — 683,530 — — — 683,530 239,236
50% — — — — 7 5,488 474,818 — — — 480,313 240,157
75% — — — — — 10,607,917 515,880 — — — 11,123,797 8,342,848
100% — — — 29 406,847 12,200 24,276 — 52,143 400,454 895,949 895,949
150% — — — — 1,576 90,185 27,097 11,202 — — 130,060 195,090

Total Exposures 3,650,858 87 14,710 29 408,430 10,715,790 1,725,601 11,202 65,009 400,454 16,992,170 9,918,753

Risk-Weighted Assets
by Exposures — 17 2,942 29 409,214 8,106,159 928,477 16,803 54,658 400,454 9,918,753

Average Risk Weight 0.0% 20.0% 20.0% 100.0% 100.2% 75.6% 53.8% 150.0% 84.1% 100.0% 58.4%

Deduction from
Capital Base — — —

PUBLIC BANK BERHAD
ANNUAL REPORT 2009
394 NOTES TO THE FINANCIAL STATEMENTS

57. ISLAMIC BANKING BUSINESS (continued)

Notes to the Financial Statements for the financial year ended 31 December 2009 (continued)

(t) Capital Adequacy (continued)

The Off-Balance Sheet exposures and their related counterparty credit risk of the Group are as follows:

Credit Risk-
Principal Equivalent Weighted
Amount Amount Assets
RM’000 RM’000 RM’000
2009
Group
Credit-related Exposures
Other commitments, such as formal standby facilities
and credit lines, with an original maturity of:
– exceeding one year 965,794 446,522 334,398
– not exceeding one year 178,497 — —

1,144,291 446,522 334,398

2008
Group
Credit-related Exposures
Assets sold with recourse 341,989 341,989 163,769
Other commitments, such as formal standby facilities
and credit lines, with an original maturity of:
– exceeding one year 583,635 291,818 225,063
– not exceeding one year 125,342 25,068 20,499

1,050,966 658,875 409,331

The risk-weighted assets and capital requirements for the various categories of risk under Market Risk are as follows:

2009 2008
Risk-weighted Risk-weighted
Assets Capital Assets Capital
Group Equivalent Required Equivalent Required
RM’000 RM’000 RM’000 RM’000

Profit rate risk

– General interest rate risk 10,305 824 9,557 765
– Specific interest rate risk 1,550 124 11,947 955

11,855 948 21,504 1,720

Foreign exchange/Gold position risk 373 30 297 24

12,228 978 21,801 1,744

 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
NOTES TO THE FINANCIAL STATEMENTS 395

57. ISLAMIC BANKING BUSINESS (continued)

Notes to the Financial Statements for the financial year ended 31 December 2009 (continued)

(u) Profit Rate Risk

The Group is exposed to various risks associated with the effects of fluctuations in the prevailing levels of market profit
rates on its financial position and cash flows. The following tables indicate the effective profit rates at the balance sheet
date and the periods in which the financial instruments reprice or mature, whichever is earlier.

<----------------------------------------------------------------- Non trading book ----------------------------------------------------------------->

Non-yield/ Effective
Group Up to > 1 - 3 > 3 - 12 > 1 - 2 > 2 - 3 > 3 - 4 > 4 - 5 Over 5 profit Trading profit
2009 1 month months months years years years years years sensitive book Total rate
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 %

ASSETS
Cash and short-term funds 6,664,970 — — — — — — — 62,694 — 6,727,664 2.07
Securities held-for-trading — — — — — — — — — 79,988 79,988 2.48
Securities available-for-sale — 157,102 — 709,185 — — — — 408,225 — 1,274,512 2.50
Securities held-to-maturity — — — — 5,022 — — — — — 5,022 3.55
Financing and advances
– performing 2,480,681 369,309 1,563,645 1,892,714 1,637,421 1,380,342 1,144,734 4,110,136 — — 14,578,982 6.48
– non-performing * — — — — — — — — (106,154) — (106,154) —
Other non-profit
sensitive balances — — — — — — — — 299,117 — 299,117 —

TOTAL ASSETS 9,145,651 526,411 1,563,645 2,601,899 1,642,443 1,380,342 1,144,734 4,110,136 663,882 79,988 22,859,131

LIABILITIES AND
ISLAMIC BANKING
FUNDS
Deposits from customers 6,829,428 2,003,050 2,032,528 105,752 2,956 474 1,657 — 2,097,856 — 13,073,701 1.64
Deposits and placements
of banks and other
financial institutions 2,332,212 1,867,476 3,226,000 115,000 600,000 — — — (89,506) — 8,051,182 2.60
Other non-profit
sensitive balances — — — — — — — — 99,836 — 99,836 —

Total Liabilities 9,161,640 3,870,526 5,258,528 220,752 602,956 474 1,657 — 2,108,186 — 21,224,719
Islamic Banking Funds — — — — — — — — 1,634,412 — 1,634,412 —

Total Liabilities and
Islamic Banking Funds 9,161,640 3,870,526 5,258,528 220,752 602,956 474 1,657 — 3,742,598 — 22,859,131

On-balance sheet profit

sensitivity gap (15,989) (3,344,115) (3,694,883) 2,381,147 1,039,487 1,379,868 1,143,077 4,110,136 (3,078,716) 79,988 —
Off-balance sheet profit
sensitivity gap — — — — — — — — — — —

Total profit sensitivity gap (15,989) (3,344,115) (3,694,883) 2,381,147 1,039,487 1,379,868 1,143,077 4,110,136 (3,078,716) 79,988 —

* This is arrived at after deducting the general allowance and specific allowance from the outstanding gross non-performing financing and advances.
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
396 NOTES TO THE FINANCIAL STATEMENTS

57. ISLAMIC BANKING BUSINESS (continued)

Notes to the Financial Statements for the financial year ended 31 December 2009 (continued)

(u) Profit Rate Risk (continued)

<----------------------------------------------------------------- Non trading book ----------------------------------------------------------------->

Non-yield/ Effective
Group Up to > 1 - 3 > 3 - 12 > 1 - 2 > 2 - 3 > 3 - 4 > 4 - 5 Over 5 profit Trading profit
2008 1 month months months years years years years years sensitive book Total rate
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 %

ASSETS
Cash and short-term funds 3,308,820 — — — — — — — 14,760 — 3,323,580 3.21
Securities held-for-trading — — — — — — — — — 382,296 382,296 3.47
Securities available-for-sale — — — — — — — — 400,454 — 400,454 —
Financing and advances
– performing 1,011,995 357,800 1,589,239 1,844,253 1,584,328 1,369,668 1,103,412 3,583,384 — — 12,444,079 6.48
– non-performing * — — — — — — — — (70,405) — (70,405) —
– Islamic house financing
sold to Cagamas (200,008) (150,001) — — — — — — — — (350,009) 3.74
Other non-profit
sensitive balances — — — — — — — — 479,302 — 479,302 —

TOTAL ASSETS 4,120,807 207,799 1,589,239 1,844,253 1,584,328 1,369,668 1,103,412 3,583,384 824,111 382,296 16,609,297

LIABILITIES AND
ISLAMIC BANKING
FUNDS
Deposits from customers 6,471,029 860,940 325,654 130,075 114,013 592 582 — 1,719,440 — 9,622,325 2.23
Deposits and placements
of banks and other
financial institutions 1,492,411 — 649,659 1,900,461 106,943 — — — 715,351 — 4,864,825 3.53
Other non-profit
sensitive balances — — — — — — — — 1,018,279 — 1,018,279 —

Total Liabilities 7,963,440 860,940 975,313 2,030,536 220,956 592 582 — 3,453,070 — 15,505,429
Islamic Banking Funds — — — — — — — — 1,103,868 — 1,103,868 —

Total Liabilities and
Islamic Banking Funds 7,963,440 860,940 975,313 2,030,536 220,956 592 582 — 4,556,938 — 16,609,297

On-balance sheet profit

sensitivity gap (3,842,633) (653,141) 613,926 (186,283) 1,363,372 1,369,076 1,102,830 3,583,384 (3,732,827) 382,296 —
Off-balance sheet profit
sensitivity gap — — — — — — — — — — —

Total profit sensitivity gap (3,842,633) (653,141) 613,926 (186,283) 1,363,372 1,369,076 1,102,830 3,583,384 (3,732,827) 382,296 —

* This is arrived at after deducting the general allowance and specific allowance from the outstanding gross non-performing financing and advances.
 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
NOTES TO THE FINANCIAL STATEMENTS 397

57. ISLAMIC BANKING BUSINESS (continued)

Notes to the Financial Statements for the financial year ended 31 December 2009 (continued)

(v) Fair Values of Financial Assets and Liabilities

The estimated fair values of the financial instruments of the Group approximate their respective carrying amounts as
shown in the balance sheets, except for the following financial assets and financial liabilities:

2009 2008
Carrying Fair Carrying Fair
Amount Value Amount Value
RM’000 RM’000 RM’000 RM’000

Group
Financial assets
Securities held-to-maturity 5,022 5,029 — —
Financing and advances* 14,695,876 14,758,931 12,214,411 12,110,995

Financial liabilities
Deposits from customers 13,073,701 13,074,281 9,622,325 9,622,621
Deposits and placements of banks
and other financial institutions 8,051,182 8,042,472 4,864,825 4,866,098

* The general allowance of the Group of RM223,048,000 (2008 – RM190,746,000) is not included in the carrying
amounts.

(w) Allocation of Income

The method of allocation of income to the types of deposits is based on “The Framework on Rate of Return” issued
by Bank Negara Malaysia. This Framework on Rate of Return which is based on the return on assets concept, calculates
the income on assets. The return on assets after deducting incidental expenses and allowances for losses on financing
and advances are distributed to the depositors using the weighted average method.

(x) Shariah Committee

The Shariah Committee was established under Bank Negara Malaysia’s “Guidelines on the Governance of Shariah
Committee for the Islamic Financial Institutions” (BNM/GPS1) to advise the Board of Directors on Shariah matters in its
business operations and to provide technical assistance in ensuring the Islamic banking products and services offered
by the Group and the relevant documentation are in compliance with Shariah principles. The Shariah Committee also
provides written Shariah opinions on new Islamic banking products and in instances where the Group makes reference
to Bank Negara Malaysia’s Shariah Advisory Council for advice.

(y) Zakat Obligations

This represents business zakat payable by the Group to comply with Shariah principles. Zakat provision is calculated
using the profit and loss method at a zakat rate of 2.5% and is based on the percentage of estimated Muslim individual
shareholders of the Bank.
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
398 Bursa Securities Listing Requirements
Compliance Information
The information set out below is disclosed in compliance with
the Listing Requirements of Bursa Malaysia Securities Berhad
(“Bursa Securities”):
(i) Utilisation of Proceeds Raised from
Corporate Proposals
a) Subordinated Medium Term Note Programme
On 13 March 2008, Public Bank had obtained
approval from Bank Negara Malaysia for a
Subordinated Medium Term Note Programme (“the
MTN Programme”) for the issuance of up to
RM5.0 billion in aggregate principal value of
Subordinated Notes. The tenor of the MTN
Programme will be up to fifteen (15) years, with the
maturity for each issuance to range between ten (10)
to fifteen (15) years, and callable from five (5) years
prior to the relevant maturity date at each issuance.
Each issuance will bear interest at a rate to be
determined prior to the issuance, payable semi-
annually in arrears.
The Subordinated Notes to be issued under the MTN
Programme shall be issued at par. The Notes will,
subject to the prior consent of Bank Negara Malaysia,
be redeemable in whole but not in part, at the option
of Public Bank in the event of certain changes
affecting taxation in Malaysia or if there is a more
than insubstantial risk that the Notes will no longer
qualify as Tier II Capital for the purposes of Bank
Negara Malaysia’s capital adequacy requirements or
on the first call date or at any subsequent interest
payment date thereafter at their principal amount
plus accrued interest (if applicable).
Public Bank has issued the following tranches of
Subordinated Notes under the MTN Programme
during the year:
i) On 6 November 2009, Public Bank issued the
second tranche of RM200 million in aggregate
principal amount of Subordinated Notes due in
2019 callable with step-up in 2014. The Notes
bear interest at the rate of 4.60% per annum
from (and including) 6 November 2009 to (but
excluding) 6 November 2014 and thereafter, at
the rate of 5.60% per annum from (and
including) 6 November 2014 to (but excluding)
the date of early redemption in full of such
Notes or the maturity date of the Notes
(whichever is earlier). The interest is payable
semi-annually in arrears on 6 May and 6
November each year commencing 6 May
2010.
ii) On 10 December 2009, Public Bank issued the
third tranche of RM223 million in aggregate
principal amount of Subordinated Notes due in
2019 callable with step-up in 2014. The Notes
bear interest at the rate of 4.60% per annum
from (and including) 10 December 2009 to (but
excluding) 10 December 2014 and thereafter, at
the rate of 5.60% per annum from (and
including) 10 December 2014 to (but excluding)
the date of early redemption in full of such
Notes or the maturity date of the Notes
(whichever is earlier). The interest is payable
semi-annually in arrears on 10 June and 10
December each year commencing 10 June
2010.
iii) On 31 December 2009, Public Bank issued the
fourth tranche of RM50 million in aggregate
principal amount of Subordinated Notes due in
2019 callable with step-up in 2014. The Notes
bear interest at the rate of 4.60% per annum
from (and including) 31 December 2009 to (but
excluding) 31 December 2014 and thereafter, at
the rate of 5.60% per annum from (and
including) 31 December 2014 to (but excluding)
the date of early redemption in full of such
Notes or the maturity date of the Notes
(whichever is earlier). The interest is payable
semi-annually in arrears on 30 June and
31 December each year commencing 30 June
2010.
The other salient features of the MTN Programme
are as disclosed in Note 27 to the financial
statements.
The proceeds arising from the issuances of the
second, third and fourth tranches of the Notes have
been used for working capital, general banking and
other corporate purposes.
b) Non-Innovative Tier I Stapled Securities
On 16 March 2009, Public Bank and PBFIN Berhad
(“PBFIN”), a wholly-owned subsidiary company of
Public Bank obtained approval from Bank Negara
Malaysia for a Non-Innovative Tier I Stapled Securities
(“Stapled Securities”) Programme (“the NIT-1

Bursa Securities Listing Requirements Compliance Information
Programme”) for the issuance of up to RM5.0 billion
in nominal value of Stapled Securities, comprising
the following securities:
i) Non-Cumulative Perpetual Capital Securities
(“NCPCS”) issued by Public Bank; and
ii) Subordinated Notes (“Sub-Notes”) issued by
PBFIN
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
399
redemption date of the NCPCS will be on 5
June 2019, whilst the Sub-Notes are due on 5
June 2059. The Stapled Securities were issued
at par. The Sub-Notes bear interest at a rate of
7.50% per annum, payable semi-annually.
Should an assignment event occur, the NCPCS
will also accrue interest at a rate of 7.50% per
annum.

The NCPCS are stapled to an equivalent amount in
nominal value of the Sub-Notes.
Under the NIT-1 Programme, the tenor of the NCPCS
will be perpetual, with the first optional redemption
date to be on a date falling no earlier than the fifth
(5th) anniversary of the first issue date, whilst the
Sub-Notes have a maturity of fifty (50) years. The
NCPCS will not be subject to the payment of any
distribution until the occurence of an assignment
event, upon which distribution will be accrued at a
fixed interest rate to be determined prior to each
issuance of NCPCS. The Sub-Notes will bear interest
at a rate which is the same rate as the distribution
of the NCPCS together with which the Sub-Notes is
stapled, payable semi-annually in arrears. Therefore,
the Stapled Securities are effectively issued by Public
Bank and PBFIN at a pre-determined fixed interest
rate.
Public Bank and PBFIN have issued the following
tranches of Stapled Securities under the NIT-1
Programme:
ii) On 13 November 2009, Public Bank and PBFIN
issued the second tranche of RM888 million in
nominal value of Stapled Securities. The first
optional redemption date of the NCPCS will be
on 13 November 2019, whilst the Sub-Notes
are due on 13 November 2059. The Stapled
Securities were issued at par. The Sub-Notes
bear interest at a rate of 7.20% per annum,
payable semi-annually. Should an assignment
event occur, the NCPCS will also accrue interest
at a rate of 7.20% per annum.
The other salient features of the NIT-1 Programme
are as disclosed in Note 29 to the financial
statements.
The proceeds arising from the issuance of the
RM1,200 million and RM888 million Stapled Securities
have been used for working capital, general banking
and other corporate purposes.
Disclosed in accordance with Appendix 9C, Part A, item
13 of the Listing Requirements of Bursa Securities.

i) On 5 June 2009, Public Bank and PBFIN issued

the first tranche of RM1,200 million in nominal
value of Stapled Securities. The first optional

(ii) Share Buy Back

During the financial year ended 31 December 2009, Public Bank bought back from the open market, 10,000 of its ordinary
shares of RM1.00 each which are listed and quoted as “Local” (“PBB Local Shares”) and 5,000 of its ordinary shares of
RM1.00 each which are listed and quoted as “Foreign” (“PBB Foreign Shares”) on the Main Market of Bursa Securities. The
details of the PBB Local and Foreign Shares bought back during the year are as follows:

Number of PBB Buy Back Price Per PBB Local and Average Cost Per
Monthly Local and Foreign Share PBB Local and
Breakdown Foreign Shares (RM) Foreign Share* Total Cost*
2009 Bought Back Lowest Highest Average (RM) (RM)
January 10,000   8.75   8.75   8.75   8.78   87,811
July   5,000 10.30 10.30 10.30 10.34   51,683
Total 15,000   8.75 10.30   9.27   9.30 139,494
* Inclusive of transaction cost

All the PBB Local and Foreign Shares bought back are held as treasury shares in accordance with Section 67A Subsection
3(A)(b) of the Companies Act, 1965. On 11 March 2009, a total of 95,834,632 treasury shares were distributed as a share
dividend on the basis of 1 PBB Local Share held as a treasury share for every 35 PBB shares held. As at 31 December
2009, the number of treasury shares held after deducting the share dividend distributed on 11 March 2009 was 80,477,168
treasury shares. None of the treasury shares held were resold or cancelled during the financial year.
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
400 Bursa Securities Listing Requirements Compliance Information
On 19 January 2010, the Board of Directors declared the
distribution of a share dividend of 1 PBB Local Share
held as a treasury share for every 68 PBB shares held,
fraction shares to be disregarded, amounting to
approximately 50,756,598 PBB Local Shares held as
treasury shares. This is computed based on the issued
and paid-up share capital of the Bank as at 31 December
2009, excluding treasury shares held by the Bank, of
3,451,448,666 PBB Shares. Subsequent to the share
dividend distribution, the remaining number of PBB shares
held as treasury shares will be app r o x i m a t e l y
29,720,570.
Disclosed in accordance with Paragraph 12.23, Appendix
12D of the Listing Requirements of Bursa Securities.
(iii) Options or Convertible Securities
No options or convertible securities were issued by Public
Bank during the financial year ended 31 December 2009
and there are no options or convertible securities
outstanding and exercisable at the end of the financial
year ended 31 December 2009.
Disclosed in accordance with Appendix 9C, Part A, item
15 of the Listing Requirements of Bursa Securities.
(iv) Depository Receipt Programme
Public Bank did not sponsor any depository receipt
programme during the financial year ended 31 December
2009.
Disclosed in accordance with Appendix 9C, Part A, item
16 of the Listing Requirements of Bursa Securities.
(v) Sanctions and/or Penalties
There was no sanction and/or penalty imposed on Public
Bank and its subsidiary companies, directors or
management by the relevant regulatory bodies during the
financial year ended 31 December 2009.
Disclosed in accordance with Appendix 9C, Part A, item
17 of the Listing Requirements of Bursa Securities.
(vi) Non-audit Fees
The amount of non-audit fees paid to external auditors
by the Group and the Bank for the financial year ended
31 December 2009 amounted to RM504,000 and
RM388,000 respectively.
Disclosed in accordance with Appendix 9C, Part A, item
18 of the Listing Requirements of Bursa Securities.
(vii) Variation in Results
There were no profit estimate, forecast or projection
issued by Public Bank and its subsidiary companies
during the financial year ended 31 December 2009.
Disclosed in accordance with Appendix 9C, Part A, item
19 of the Listing Requirements of Bursa Securities.
(viii) Profit Guarantee
There was no profit guarantee given by Public Bank and
its subsidiary companies during the financial year ended
31 December 2009.
Disclosed in accordance with Appendix 9C, Part A, item
20 of the Listing Requirements of Bursa Securities.
(ix) Material Contracts
There were no material contracts entered into by Public
Bank and its subsidiary companies involving directors’
and major shareholders’ interests, which subsisted at the
end of the financial year ended 31 December 2009 or, if
not then subsisting, entered into since the end of the
previous financial year.
Disclosed in accordance with Appendix 9C, Part A, item
21 of the Listing Requirements of Bursa Securities.
(x) Revaluation Policy
The Public Bank Group does not revalue its landed
properties classified as Property and Equipment. The
revaluation policy on landed properties classified as
Investment Properties are as disclosed in Note 2 (g) to
the financial statements.
Disclosed in accordance with Appendix 9C, Part A, item
24 of the Listing Requirements of Bursa Securities.
(xi) Recurrent Related Party Transaction
of a Revenue or Trading Nature
Public Bank did not seek any mandate from its
shareholders under Paragraph 10.09(2)(b), Part E of
Chapter 10 of the Listing Requirements of Bursa Securities
as the recurrent related party transactions of a revenue or
trading nature entered into by the Public Bank Group
qualified as exempted transactions as defined under
Paragraph 10.08(11)(e), Part E of Chapter 10 of the Listing
Requirements of Bursa Securities.
Disclosed in accordance with Paragraph 10.09(2)(b) of the
Listing Requirements of Bursa Securities.
 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
Malaysian Economy: 401
Managing a Sustained Recovery

I. Global Perspective To support the global economy, policy intervention by major

2009 – particularly in the first half of the year – had been very
challenging for the global economy due to the global financial
crisis and the subsequent sharp fall in global output and trade.
The financial crisis which was triggered by problems in the
subprime mortgage loan and mortgage-backed securities
markets in the United States (“US”) in July 2007 has had far
reaching impact on the global financial system and the real
economy. As a result of huge losses, major global financial
institutions had to be rescued by governments through massive
capital injections of public funds. Some had failed and
disappeared. Credit and interbank markets froze in some of
the developed countries. However, despite the massive efforts
to rebuild the financial system in the west, some financial
institutions remained impaired.
Although the global economy has avoided a second Great
Depression due to the unprecedented scale and scope of
monetary and fiscal intervention by central banks and
governments, global output and trade have contracted
significantly in 2009. The International Monetary Fund (“IMF”)
projected world output to contract by 1.1% in 2009 from a 3%
growth in 2008. World trade volume would be down 11.9% in
2009 from a 3% expansion in 2008. The Organisation for
developed economies broke new ground. In the case of
monetary policy, policy interest rates were brought down close
to zero and kept at historical lows (Graph 1) to support
economic activity and curb deflationary pressure due to the
large output gap. To support credit markets, major global
central banks had injected huge amounts of liquidity into the
global financial system by directly injecting capital and
purchasing toxic assets held by financial institutions. In addition
to historically low interest rates, other monetary policy tools,
such as quantitative easing, have been used extensively by
central banks globally to stabilise financial systems. To restore
and ensure financial stability in the future, major financial
reforms related to capital adequacy, risk management and
governance are being discussed at various international
forums.
Graph 1
Major Advanced Countries: Monetary Policy Rates, 2007-2009
7
6
5

Economic Co-operation and Development (“OECD”) economies, 4

which account for about 67% of global output, are expected
%

to contract by 3.5% in 2009 with the US – the world’s largest 3

economy – contracting by 2.5%, Japan by 5.3% and the euro 2

area by 4% as a result of the compression in private demand
and investment. The present high level of unemployment in 1

these major economies is likely to remain high into 2010 and

0
2011 (Table 1).
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec

’07 ’08 ’09

Table 1
Japan Euro US
Major Advanced Countries: Unemployment, 2009-2011
Sources: US Federal Reserve; Bank of Japan; and European Central Bank.
% of labour force

2009 2010 2011

United States 9.2 9.9 9.1

Japan 5.2 5.6 5.4

Euro area 9.4 10.6 10.8

Source: O
 rganisation for Economic Co-operation and Development (OECD),
Economic Outlook No. 86, November 2009.
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
402 Malaysian Economy: Managing a Sustained Recovery

On the fiscal front, a Keynesian approach to stimulate aggregate
demand had been widely used. In many economies, fiscal
deficits have ballooned. By the end of 2009, most governments
are expected to register large fiscal deficits. For example, the
deficit in the OECD economy is estimated to surge to 8.2% of
gross domestic product (“GDP”) in 2009 and 8.3% in 2010,
before falling slightly to 7.6% in 2011. Public sector debt as a
proportion of GDP across major developed economies will rise
significantly in the next few years.
The sharp economic downturn had adversely affected Asia, in
particular the more open economies such as Singapore, South
Korea, Hong Kong and Malaysia. In the first quarter of 2009,
Asia’s economy contracted significantly before stabilising in the
second quarter of the year (Table 2). Helped by strong
fundamentals and healthy domestic demand, most Asian
economies – like the developed economies – had pursued
exceptional levels of fiscal stimulus by reducing and maintaining
low policy interest rates and also implementing large fiscal
Malaysian economy remained resilient. The flexible ringgit
exchange rate had helped the economy to adjust to the new
economic environment. Labour market conditions remained
healthy with the number of employees retrenched declining
sharply from 12,590 in the first quarter of 2009 to 2,879 in the
third quarter of 2009 (Graph 2). Headline inflation fell from
3.9% in January 2009 to -2.4% in August 2009, -2% in
September 2009, -1.6% in October 2009 and -0.1% in
November 2009 (Graph 3). The negative inflation – which is
expected to be temporary – was due to the cumulative effect
of the sharp fall in fuel prices in August 2008 to December
2008.
Graph 2
Malaysia: Number of Retrenchments, 2008-2009
12,000
10,000

stimulus (such as the People’s Republic of China) to support Number of Workers

8,000
economic activity. Other measures to restore growth included
measures to support financial markets such as blanket
6,000
guarantees on bank deposits and assurance to banks needing
foreign currency. 4,000

Table 2 2,000
Regional Countries: Real GDP Growth, 2008-2009
0
% Annual Change 1Q08 2Q 3Q 4Q 1Q09 2Q 3Q

2009
Source: Bank Negara Malaysia, Monthly Statistical Bulletin, October 2009.
2008 1Q 2Q 3Q

People’s 9.0 6.1 7.9 8.9

Graph 3
Republic of
Malaysia: Consumer Price Inflation, 2009
China

Hong Kong 2.4 -7.8 -3.6 -2.4 6

5
South Korea 2.2 -4.2 -2.2 0.9
4
Taiwan 0.1 -9.1 -6.9 -1.3
Annual change (%)

Singapore 1.1 -9.4 -3.2 0.9 2

1
Sources: R
 euters and International Monetary Fund, World Economic
0
Outlook, October 2009.
-1

-2
II. MALAYSIAN ECONOMY: Review -3
As an open economy, Malaysia is exposed to volatilities in the Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov

global economy, particularly in that of its large trading partners

such as the US, the European Union and Japan. However, as Source: D
 epartment of Statistics, Malaysia, Consumer Price Index, various
Malaysia entered the challenging period from a position of issues.
strength, with its high level of savings, low inflation, strong
international reserves and large current account surplus, the

After a sharp 6.2% fall in GDP in the first quarter of 2009 due
to a drastic drop in exports and large inventory drawdowns,
the Malaysian economy had improved significantly since the
second quarter of the year. In the second quarter, the
contraction slowed to 3.9% due to higher public spending and
private consumption. The economy further recovered in the
third quarter of the year with a much milder contraction of only
1.2% due to improved private consumption and higher public
spending (Table 3). On the supply side, improvements in the
third quarter of 2009 were contributed by a broad-based
recovery, led by the services and construction sectors. The
manufacturing sector also improved, as a result of higher
activity in domestic-oriented industries and a modest
improvement in the electronics and electrical industries.
Table 3
Malaysia: GDP by Expenditure Components, 2008-2009
(at constant 2000 Prices)
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
Malaysian Economy: Managing a Sustained Recovery 403
2009 (Graph 6) and the net non-performing loans ratio was low
at 1.9% in November 2009, due to resilient households and
businesses. Malaysia’s financial institutions had very little
exposure to subprime related securities and to the affected
financial institutions of other countries. Past consolidation and
efforts to build capacity of domestic banks, particularly to
compete and improve risk management practices have
strengthened the banking system. During the peak of the
global financial crisis, the interbank money market and the
credit market in Malaysia remained intact with little disruptions.
Credit flows to the real economy was sustained as shown by
the 7.0% annualised loan growth of the banking system in
November 2009.
Graph 4
Banking System: Net Non-Performing Loans Ratio, 2009
3.0

% Annual Change
2.5
% of Total Loans

2009

2008 1Q 2Q 3Q 2.0

Aggregate 6.8 -2.9 -2.2 0.4

Domestic
1.5
Demand

Consumption 9.0 -0.2 0.6 3.3

1.0
 rivate
P 8.5 -0.7 0.5 1.5 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov

sector

 ublic
P 10.9 2.1 1.0 10.9 Source: Bank Negara Malaysia, Monthly Statistical Bulletin, November 2009.

sector

Gross Fixed 0.8 -10.8 -9.6 -7.9 Graph 5

Capital Banking System: Loan-Deposit Ratio, 2009
Formation
76.0
Exports of 1.3 -15.2 -17.3 -13.4
Goods and 75.5
Services
75.0
Imports of 1.9 -23.5 -19.7 -12.9
Goods and
%

74.5
Services
74.0
GDP 4.6 -6.2 -3.9 -1.2
73.5
Source: D
 epartment of Statistics, Malaysia, Gross Domestic Product, Third
Quarter 2009.
73.0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov

Supporting the recovery was the banking system in Malaysia

which continued to remain strong. The banking system remains Source: Bank Negara Malaysia, Monthly Statistical Bulletin, November 2009.
well capitalised with low levels of non-performing loans and
strong liquidity buffers (Graphs 4 and 5). The risk-weighted
capital ratio and the core capital ratio of the banking system
strengthened to 14.6% and 13%, respectively in November
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
404 Malaysian Economy: Managing a Sustained Recovery

Graph 6 III. MALAYSIAN ECONOMY: Prospects for 2010

Banking System: Capital Adequacy Ratios, 2009 The Malaysian economy is expected to further improve in 2010
with the private sector taking up the slack in the economy. The
16
Malaysian Government has conservatively projected that the
15 Malaysian economy will grow by 2% to 3% in 2010 (Tables 4
and 5), based on higher domestic demand and a stable
14
external environment, with the global economy and global
13 trade projected to grow at a measured pace by 3% and 6%
respectively in 2010. The steady upward trend in the Leading
%

12 Index for the Malaysian economy and improved consumer and

11
business sentiment in recent months support the positive
outlook for the economy in 2010 (Graph 7). The positive
10 outlook for the Malaysian economy is also based on the
increasingly positive view of the economies of the US and the
9
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov euro area. Inflation is projected to remain low in 2010 due to
the large output gap. The strong ringgit exchange rates will
keep imported inflationary pressures down.
Risk-Weighted Capital Ratio Core Capital Ratio

Table 4
Source: Bank Negara Malaysia, Monthly Statistical Bulletin, November 2009.
Malaysia: GDP by Expenditure Components, 2010
(at constant 2000 Prices)
In managing the early stages of a sharply contracting economy,
% Annual
the Government implemented two economic stimulus packages
Change
in 2008 and 2009, amounting to RM67 billion. The packages
were aimed at stimulating private consumption and investment Aggregate Domestic Demand 1.2
and creating employment. As a result of the large fiscal
stimulus, the Government’s fiscal deficit is expected to widen Consumption 1.6
to 7.4% of GDP in 2009 from 4.8% in 2008. There are 27 Private sector 2.9
selected services sub-sectors which have been liberalised to
attract domestic and foreign investment. The financial services Public sector -3.4
sector had also been further liberalised to strengthen Malaysia’s
Gross Fixed Capital Formation -0.02
economic inter-linkages with other economies.
Exports of Goods and Services 3.5
In terms of monetary policy, Bank Negara Malaysia (“BNM”)
Imports of Goods and Services 5.2
had loosened its monetary policy decisively to support
economic recovery. BNM cut its Overnight Policy Rate (“OPR”) GDP 2.0 – 3.0
by 1.5% from 3.5% in November 2008 to 2% in February
2009, bringing down the base lending rate from 6.75% to Source: Ministry of Finance, Malaysia, Economic Report 2009/2010.
5.55%. The OPR had remained unchanged at 2% in 2009 to
spur recovery. To reduce the cost of financial intermediation,
BNM cut its Statutory Reserve Ratio (“SRR”) for banking Table 5
institutions from 4% in November 2008 to 1% by March 2009. Malaysia: GDP by Economic Activity, 2010
To ensure uninterrupted monetary policy transmission to the (at constant 2000 Prices)
real economy, BNM introduced preemptive measures to ensure
continued access to financing by businesses, particularly % Annual
small- and medium-sized enterprises (“SMEs”), by establishing Change
new funds and guarantee schemes for working capital and
Real GDP 2.0 – 3.0
industry restructuring. The Government established Danajamin
– a national bond guarantee institution – to provide credit Agriculture 2.5
enhancement to facilitate corporations with viable businesses
to access the Malaysian bond market. Mining 1.1

Manufacturing 1.7

Construction 3.2

Services 3.6

Source: Ministry of Finance, Malaysia, Economic Report 2009/2010.

 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
Malaysian Economy: Managing a Sustained Recovery 405
Graph 7 Graph 8
Malaysia: Leading Index, 2009 Emerging Asia: Real GDP Growth, 2006-2010

12 10

10 9

8
8
7
6
6
%

%
4 5

2 4

3
0
2
-2
1
-4 0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct ’06 ’07 ’08 ’09 ’10

Source: International Monetary Fund, Regional Economic Outlook, Asia and

Source: D
 epartment of Statistics, Malaysia, Leading, Coincident and Pacific, various issues.
Lagging Indices, October 2009.

Specific to Malaysia, domestic demand is expected to

In contrast to the official forecast, other forecasts for the
Malaysian economy in 2010 are pointing to a more robust
recovery of between 4% and 6% GDP growth based on a
stronger than expected recovery in global economy, and
particularly in Asia, which will boost intra-regional trade. Asia’s
relatively strong conditions at the onset of the financial crisis
such as sound fiscal positions, credible monetary policies and
healthy corporate, household and bank balance sheets give
Asia the edge to recover and more flexible policy options to
stimulate domestic demand. In 2009, despite the massive
financial crisis, domestic demand in Asia, including Malaysia,
held up relatively well, partly due to the high level of savings
and low interest rates. Based on low household and corporate
gearing as well as steady credit flows in Asia, there is ample
room for the Asian economies to boost domestic demand in
2010. Recent trends in inventory restocking, fiscal impulses
from the region’s aggressive countercyclical response and
healthy intra-regional trade activity suggest that growth in
emerging Asia is likely to accelerate to 7% in 2010 (Graph 8).
strengthen in 2010. Private consumption, in particular, is
expected to resume growing due to higher household
disposable income, low interest rates, large fiscal stimulus and
healthy labour market conditions. Specific measures in the
Budget 2010 – such as the reduction in the maximum personal
income tax rate and increased personal relief – will result in
higher household disposable income which in turn will support
private consumption.
Several key measures in the Budget 2010 are expected to
support growth in domestic and foreign investment. In particular,
initiatives to provide a more business-friendly environment,
implementation of a second wave of privatisation programmes
and new incentives to attract foreign investment will support
growth in 2010. New initiatives to support tourism, promote the
agriculture sector and ensure efficient access to financing by
SMEs will further support economic activity. In addition, the
liberalisation of 27 services sub-sectors and the financial
services sector will enhance Malaysia’s value proposition to
long-term investors. As the economic growth gains traction,
the Malaysian Government will have room to consolidate its
fiscal position. The Malaysian Government continues to enjoy
high sovereign ratings, reflecting Malaysia’s strong external
liquidity, robust balance of payments position and a sound
financial sector.

In 2010 and beyond, the banking system will continue to

remain a catalyst to support growth. Based on their strong
capital position, asset quality and liquidity position, banks in
Malaysia will remain an effective conduit for an efficient
transmission of monetary policy to the real economy. Based on
a stable interest rate outlook and positive economic environment,
credit flows to finance the economy, in particular to households
and businesses, will remain ample and steady.
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
406 Investor Information
Stock Market Performance in 2009
Following the poor performance of the local stock market in
2008, investors’ interest was fairly lacklustre at the beginning
of 2009 as the global economy continued to grapple with the
downturn. The world’s biggest economies, including the United
States of America (“US”), Japan, and the Euro zone, were in
recession. Shrinking consumer demand led to sharp contractions
in exports for Asia’s emerging economies. This also affected
Malaysia as our economy is highly dependent on exports.
The Kuala Lumpur Composite Index (“KLCI”) started the year
2009 on shaky footing, on rising fear of an economic recession,
as investors remained sidelined. The KLCI was weighed down
by finance stocks in early February 2009, as this sector was
seen to be most affected in this crisis. The KLCI showed little
improvement even after Bank Negara Malaysia cut its Overnight
Policy Rate by another 50 basis points on 24 February 2009
and the announcement of a second stimulus package worth
RM60 billion by the Government on 10 March 2009. The KLCI
continued to slide reaching a low of 836.51 points on
12 March 2009. However, global equity markets bottomed in
March 2009 after the US Treasury unveiled a much awaited
plan to get rid of toxic assets in the banking system to aid the
recovery of the financial industry. Furthermore, this was boosted
by the US$800 billion fiscal stimulus and the G-20 meeting in
April 2009 which indicated stronger resolve to restart the
growth engine of the global economy.
The KLCI rebounded strongly in April 2009, following a smooth
transition of Malaysia’s Prime Ministership from Datuk Seri
Abdullah Ahmad Badawi to Datuk Seri Najib Tun Abdul Razak.
Investor sentiment continued to improve as there was growing
optimism that the worst had been seen and that the global
economy was on the mend. The KLCI continued its rally,
breaking above the psychological 1,000 points level when the
Prime Minister announced further liberalisation measures for
the financial sector on 27 April 2009. The optimism was further
fuelled when the first quarter 2009 corporate results season
was better than expected, pushing the KLCI to a high of
1,091.17 points on 15 June 2009. For the first half of 2009, the
KLCI was up by 198.49 points or 22.6% to close at 1,075.24
points.
In the second half of 2009, the benchmark KLCI was replaced
by FTSE Bursa Malaysia KLCI (“FBM KLCI”) on 6 July 2009.
The FBM KLCI continued its upward trend in July 2009 in line
with gains in the US and regional markets. However, in mid
August 2009, the investors turned cautious amid intermittent
corrections in some regional markets, especially the Shanghai
market which fell sharply. With some negative news flows
coming into the picture, investors took the opportunity to lock
in some profits as valuations had run ahead of fundamentals.
In September 2009, global equity markets continued to trend
higher driven by liquidity. The FBM KLCI subsequently rose to
a 15 month high of 1,231.49 points in late September 2009
before easing towards the end of the quarter on profit-taking
and closed at 1,202.08 points to register a gain of 11.8% for
the third quarter of 2009.
In the fourth quarter of 2009, the FBM KLCI continued to rise
in tandem with the rise of the global and regional equity
markets. Thereafter, the FBM KLCI began to consolidate in line
with the flattish performance of regional markets on the belief
that the rally may have overshot underlying fundamentals.
For the year 2009, the FBM KLCI gained 396.03 points or
45.2% when compared to the loss of 39.3% for the year 2008
to close at 1,272.78 points on 31 December 2009.
On the outlook for the stock market in 2010, equity markets
regionally and globally are expected to improve further on
positive outlook from the US. The key economic indicators
suggest that the global economy has passed its worst and is
currently experiencing a more moderate pace of contraction.
This is reflected in global services and manufacturing activities,
which are on a recovery path, although they have yet to
recover to positive growth. In the US, economic data continues
to suggest that it is close to emerging from what has been the
longest recession in post World War II history. The overall tone
on the market still remains positive with some of the research
houses raising the target for FBM KLCI for 2010 to between
1,300 to 1,400 points.
 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
Investor Information 407

Public Bank (Local) Share and Public Bank (Foreign) Share Prices and FBM KLCI in 2009
1,400 12.0

1,300
10.0
1,200

1,100 8.0

Share Price (RM)

1,000
6.0
FBM KLCI

900

800 4.0

700
2.0
600

500 0.0
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC

FBM KLCI PBB (LOCAL) PBB (FOREIGN)

Public Bank (Local) Share and Public Bank (Foreign) Share Transactions in 2009
120
103.74
93.04

100
Volume (No. of shares in million)

75.17
73.50
69.60

80
62.68

61.25

59.94
58.32

57.60

56.42
53.27

48.75

60
45.40
44.87

44.26
42.52
41.65

40.90

39.97
36.37

35.04
34.09

40
16.55

20

0
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC

PBB (LOCAL) PBB (FOREIGN)

PUBLIC BANK BERHAD
ANNUAL REPORT 2009
408 Investor Information

Public Bank Share Price Performance in
2009
Both Public Bank (Local) share and Public Bank (Foreign) share
prices consolidated between RM8.50 and RM9.00 at the
beginning of year 2009 from the end 2008 closing share prices
of RM8.85 and RM8.75 respectively. In early February 2009,
both the Public Bank Local and Foreign share prices surpassed
RM9.00 following the announcement of the Public Bank Group’s
better than expected financial results for 2008 on 20 January
2009 and the announcement of a final dividend of 25% per
share less 25% income tax together with a distribution of
share dividend on the basis of 1 Public Bank treasury share
for every 35 ordinary shares of RM1.00 each held.
However, a sell down in regional and global equity markets
towards the end of February 2009 on rising fears of a global
economic recession saw Public Bank (Local) share and Public
Bank (Foreign) share prices falling to a low of RM7.05 and
RM6.85 respectively on 12 March 2009.
As regional and global equity markets recovered from the
March 2009 lows, Public Bank (Local) and Public Bank (Foreign)
share prices gradually improved in line with the recovery of the
FBM Kuala Lumpur Composite Index (“FBM KLCI”) and regional
equity markets. Both Public Bank (Local) share and Public
Bank (Foreign) share prices consolidated above RM8.50 in late
April and held that level until end of May 2009.
The beginning of October 2009 saw Public Bank (Local) and
Public Bank (Foreign) share prices rising in tandem with
regional and global equity markets. The announcement of
Public Bank’s third quarter financial results on 15 October
2009, which was in line with consensus expectations helped
boost investor interest on finance stocks.
For 2009, Public Bank’s value in terms of market capitalisation
rose by 28% or RM8.72 billion to RM39.87 billion compared to
the rise of 45.2% of the KLCI. The total average daily volume
and value of both Public Bank (Local) and Public Bank (Foreign)
shares traded in 2009 decreased by 0.1 million shares and
RM5.4 million to 5.3 million shares and RM49.2 million
respectively per day, a decrease of 1.9% and 9.9% respectively
when compared to the previous year. Including the total gross
dividend of 87.4 sen paid during the year, shareholders of
Public Bank (Local) shares and Public Bank (Foreign) shares
would have enjoyed a total return of approximately 37.6% and
38.7% respectively for 2009 based on the closing share prices
of RM11.30 and RM11.26 for Public Bank (Local) share and
Public Bank (Foreign) share respectively as at the end of
2009.

Public Bank (Local) and Public Bank (Foreign) share prices

continued their ascendancy in June 2009, in line with the
strong performance of the local and regional equity markets.
Both stocks continued their rally following the announcement
of Public Bank’s good second quarter results together with an
interim dividend of 30% less 25% income tax on 20 July 2009,
rising to close at RM10.40 respectively on 28 July 2009.
Having traded ex-interim dividend on 3 August 2009, both
Public Bank (Local) and Public Bank (Foreign) share consolidated
around RM10.00 in August and September 2009.
 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
Analysis of Shareholdings 409
as at 31 December 2009

Authorised Share Capital : RM10,000,000,000

Issued and Paid-up Share Capital : RM3,531,925,834 comprising 3,531,925,834 ordinary shares of RM1.00 each
Class of Shares : Ordinary shares of RM1.00 each
Voting Rights : One vote per ordinary share

DISTRIBUTION OF SHAREHOLDINGS
Shareholders No. of Shares Held

Malaysian Foreigner Malaysian Foreigner

Size of shareholdings No. % No. % No. % No. %

Less than 100 7,908 8.76 290 0.32 257,072 0.01 10,967 *1

100 – 1,000 13,252 14.68 572 0.63 6,987,309 0.20 294,839 0.01

1,001 – 10,000 47,344 52.44 4,490 4.97 151,020,947 4.37 18,909,320 0.55

10,001 – 100,000 11,791 13.06 2,850 3.16 296,507,288 8.59 78,522,127 2.28

100,001 – 172,572,432 1,150 1.27 637 0.71 1,469,189,037 42.57 816,271,101 23.65
(less than 5% of issued
shares*2)

172,572,433 (5% of 2 *1
— — 613,478,659 17.77 — —
issued shares*2) and
above

Total 81,447 90.21 8,839 9.79 2,537,440,312 73.51 914,008,354 26.49

Notes:
*1
Less than 0.01%.
*2
Excluding a total of 80,477,168 Public Bank (“PBB”) shares bought-back by PBB and retained as treasury shares as at 31 December 2009.
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
410 Analysis of Shareholdings

DIRECTORS’ DIRECT AND INDIRECT INTERESTS IN SHARES IN THE COMPANY AND IN SUBSIDIARY
COMPANY
The Directors’ direct and indirect interests in shares in the Company and its subsidiary company based on the Register of
Directors’ Shareholdings are as follows:

Shares Held in the Company

Direct Interests Indirect Interests Total Interests

% of % of % of
No. of Issued No. of Issued No. of Issued
Name Shares Held Shares*5 Shares Held Shares*5 Shares Held Shares*5

Tan Sri Dato’ Sri Dr. Teh Hong Piow 22,139,228 0.64 808,939,118*1 23.44 831,078,346 24.08

Tan Sri Dato’ Thong Yaw Hong 7,522,714 0.22 845,356*2 0.02 8,368,070 0.24

Tan Sri Dato’ Sri Tay Ah Lek 6,798,968 0.20 349,181 *2

0.01 7,148,149 0.21

Dato’ Sri Lee Kong Lam 375,347 0.01 822,857*3 0.02 1,198,204 0.03

Dato’ Yeoh Chin Kee 205,714 *4

308,571*3 0.01 514,285 0.01

Dato’ Haji Abdul Aziz bin Omar 721,428 0.02 — — 721,428 0.02

Dato’ Dr. Haji Mohamed Ishak bin 360,000 0.01 — — 360,000 0.01
Haji Mohamed Ariff

Notes:
*1
Deemed to have interests in PBB shares held by other corporations by virtue of Section 6A(4) of the Companies Act, 1965.
*2
Deemed to have interests in PBB shares held by person(s) connected as defined per Section 122A of the Companies Act, 1965 and held by other
corporation by virtue of Section 6A(4) of the Companies Act, 1965.
*3
Deemed to have interests in PBB shares held by person(s) connected as defined per Section 122A of the Companies Act, 1965.
*4
Less than 0.01%.
*5
Excluding a total of 80,477,168 PBB shares bought-back by PBB and retained as treasury shares as at 31 December 2009.

Shares Held in Subsidiary Company

– Shares Held in Public Financial Holdings Limited (“PFHL”)
Direct Interests

No. of % of
Name Shares Held Issued Shares

Tan Sri Dato’ Sri Tay Ah Lek 350,000 0.03

Dato’ Yeoh Chin Kee 150,000 0.01

Share Options Held in Subsidiary Company

– Share Options Held under the PFHL Employees’ Share Option Scheme
No. of Option Price
Name Options Held (HKD)

Tan Sri Dato’ Sri Tay Ah Lek 1,230,000 6.35

Tan Sri Dato’ Sri Dr. Teh Hong Piow, by virtue of his total direct and indirect interests of 831,078,346 shares in PBB, and pursuant
to Section 6A(4)(c) of the Companies Act, 1965, is deemed interested in the shares in all of PBB’s subsidiary and associated
companies to the extent that PBB has interests.
 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
Analysis of Shareholdings 411
Substantial Shareholders BASED ON THE Register of Substantial Shareholders
Direct Interests Indirect Interests Total Interests

% of % of % of
No. of Issued No. of Issued No. of Issued
Name Shares Held Shares*2 Shares Held Shares*2 Shares Held Shares*2

Tan Sri Dato’ Sri Dr. Teh Hong Piow 22,139,228 0.64 808,939,118*1 23.44 831,078,346 24.08

Employees Provident Fund Board 467,616,735 13.55 — — 467,616,735 13.55

Consolidated Teh Holdings Sdn Bhd 81,750,535 2.37 170,446,256*1 4.94 252,196,791 7.31

Sekuriti Pejal Sdn Bhd 207,148,819 6.00 39,827,165 *1

1.15 246,975,984 7.15

Notes:
*1
Deemed to have interests in PBB shares held by other corporations by virtue of Section 6A(4) of the Companies Act, 1965.
*2
Excluding a total of 80,477,168 PBB shares bought-back by PBB and retained as treasury shares as at 31 December 2009.

TOP THIRTY SECURITIES ACCOUNT HOLDERS

(Without aggregating the securities from different securities accounts belonging to the same Depositor)

% of
No. of Issued
Name Shares Held Shares*

1. Employees Provident Fund Board 331,904,881 9.62

2. Sekuriti Pejal Sdn Berhad 106,560,000 3.09

3. Valuecap Sdn Bhd 102,318,045 2.96

4. Sekuriti Pejal Sdn Berhad 100,588,819 2.91

5. Employees Provident Fund Board 74,424,959 2.16

6. Kepunyaan Chintamani Sdn Bhd 69,840,000 2.02

7. Consolidated Teh Holdings Sdn Berhad 60,444,000 1.75

8. Selected Securities Sdn Bhd 51,003,320 1.48

9. Kumpulan Wang Persaraan (Diperbadankan) 50,432,288 1.46

10. HSBC Nominees (Asing) Sdn Bhd 44,290,914 1.28

– BNP Paribas Secs Svs Lux for Aberdeen Global

11. HSBC Nominees (Asing) Sdn Bhd 39,064,000 1.13

– TNTC for Saudi Arabian Monetary Agency

12. Selected Holdings Sdn Berhad 38,826,561 1.12

13. Kayakita Corporation Sdn Bhd 34,560,000 1.00

14. Amanah Raya Nominees (Tempatan) Sdn Bhd 33,165,299 0.96

– Amanah Saham Malaysia

15. Kepunyaan Perindustrian Sdn Berhad 32,400,000 0.94

16. Malaysia Nominees (Tempatan) Sendirian Berhad 29,273,347 0.85

– Great Eastern Life Assurance (Malaysia) Berhad (Par 1)

17. LPI Capital Bhd 27,924,918 0.81

PUBLIC BANK BERHAD
ANNUAL REPORT 2009
412 Analysis of Shareholdings

% of
No. of Issued
Name Shares Held Shares*
18. Selected Securities Sdn Bhd 27,288,000 0.79

19. Kayakita Corporation Sdn Bhd 27,108,000 0.79

20. Tong Meng Industries Limited 26,915,000 0.78

21. LPI Capital Bhd 26,474,994 0.77

22. Selected Holdings Sdn Berhad 25,560,000 0.74

23. Securities Holdings Sdn Berhad 23,433,589 0.68

24. Tan Sri Dato’ Sri Dr. Teh Hong Piow 21,707,228 0.63

25. Citigroup Nominees (Tempatan) Sdn Bhd 20,724,344 0.60

– Exempt An for Prudential Fund Management Berhad

26. HSBC Nominees (Asing) Sdn Bhd 20,277,117 0.59

– Exempt An for JPMorgan Chase Bank, National Association (U.K.)

27. Luhur Management Sdn Bhd 19,800,000 0.57

28. Amanah Raya Nominees (Tempatan) Sdn Bhd 19,144,480 0.55

– Skim Amanah Saham Bumiputera

29. Amanah Raya Nominees (Tempatan) Sdn Bhd 17,546,200 0.51

– Amanah Saham Wawasan 2020

30. HSBC Nominees (Asing) Sdn Bhd 16,777,450 0.49

– BNP Paribas Secs Svs Paris for Aberdeen Asia Pacific Fund

1,519,777,753 44.03

Note:
* Excluding a total of 80,477,168 PBB shares bought-back by PBB and retained as treasury shares as at 31 December 2009.
 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
Authorised and Issued Share Capital 413

AUTHORISED SHARE CAPITAL

The authorised share capital as at 31 December 2009 is RM10,000,000,000 divided into 10,000,000,000 ordinary shares of RM1.00
each. The changes in the authorised share capital are as follows:

Increase in Authorised
Share Capital Total Authorised Share Capital
Date (RM) (RM)
30.12.1965 50,000,000 50,000,000
06.01.1982 250,000,000 300,000,000
30.09.1986 200,000,000 500,000,000
08.06.1987 500,000,000 1,000,000,000
17.06.1997 4,000,000,000 5,000,000,000
30.03.2005 5,000,000,000 10,000,000,000

ISSUED AND PAID-UP SHARE CAPITAL

The issued and paid-up share capital as at 31 December 2009 is RM3,531,925,834 comprising 3,531,925,834 ordinary shares of
RM1.00 each. The changes in the issued and paid-up share capital are as follows:

Total Issued
and Paid-up
No. of Shares Share Capital
Date of Allotment Allotted Consideration (RM)
Up to 30.08.1966 16,000,000 Cash 16,000,000
15.11.1978 4,000,000 Capitalisation of general reserve account (Bonus Issue 1:4) 20,000,000
22.07.1981 5,000,000 Capitalisation of general reserve account (Bonus Issue 1:4) 25,000,000
07.01.1982 10,000,000 Capitalisation of capital reserve account and general reserve account 35,000,000
(Bonus Issue 2:5)
11.02.1982 35,000,000 Rights Issue 1:1 at RM2.00 per share 70,000,000
22.06.1983 42,000,000 Capitalisation of share premium account and general reserve account 112,000,000
(Bonus Issue 3:5)
22.08.1983 56,000,000* Rights Issue 1:2 at RM2.00 per share 168,000,000
05.07.1984 42,000,000* Capitalisation of share premium account and general reserve account 210,000,000
(Bonus Issue 1:4)
05.02.1988 42,000,000* Capitalisation of share premium account and general reserve account 252,000,000
(Bonus Issue 1:5)
03.08.1988 105,000,000* Rights Issue 1:2 at RM1.60 per share 357,000,000
11.10.1989 218,500* Exercise of share options under Public Bank Berhad Employees’ 357,218,500
Share Option Scheme (“PBB ESOS”) at option price of RM3.80 per
share
02.05.1990 1,237,500* Exercise of share options under PBB ESOS at option price of RM3.80 358,456,000
per share
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
414 Authorised and Issued Share Capital

Total Issued
and Paid-up
No. of Shares Share Capital
Date of Allotment Allotted Consideration (RM)
15.06.1990 119,485,333* Capitalisation of share premium account and general reserve account 477,941,333
(Bonus Issue 1:3)
06.08.1990 71,691,200* Rights Issue 1:5 at RM2.20 per share 549,632,533
08.10.1990 138,500* Exercise of share options under PBB ESOS at option price of RM2.76 549,771,033
per share
12.04.1991 3,828,850* Exercise of share options under PBB ESOS at option price of RM2.76 553,599,883
per share
24.09.1991 334,300* Exercise of share options under PBB ESOS at option price of RM2.76 553,934,183
per share
25.03.1992 114,700* Exercise of share options under PBB ESOS at option price of RM2.76 554,048,883
per share
15.04.1993 1,038,701* Exercise of share options under PBB ESOS at option price of RM2.76 555,087,584
per share
01.10.1993 9,912,337* Exercise of share options under PBB ESOS at option price of RM2.76 564,999,921
per share
20.04.1994 3,434,479* Exercise of share options under PBB ESOS at option price of RM2.76 568,434,400
per share
05.10.1994 1,113,000* Exercise of share options under PBB ESOS at option price of RM7.84 569,547,400
per share
27.12.1994 50,000,000* Issue and private placement of 50,000,000 new shares as follows: 619,547,400
– 35,000,000 PBB local shares at RM8.28 per share
– 15,000,000 PBB foreign shares at RM10.62 per share
18.04.1996 25,500* Exercise of share options under PBB ESOS at option price of RM7.84 619,572,900
per share
07.08.1996 206,524,300* Capitalisation of share premium account (Bonus Issue 1:3) 826,097,200
25.10.1996 143,541* Exercise of share options under PBB ESOS at option price of RM5.88 826,240,741
per share
12.05.1997 358,850* Exercise of share options under PBB ESOS at option price of RM5.88 826,599,591
per share
06.01.1998 165,319,918* Capitalisation of share premium account (Bonus Issue 1:5) 991,919,509
09.03.1998 165,319,918* Rights Issue 1:5 at RM2.00 per PBB local share and at RM2.28 per 1,157,239,427
PBB foreign share
11.02.1999 8,007,750* Exercise of share options under PBB ESOS at option price of RM3.32 1,165,247,177
per share
11.05.1999 35,500* Exercise of share options under PBB ESOS at option price of RM4.48 1,165,282,677
per share
19.05.1999 4,736,865* Exercise of share options under PBB ESOS at option price of RM4.48 1,170,019,542
per share
07.06.1999 1,077,950* Exercise of share options under PBB ESOS at option price of RM4.48 1,171,097,492
per share
02.07.1999 12,063,250* Exercise of share options under PBB ESOS at option price of RM3.32 1,183,160,742
per share
08.12.2000 11,899,125* Exercise of share options under PBB ESOS at option price of RM3.32 1,195,059,867
per share
 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
Authorised and Issued Share Capital 415

Total Issued
and Paid-up
No. of Shares Share Capital
Date of Allotment Allotted Consideration (RM)
15.02.2001 1,662,500* Exercise of share options under PBB ESOS at option price of RM3.32 1,196,722,367
per share
31.03.2001 213,140,892* New PBB local shares issued in exchange for 125,377,000 ordinary 1,409,863,259
shares of RM1.00 each in Hock Hua Bank Bhd (“HHB”) pursuant to
terms of merger of PBB and HHB
23.04.2001 422,958,977* Capitalisation of share premium account and retained profits (Bonus 1,832,822,236
Issue 3:10)
11.12.2001 996,387* Exercise of share options under PBB ESOS at option price of RM2.54 1,833,818,623
per share
12.03.2002 1,025,362* Exercise of share options under PBB ESOS at option price of RM2.54 1,834,843,985
per share
12.07.2002 458,710,997* Capitalisation of share premium account (Bonus Issue 1:4) 2,293,554,982
13.09.2002 13,570,954* Exercise of share options under PBB ESOS as follows: 2,307,125,936
– 1,488,329 shares at option price of RM2.04 per share
– 12,082,625 shares at option price of RM4.44 per share
08.10.2002 7,153,442* Exercise of share options under PBB ESOS as follows: 2,314,279,378
– 412,567 shares at option price of RM2.04 per share
– 6,740,875 shares at option price of RM4.44 per share
12.12.2002 247,675* Exercise of share options under PBB ESOS as follows: 2,314,527,053
– 130,050 shares at option price of RM2.04 per share
– 117,625 shares at option price of RM4.44 per share
14.03.2003 153,158* Exercise of share options under PBB ESOS as follows: 2,314,680,211
– 112,408 shares at option price of RM2.04 per share
– 40,750 shares at option price of RM4.44 per share
09.04.2003 37,907* Exercise of share options under PBB ESOS at option price of RM2.04 2,314,718,118
per share
13.06.2003 202,598,923* New PBB local shares issued in exchange for 135,065,949 ordinary 2,517,317,041
shares of RM1.00 each in Public Finance Bhd (“PFB”) pursuant to
terms of privatisation of PFB
16.07.2003 629,329,261* Capitalisation of share premium account (Bonus Issue 1:4) 3,146,646,302
14.08.2003 8,337,798* Exercise of share options under PBB ESOS as follows: 3,154,984,100
– 250,423 shares at option price of RM1.64 per share
– 8,087,375 shares at option price of RM3.56 per share
05.09.2003 2,804,031* Exercise of share options under PBB ESOS as follows: 3,157,788,131
– 75,156 shares at option price of RM1.64 per share
– 2,728,875 shares at option price of RM3.56 per share
08.09.2003 2,902,623* Exercise of share options under PBB ESOS as follows: 3,160,690,754
– 67,856 shares at option price of RM1.64 per share
– 1,595,142 shares at option price of RM3.56 per share
– 1,239,625 shares at option price of RM3.40 per share
12.09.2003 7,001,644* Exercise of share options under PBB ESOS as follows: 3,167,692,398
– 54,489 shares at option price of RM1.64 per share
– 4,948,530 shares at option price of RM3.56 per share
– 1,998,625 shares at option price of RM3.40 per share
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
416 Authorised and Issued Share Capital

Total Issued
and Paid-up
No. of Shares Share Capital
Date of Allotment Allotted Consideration (RM)
24.09.2003 1,216,063* Exercise of share options under PBB ESOS as follows: 3,168,908,461
– 6,250 shares at option price of RM1.64 per share
– 915,688 shares at option price of RM3.56 per share
– 294,125 shares at option price of RM3.40 per share
15.10.2003 3,518,818* Exercise of share options under PBB ESOS as follows: 3,172,427,279
– 15,169 shares at option price of RM1.64 per share
– 2,515,399 shares at option price of RM3.56 per share
– 988,250 shares at option price of RM3.40 per share
27.10.2003 2,054,251* Exercise of share options under PBB ESOS as follows: 3,174,481,530
– 3,313 shares at option price of RM1.64 per share
– 1,457,938 shares at option price of RM3.56 per share
– 593,000 shares at option price of RM3.40 per share
29.10.2003 6,748,111* Exercise of share options under PBB ESOS as follows: 3,181,229,641
– 32,993 shares at option price of RM1.64 per share
– 3,781,268 shares at option price of RM3.56 per share
– 2,933,850 shares at option price of RM3.40 per share
06.11.2003 4,913,239* Exercise of share options under PBB ESOS as follows: 3,186,142,880
– 39,115 shares at option price of RM1.64 per share
– 3,806,374 shares at option price of RM3.56 per share
– 1,067,750 shares at option price of RM3.40 per share
13.11.2003 1,202,135* Exercise of share options under PBB ESOS as follows: 3,187,345,015
– 5,040 shares at option price of RM1.64 per share
– 961,220 shares at option price of RM3.56 per share
– 235,875 shares at option price of RM3.40 per share
18.11.2003 455,750* Exercise of share options under PBB ESOS as follows: 3,187,800,765
– 406,250 shares at option price of RM3.56 per share
– 49,500 shares at option price of RM3.40 per share
21.11.2003 5,801,710* Exercise of share options under PBB ESOS as follows: 3,193,602,475
– 33,297 shares at option price of RM1.64 per share
– 2,989,788 shares at option price of RM3.56 per share
– 2,778,625 shares at option price of RM3.40 per share
01.12.2003 1,417,894* Exercise of share options under PBB ESOS as follows: 3,195,020,369
– 16,324 shares at option price of RM1.64 per share
– 1,062,070 shares at option price of RM3.56 per share
– 339,500 shares at option price of RM3.40 per share
04.12.2003 68,000* Exercise of share options under PBB ESOS at option price of RM3.56 3,195,088,369
per share
22.12.2003 2,297,250* Exercise of share options under PBB ESOS as follows: 3,197,385,619
– 13,484 shares at option price of RM1.64 per share
– 1,889,391 shares at option price of RM3.56 per share
– 394,375 shares at option price of RM3.40 per share
26.12.2003 9,214,108* Exercise of share options under PBB ESOS as follows: 3,206,599,727
– 20,525 shares at option price of RM1.64 per share
– 6,642,458 shares at option price of RM3.56 per share
– 2,551,125 shares at option price of RM3.40 per share
 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
Authorised and Issued Share Capital 417

Total Issued
and Paid-up
No. of Shares Share Capital
Date of Allotment Allotted Consideration (RM)
27.01.2004 1,883,267* Exercise of share options under PBB ESOS as follows: 3,208,482,994
– 4,547 shares at option price of RM1.64 per share
– 1,680,345 shares at option price of RM3.56 per share
– 198,375 shares at option price of RM3.40 per share
20.02.2004 483,813* Exercise of share options under PBB ESOS as follows: 3,208,966,807
– 457,313 shares at option price of RM3.56 per share
– 26,500 shares at option price of RM3.40 per share
01.03.2004 1,024,066* Exercise of share options under PBB ESOS as follows: 3,209,990,873
– 886,316 shares at option price of RM3.56 per share
– 137,750 shares at option price of RM3.40 per share
03.03.2004 13,717,282* Exercise of share options under PBB ESOS as follows: 3,223,708,155
– 38,231 shares at option price of RM1.64 per share
– 10,718,176 shares at option price of RM3.56 per share
– 1,647,375 shares at option price of RM3.40 per share
– 1,313,500 shares at option price of RM4.60 per share
05.03.2004 28,660,157* Exercise of share options under PBB ESOS as follows: 3,252,368,312
– 253,907 shares at option price of RM1.64 per share
– 28,406,250 shares at option price of RM3.56 per share
11.03.2004 13,177,700* Exercise of share options under PBB ESOS as follows: 3,265,546,012
– 36,366 shares at option price of RM1.64 per share
– 10,361,459 shares at option price of RM3.56 per share
– 940,875 shares at option price of RM3.40 per share
– 1,839,000 shares at option price of RM4.60 per share
17.03.2004 12,271,286* Exercise of share options under PBB ESOS as follows: 3,277,817,298
– 46,892 shares at option price of RM1.64 per share
– 10,183,769 shares at option price of RM3.56 per share
– 597,125 shares at option price of RM3.40 per share
– 1,443,500 shares at option price of RM4.60 per share
23.03.2004 8,575,825* Exercise of share options under PBB ESOS as follows: 3,286,393,123
– 38,252 shares at option price of RM1.64 per share
– 6,166,723 shares at option price of RM3.56 per share
– 867,350 shares at option price of RM3.40 per share
– 1,503,500 shares at option price of RM4.60 per share
06.04.2004 1,919,157* Exercise of share options under PBB ESOS as follows: 3,288,312,280
– 1,703,532 shares at option price of RM3.56 per share
– 69,625 shares at option price of RM3.40 per share
– 146,000 shares at option price of RM4.60 per share
13.04.2004 4,016,890* Exercise of share options under PBB ESOS as follows: 3,292,329,170
– 3,078,890 shares at option price of RM3.56 per share
– 405,000 shares at option price of RM3.40 per share
– 533,000 shares at option price of RM4.60 per share
16.04.2004 1,233,902* Exercise of share options under PBB ESOS as follows: 3,293,563,072
– 10,500 shares at option price of RM1.64 per share
– 1,017,652 shares at option price of RM3.56 per share
– 85,750 shares at option price of RM3.40 per share
– 120,000 shares at option price of RM4.60 per share
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
418 Authorised and Issued Share Capital

Total Issued
and Paid-up
No. of Shares Share Capital
Date of Allotment Allotted Consideration (RM)
17.08.2004 11,152,166 Exercise of share options under PBB ESOS as follows: 3,304,715,238
– 13,349 shares at option price of RM1.64 per share
– 6,270,567 shares at option price of RM3.56 per share
– 857,550 shares at option price of RM3.40 per share
– 2,299,700 shares at option price of RM4.60 per share
– 1,711,000 shares at option price of RM4.92 per share
30.08.2004 12,767,404 Exercise of share options under PBB ESOS as follows: 3,317,482,642
– 57,078 shares at option price of RM1.64 per share
– 7,127,076 shares at option price of RM3.56 per share
– 618,450 shares at option price of RM3.40 per share
– 2,372,800 shares at option price of RM4.60 per share
– 2,592,000 shares at option price of RM4.92 per share
09.09.2004 1,649,681 Exercise of share options under PBB ESOS as follows: 3,319,132,323
– 908,831 shares at option price of RM3.56 per share
– 67,350 shares at option price of RM3.40 per share
– 260,500 shares at option price of RM4.60 per share
– 413,000 shares at option price of RM4.92 per share
27.09.2004 623,819 Exercise of share options under PBB ESOS as follows: 3,319,756,142
– 8,125 shares at option price of RM1.64 per share
– 344,819 shares at option price of RM3.56 per share
– 63,375 shares at option price of RM3.40 per share
– 136,000 shares at option price of RM4.60 per share
– 71,500 shares at option price of RM4.92 per share
28.09.2004 1,737,912 Exercise of share options under PBB ESOS as follows: 3,321,494,054
– 795,637 shares at option price of RM3.56 per share
– 120,875 shares at option price of RM3.40 per share
– 347,900 shares at option price of RM4.60 per share
– 473,500 shares at option price of RM4.92 per share
04.10.2004 4,621,593 Exercise of share options under PBB ESOS as follows: 3,326,115,647
– 33,767 shares at option price of RM1.64 per share
– 2,569,876 shares at option price of RM3.56 per share
– 267,650 shares at option price of RM3.40 per share
– 1,187,300 shares at option price of RM4.60 per share
– 563,000 shares at option price of RM4.92 per share
26.10.2004 1,755,048 Exercise of share options under PBB ESOS as follows: 3,327,870,695
– 665,498 shares at option price of RM3.56 per share
– 71,650 shares at option price of RM3.40 per share
– 527,400 shares at option price of RM4.60 per share
– 490,500 shares at option price of RM4.92 per share
19.11.2004 4,569,277 Exercise of share options under PBB ESOS as follows: 3,332,439,972
– 187,546 shares at option price of RM1.64 per share
– 2,491,856 shares at option price of RM3.56 per share
– 289,375 shares at option price of RM3.40 per share
– 1,212,000 shares at option price of RM4.60 per share
– 388,500 shares at option price of RM4.92 per share
 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
Authorised and Issued Share Capital 419

Total Issued
and Paid-up
No. of Shares Share Capital
Date of Allotment Allotted Consideration (RM)
25.11.2004 20,935,350 Exercise of share options under PBB ESOS as follows: 3,353,375,322
– 31,710 shares at option price of RM1.64 per share
– 9,479,777 shares at option price of RM3.56 per share
– 653,600 shares at option price of RM3.40 per share
– 4,162,263 shares at option price of RM4.60 per share
– 6,608,000 shares at option price of RM4.92 per share
03.12.2004 2,392,002 Exercise of share options under PBB ESOS as follows: 3,355,767,324
– 1,183,077 shares at option price of RM3.56 per share
– 140,300 shares at option price of RM3.40 per share
– 604,125 shares at option price of RM4.60 per share
– 464,500 shares at option price of RM4.92 per share
28.01.2005 20,743,000 Exercise of share options under PBB ESOS at option price of RM4.92 3,376,510,324
per share
31.01.2005 2,415,001 Exercise of share options under PBB ESOS as follows: 3,378,925,325
– 15,475 shares at option price of RM1.64 per share
– 985,926 shares at option price of RM3.56 per share
– 104,200 shares at option price of RM3.40 per share
– 954,400 shares at option price of RM4.60 per share
– 355,000 shares at option price of RM4.92 per share
07.02.2005 10,466,250 Exercise of share options under PBB ESOS as follows: 3,389,391,575
– 2,406,250 shares at option price of RM3.56 per share
– 2,250,000 shares at option price of RM4.60 per share
– 5,810,000 shares at option price of RM4.92 per share
21.02.2005 7,511,743 Exercise of share options under PBB ESOS as follows: 3,396,903,318
– 26,106 shares at option price of RM1.64 per share
– 3,364,187 shares at option price of RM3.56 per share
– 377,950 shares at option price of RM3.40 per share
– 2,883,000 shares at option price of RM4.60 per share
– 860,500 shares at option price of RM4.92 per share
25.02.2005 639,342 Exercise of share options under PBB ESOS as follows: 3,397,542,660
– 6,094 shares at option price of RM1.64 per share
– 236,373 shares at option price of RM3.56 per share
– 14,875 shares at option price of RM3.40 per share
– 291,000 shares at option price of RM4.60 per share
– 91,000 shares at option price of RM4.92 per share
01.08.2005 12,813,748 Exercise of share options under PBB ESOS as follows: 3,410,356,408
– 14,482 shares at option price of RM1.64 per share
– 1,382,291 shares at option price of RM3.56 per share
– 194,275 shares at option price of RM3.40 per share
– 1,397,700 shares at option price of RM4.60 per share
– 6,670,000 shares at option price of RM4.92 per share
– 3,155,000 shares at option price of RM6.37 per share
31.10.2005 2,114,074 Exercise of share options under PBB ESOS as follows: 3,412,470,482
– 1,063 shares at option price of RM1.64 per share
– 442,561 shares at option price of RM3.56 per share
– 96,950 shares at option price of RM3.40 per share
– 424,800 shares at option price of RM4.60 per share
– 1,014,500 shares at option price of RM4.92 per share
– 134,200 shares at option price of RM6.37 per share
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
420 Authorised and Issued Share Capital

Total Issued
and Paid-up
No. of Shares Share Capital
Date of Allotment Allotted Consideration (RM)
09.11.2005 3,737,523 Exercise of share options under PBB ESOS as follows: 3,416,208,005
– 1,269 shares at option price of RM1.64 per share
– 1,429,354 shares at option price of RM3.56 per share
– 238,525 shares at option price of RM3.40 per share
– 1,537,875 shares at option price of RM4.60 per share
– 204,000 shares at option price of RM4.92 per share
– 326,500 shares at option price of RM6.37 per share
15.11.2005 660,400 Exercise of share options under PBB ESOS as follows: 3,416,868,405
– 163,100 shares at option price of RM3.56 per share
– 61,700 shares at option price of RM3.40 per share
– 390,100 shares at option price of RM4.60 per share
– 45,500 shares at option price of RM4.92 per share
05.12.2005 504,684 Exercise of share options under PBB ESOS as follows: 3,417,373,089
– 217,309 shares at option price of RM3.56 per share
– 35,375 shares at option price of RM3.40 per share
– 202,500 shares at option price of RM4.60 per share
– 23,500 shares at option price of RM4.92 per share
– 26,000 shares at option price of RM6.37 per share
13.01.2006 3,553,363 Exercise of share options under PBB ESOS as follows: 3,420,926,452
– 2,587 shares at option price of RM1.64 per share
– 391,750 shares at option price of RM3.56 per share
– 77,325 shares at option price of RM3.40 per share
– 519,300 shares at option price of RM4.60 per share
– 71,000 shares at option price of RM4.92 per share
– 86,000 shares at option price of RM6.37 per share
– 2,405,401 shares at option price of RM5.67 per share
18.01.2006 115,100 Exercise of share options under PBB ESOS as follows: 3,421,041,552
– 8,600 shares at option price of RM3.56 per share
– 83,500 shares at option price of RM4.60 per share
– 23,000 shares at option price of RM4.92 per share
08.02.2006 329,363 Exercise of share options under PBB ESOS as follows: 3,421,370,915
– 45,938 shares at option price of RM3.56 per share
– 2,425 shares at option price of RM3.40 per share
– 27,500 shares at option price of RM4.60 per share
– 7,500 shares at option price of RM4.92 per share
– 7,000 shares at option price of RM6.37 per share
– 239,000 shares at option price of RM5.67 per share
28.02.2006 3,922,364 Exercise of share options under PBB ESOS as follows: 3,425,293,279
– 302 shares at option price of RM1.64 per share
– 234,931 shares at option price of RM3.56 per share
– 20,125 shares at option price of RM3.40 per share
– 293,500 shares at option price of RM4.60 per share
– 63,500 shares at option price of RM4.92 per share
– 255,000 shares at option price of RM6.37 per share
– 3,055,006 shares at option price of RM5.67 per share
 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
Authorised and Issued Share Capital 421

Total Issued
and Paid-up
No. of Shares Share Capital
Date of Allotment Allotted Consideration (RM)
09.03.2006 8,050,287 Exercise of share options under PBB ESOS as follows: 3,433,343,566
– 1,282 shares at option price of RM1.64 per share
– 296,195 shares at option price of RM3.56 per share
– 3,125 shares at option price of RM3.40 per share
– 314,600 shares at option price of RM4.60 per share
– 108,000 shares at option price of RM4.92 per share
– 402,390 shares at option price of RM6.37 per share
– 6,924,695 shares at option price of RM5.67 per share
14.03.2006 12,000 Exercise of share options under PBB ESOS at option price of RM5.67 3,433,355,566
per share
14.08.2006 1,960,920 Exercise of share options under PBB ESOS as follows: 3,435,316,486
– 2,094 shares at option price of RM1.64 per share
– 94,596 shares at option price of RM3.56 per share
– 11,625 shares at option price of RM3.40 per share
– 212,500 shares at option price of RM4.60 per share
– 40,000 shares at option price of RM4.92 per share
– 115,000 shares at option price of RM6.37 per share
– 1,485,105 shares at option price of RM5.67 per share
22.08.2006 13,588,150 Exercise of share options under PBB ESOS as follows: 3,448,904,636
– 17,923 shares at option price of RM1.64 per share
– 411,452 shares at option price of RM3.56 per share
– 44,250 shares at option price of RM3.40 per share
– 555,000 shares at option price of RM4.60 per share
– 72,900 shares at option price of RM4.92 per share
– 319,000 shares at option price of RM6.37 per share
– 12,167,625 shares at option price of RM5.67 per share
04.09.2006 1,147,600 Exercise of share options under PBB ESOS as follows: 3,450,052,236
– 34,600 shares at option price of RM3.56 per share
– 83,500 shares at option price of RM4.60 per share
– 51,500 shares at option price of RM4.92 per share
– 978,000 shares at option price of RM5.67 per share
22.09.2006 754,127 Exercise of share options under PBB ESOS as follows: 3,450,806,363
– 16,127 shares at option price of RM3.56 per share
– 22,000 shares at option price of RM4.60 per share
– 7,000 shares at option price of RM4.92 per share
– 16,000 shares at option price of RM6.37 per share
– 693,000 shares at option price of RM5.67 per share
20.11.2006 1,735,884 Exercise of share options under PBB ESOS as follows: 3,452,542,247
– 2,698 shares at option price of RM1.64 per share
– 31,886 shares at option price of RM3.56 per share
– 6,500 shares at option price of RM3.40 per share
– 130,500 shares at option price of RM4.60 per share
– 19,000 shares at option price of RM4.92 per share
– 542,500 shares at option price of RM6.37 per share
– 1,002,800 shares at option price of RM5.67 per share
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
422 Authorised and Issued Share Capital

Total Issued
and Paid-up
No. of Shares Share Capital
Date of Allotment Allotted Consideration (RM)
30.11.2006 3,142,529 Exercise of share options under PBB ESOS as follows: 3,455,684,776
– 1,358 shares at option price of RM1.64 per share
– 90,371 shares at option price of RM3.56 per share
– 4,000 shares at option price of RM3.40 per share
– 188,500 shares at option price of RM4.60 per share
– 43,500 shares at option price of RM4.92 per share
– 1,083,300 shares at option price of RM6.37 per share
– 1,731,500 shares at option price of RM5.67 per share
05.12.2006 4,553,096 Exercise of share options under PBB ESOS as follows: 3,460,237,872
– 4,092 shares at option price of RM1.64 per share
– 161,211 shares at option price of RM3.56 per share
– 18,793 shares at option price of RM3.40 per share
– 349,600 shares at option price of RM4.60 per share
– 78,000 shares at option price of RM4.92 per share
– 1,655,200 shares at option price of RM6.37 per share
– 2,286,200 shares at option price of RM5.67 per share
15.12.2006 2,407,500 Exercise of share options under PBB ESOS as follows: 3,462,645,372
– 30,700 shares at option price of RM3.56 per share
– 1,800 shares at option price of RM3.40 per share
– 82,200 shares at option price of RM4.60 per share
– 59,000 shares at option price of RM4.92 per share
– 729,000 shares at option price of RM6.37 per share
– 1,504,800 shares at option price of RM5.67 per share
22.12.2006 179,500 Exercise of share options under PBB ESOS as follows: 3,462,824,872
– 17,500 shares at option price of RM4.60 per share
– 50,000 shares at option price of RM6.37 per share
– 112,000 shares at option price of RM5.67 per share
25.01.2007 7,252,589 Exercise of share options under PBB ESOS as follows: 3,470,077,461
– 473 shares at option price of RM1.64 per share
– 184,208 shares at option price of RM3.56 per share
– 14,800 shares at option price of RM3.40 per share
– 234,500 shares at option price of RM4.60 per share
– 43,500 shares at option price of RM4.92 per share
– 3,230,108 shares at option price of RM6.37 per share
– 3,545,000 shares at option price of RM5.67 per share
30.01.2007 16,102,248 Exercise of share options under PBB ESOS as follows: 3,486,179,709
– 5,228 shares at option price of RM1.64 per share
– 68,187 shares at option price of RM3.56 per share
– 29,000 shares at option price of RM3.40 per share
– 254,031 shares at option price of RM4.60 per share
– 60,200 shares at option price of RM4.92 per share
– 11,004,802 shares at option price of RM6.37 per share
– 4,680,800 shares at option price of RM5.67 per share
05.02.2007 2,798,614 Exercise of share options under PBB ESOS as follows: 3,488,978,323
– 16,239 shares at option price of RM3.56 per share
– 775 shares at option price of RM3.40 per share
– 35,100 shares at option price of RM4.60 per share
– 11,000 shares at option price of RM4.92 per share
– 1,971,000 shares at option price of RM6.37 per share
– 764,500 shares at option price of RM5.67 per share
 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
Authorised and Issued Share Capital 423

Total Issued
and Paid-up
No. of Shares Share Capital
Date of Allotment Allotted Consideration (RM)
15.02.2007 3,449,000 Exercise of share options under PBB ESOS as follows: 3,492,427,323
– 8,000 shares at option price of RM3.56 per share
– 1,000 shares at option price of RM3.40 per share
– 48,500 shares at option price of RM4.60 per share
– 25,500 shares at option price of RM4.92 per share
– 2,387,000 shares at option price of RM6.37 per share
– 979,000 shares at option price of RM5.67 per share
23.02.2007 118,000 Exercise of share options under PBB ESOS as follows: 3,492,545,323
– 3,500 shares at option price of RM4.60 per share
– 49,000 shares at option price of RM6.37 per share
– 65,500 shares at option price of RM5.67 per share
14.05.2007 5,659,529 Exercise of share options under PBB ESOS as follows: 3,498,204,852
– 22,492 shares at option price of RM1.64 per share
– 75,283 shares at option price of RM3.56 per share
– 24,350 shares at option price of RM3.40 per share
– 185,000 shares at option price of RM4.60 per share
– 43,500 shares at option price of RM4.92 per share
– 3,516,279 shares at option price of RM6.37 per share
– 1,792,625 shares at option price of RM5.67 per share
17.05.2007 7,553,346 Exercise of share options under PBB ESOS as follows: 3,505,758,198
– 3,371 shares at option price of RM1.64 per share
– 114,070 shares at option price of RM3.56 per share
– 31,507 shares at option price of RM3.40 per share
– 216,500 shares at option price of RM4.60 per share
– 54,300 shares at option price of RM4.92 per share
– 4,608,696 shares at option price of RM6.37 per share
– 2,524,902 shares at option price of RM5.67 per share
30.05.2007 224,369 Exercise of share options under PBB ESOS as follows: 3,505,982,567
– 9,369 shares at option price of RM3.56 per share
– 6,500 shares at option price of RM4.60 per share
– 2,500 shares at option price of RM4.92 per share
– 128,000 shares at option price of RM6.37 per share
– 78,000 shares at option price of RM5.67 per share
04.06.2007 2,962,800 Exercise of share options under PBB ESOS as follows: 3,508,945,367
– 43,000 shares at option price of RM3.56 per share
– 1,000 shares at option price of RM3.40 per share
– 117,000 shares at option price of RM4.60 per share
– 34,000 shares at option price of RM4.92 per share
– 1,931,000 shares at option price of RM6.37 per share
– 836,800 shares at option price of RM5.67 per share
07.06.2007 33,900 Exercise of share options under PBB ESOS as follows: 3,508,979,267
– 400 shares at option price of RM3.56 per share
– 1,500 shares at option price of RM4.60 per share
– 25,000 shares at option price of RM6.37 per share
– 7,000 shares at option price of RM5.67 per share
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
424 Authorised and Issued Share Capital

Total Issued
and Paid-up
No. of Shares Share Capital
Date of Allotment Allotted Consideration (RM)
10.07.2007 1,974,411 Exercise of share options under PBB ESOS as follows: 3,510,953,678
– 379 shares at option price of RM1.64 per share
– 47,133 shares at option price of RM3.56 per share
– 91,000 shares at option price of RM4.60 per share
– 15,500 shares at option price of RM4.92 per share
– 1,201,900 shares at option price of RM6.37 per share
– 618,499 shares at option price of RM5.67 per share
17.07.2007 7,444,206 Exercise of share options under PBB ESOS as follows: 3,518,397,884
– 82,283 shares at option price of RM3.56 per share
– 19,925 shares at option price of RM3.40 per share
– 95,575 shares at option price of RM4.60 per share
– 16,100 shares at option price of RM4.92 per share
– 6,428,923 shares at option price of RM6.37 per share
– 801,400 shares at option price of RM5.67 per share
20.07.2007 727,500 Exercise of share options under PBB ESOS as follows: 3,519,125,384
– 3,000 shares at option price of RM3.56 per share
– 21,000 shares at option price of RM4.60 per share
– 10,000 shares at option price of RM4.92 per share
– 512,000 shares at option price of RM6.37 per share
– 181,500 shares at option price of RM5.67 per share
14.11.2007 6,071,344 Exercise of share options under PBB ESOS as follows: 3,525,196,728
– 727 shares at option price of RM1.64 per share
– 68,822 shares at option price of RM3.56 per share
– 450 shares at option price of RM3.40 per share
– 138,900 shares at option price of RM4.60 per share
– 26,000 shares at option price of RM4.92 per share
– 4,763,700 shares at option price of RM6.37 per share
– 1,072,745 shares at option price of RM5.67 per share
16.11.2007 1,834,280 Exercise of share options under PBB ESOS as follows: 3,527,031,008
– 32,006 shares at option price of RM3.56 per share
– 29,075 shares at option price of RM3.40 per share
– 86,969 shares at option price of RM4.60 per share
– 16,000 shares at option price of RM4.92 per share
– 1,117,231 shares at option price of RM6.37 per share
– 552,999 shares at option price of RM5.67 per share
26.11.2007 849,375 Exercise of share options under PBB ESOS as follows: 3,527,880,383
– 9,700 shares at option price of RM3.56 per share
– 19,075 shares at option price of RM3.40 per share
– 38,000 shares at option price of RM4.60 per share
– 19,500 shares at option price of RM4.92 per share
– 479,800 shares at option price of RM6.37 per share
– 283,300 shares at option price of RM5.67 per share
17.12.2007 11,000 Exercise of share options under PBB ESOS at option price of RM6.37 3,527,891,383
per share
 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
Authorised and Issued Share Capital 425

Total Issued
and Paid-up
No. of Shares Share Capital
Date of Allotment Allotted Consideration (RM)
21.01.2008 701,527 Exercise of share options under PBB ESOS as follows: 3,528,592,910
– 46,600 shares at option price of RM3.56 per share
– 125 shares at option price of RM3.40 per share
– 19,000 shares at option price of RM4.60 per share
– 8,500 shares at option price of RM4.92 per share
– 481,302 shares at option price of RM6.37 per share
– 146,000 shares at option price of RM5.67 per share
05.02.2008 710,476 Exercise of share options under PBB ESOS as follows: 3,529,303,386
– 11,109 shares at option price of RM3.56 per share
– 4,700 shares at option price of RM4.60 per share
– 8,000 shares at option price of RM4.92 per share
– 502,167 shares at option price of RM6.37 per share
– 184,500 shares at option price of RM5.67 per share
18.02.2008 1,595,474 Exercise of share options under PBB ESOS as follows: 3,530,898,860
– 10,262 shares at option price of RM3.56 per share
– 50 shares at option price of RM3.40 per share
– 61,862 shares at option price of RM4.60 per share
– 10,500 shares at option price of RM4.92 per share
– 1,090,800 shares at option price of RM6.37 per share
– 422,000 shares at option price of RM5.67 per share
21.02.2008 65,000 Exercise of share options under PBB ESOS as follows: 3,530,963,860
– 2,500 shares at option price of RM4.60 per share
– 41,500 shares at option price of RM6.37 per share
– 21,000 shares at option price of RM5.67 per share
05.03.2008 748,792 Exercise of share options under PBB ESOS as follows: 3,531,712,652
– 2,121 shares at option price of RM1.64 per share
– 23,221 shares at option price of RM3.56 per share
– 4,750 shares at option price of RM3.40 per share
– 37,700 shares at option price of RM4.60 per share
– 17,500 shares at option price of RM4.92 per share
– 462,400 shares at option price of RM6.37 per share
– 201,100 shares at option price of RM5.67 per share
12.03.2008 213,182 Exercise of share options under PBB ESOS as follows: 3,531,925,834
– 18,982 shares at option price of RM3.56 per share
– 11,500 shares at option price of RM4.60 per share
– 5,500 shares at option price of RM4.92 per share
– 123,000 shares at option price of RM6.37 per share
– 54,200 shares at option price of RM5.67 per share

* The number of shares allotted has been adjusted to reflect the consolidation of PBB shares from par value of RM0.50 to par value of RM1.00 on 2 June
2004.
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
426 Summary of Properties Owned by Public Bank Group
as at 31 December 2009

No. of Properties

Net Book Value

Area Freehold Leasehold (RM’000)
DOMESTIC
PUBLIC BANK BERHAD
Kuala Lumpur 2 — 268,989
Perak 1 — 278
Sarawak — 1 26

PUBLIC MUTUAL BERHAD

Kuala Lumpur 1 3 9,652
Johor Darul Takzim — 1 864
Pulau Pinang 1 — 1,896
Sarawak — 2 2,645
Selangor Darul Ehsan 1 1 5,999

PUBLIC HOLDINGS SDN BHD

Kuala Lumpur 5 3 109,649
Johor Darul Takzim 4 — 47,938
Kedah Darul Aman 1 — 1,473
Melaka — 2 1,340
Pahang 1 — 100
Perak 3 1 5,418
Pulau Pinang 7 — 5,415
Sabah — 2 1,850
Sarawak 1 3 5,113
Selangor Darul Ehsan 1 2 45,881

PUBLIC BANK (L) LTD

Federal Territory of Labuan — 1 285

OVERSEAS
CAMBODIAN PUBLIC BANK PLC
Phnom Penh 1 — 63,055

PUBLIC FINANCIAL HOLDINGS GROUP

Hong Kong — 31 381,361

Note:
The details of the top 10 properties as included in the above summary are disclosed in the following pages.
 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
List of Top 10 Properties Owned by Public Bank Group 427
as at 31 December 2009

Remaining Built-up Date Of Last Net Book

Lease Period Age of Area Revaluation/ Value
Location Description Current Use Tenure (Expiry Date) Property (sq m) Acquisition (RM’000)

Menara Public Bank 36-storey office Public Bank’s Freehold — 15 Years 46,436 2-1-1995 268,790
146 Jalan Ampang tower and 5-storey Head Office and
50450 Kuala Lumpur podium (L/B) Kuala Lumpur City
Malaysia Main Office;
business premises
of subsidiary and
associated
companies

Basement, A shop unit on Public Bank (HK) Leasehold 833 Years 32 Years 5,451 30-5-2006** 109,735
Ground Floor ground floor and Ltd’s Main Branch 999 Years (26-6-2842)
1st-12th Floor, basement; and and office
Flat A & B office floors of a
on 14th Floor, 23-storey
17th Floor, commercial
Flat A on 19th Floor, building
21st Floor and
Main Roof
Public Bank Centre
120 Des Voeux Road
Central Hong Kong

Lot 59, Section 57 Vacant land Public Mutual’s Freehold — — 5,393 24-4-2006 68,957
Jalan Raja Chulan future new Head
50200 Kuala Lumpur Quarters
Malaysia

Building No. 23 10 storey building Head Office, Freehold — new 18,149 14-10-2009 63,055
Street 114, 2½ Basement on Phnom Penh Main
Khan Daun Penh lot 23 & 24 Branch and
Phnom Penh Campu Bank
Cambodia Lonpac Insurance
PLC

11th Floor Office space on Public Financial Leasehold 51 Years 27 Years 1,465 2-5-1994 57,648
Argyle Centre Phase 1 the 11th Floor of Holdings Group 150 Years (18-2-2060) (R)
688 Nathan Road a 21-storey office; part of
65 Argyle Street commercial office space
Mongkok Kowloon building leased to third
Hong Kong parties
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
428 List of Top 10 Properties Owned by Public Bank Group

Remaining Built-up Date Of Last Net Book

Lease Period Age of Area Revaluation/ Value
Location Description Current Use Tenure (Expiry Date) Property (sq m) Acquisition (RM’000)

Shop B Ground Floor A shop unit on Public Bank (HK) Leasehold 41 Years 22 Years 2,215 30-6-1994 46,549
and Office B ground floor and Ltd. & Public 150 Years (27-5-2050) (R)
1st to 17th Floor all B units from Finance Ltd.’s
JCG Building 1st to 17th floors Mongkok Branch;
16 Mongkok Road of an 18-storey storeroom of
Mongkok Kowloon commercial Public Financial
Hong Kong building with Holdings Group;
shops and offices office space
leased to third
parties

Public Bank Tower 30-storey Public Bank’s Freehold — 15 Years 36,222 12-8-1991 44,494
19 Jalan Wong office tower Johor Bahru
Ah Fook (L/B) Branch; office
80000 Johor Bahru space rented to
Johor Darul Takzim third parties and a
Malaysia related party

11th Floor 11th floor of a Office of Public Leasehold 893 Years 42 Years 1,464 11-6-1993 39,442
Wing On House 31-storey office Financial Holdings 999 Years (14-8-2902)
71 Des Voeux building built on a Group. A portion
Road Central 2-storey podium is leased to Public
Central Hong Kong Bank Berhad,
Hong Kong branch
as office

1 Jalan Air Hitam 5 blocks of Public Bank’s Leasehold 87 Years 12 Years 31,669 3-9-1997 38,316
Kawasan Institusi integrated IT & Training 99 Years (2-9-2096)
Bandar Baru Bangi multi-storey Centre
43000 Kajang building (L/B)
Selangor Darul Ehsan
Malaysia

Wisma Public Bank 14-storey office Public Bank’s Freehold — 22 Years 10,395 27-8-2003 23,361
300 Jalan Raja Laut building (L/B) Tiong Nam Branch
50350 Kuala Lumpur
Malaysia

Notes:

(L/B) Land and building

(R) Revaluation was performed as at 31 December 2009

** The acquisition date of 30 May 2006 is the date such property was acquired upon acquisition of Public Bank (Hong Kong)
Limited by Public Financial Holdings Group

Public Financial Holdings Group holds the land portion of all properties by means of leases, in Hong Kong SAR.
 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
International network 429

People’s Republic
of China

Hong Kong SAR

Laos

Vietnam

Cambodia

Sri Lanka

Malaysia
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
430 Group Corporate Directory

Head office:
Menara Public Bank, 146 Jalan Ampang, 50450 Kuala Lumpur, Malaysia
Tel : 03-21766000, 03-21766666, 03-21638888, 03-21638899
Fax : 03-21639917 Swift: PBBEMYKL
Cable : “PBBKLCITY” Kuala Lumpur Telex : MA28290/MA28291

BRANCH ADDRESS TELEPHONE FAX

FEDERAL TERRITORY

Bandar Sri Damansara 6, Jalan Tembaga SD5/2A 03-62725694 03-62725767

Bandar Sri Damansara 03-62725742 03-62747185
52200 Kuala Lumpur 03-62725741

Bangsar 36 & 38, Jalan Maarof 03-22828929 03-22828917

Bangsar, 59100 Kuala Lumpur 03-22828930
03-22828931

Bintang Walk 150, Jalan Bukit Bintang 03-21427833 03-21421241

55100 Kuala Lumpur 03-21427886
03-21427969

Bukit Damansara 36 – 40, Medan Setia 2 03-20945541 03-20943844

Plaza Damansara, Bukit Damansara 03-20945573
50490 Kuala Lumpur 03-20951757

Changkat Thambi Dollah 85, 86 & 87, Changkat Thambi Dollah 03-21426300 03-21415266
Off Jalan Pudu, 55100 Kuala Lumpur 03-21454492 03-21454462
03-21454498

Jalan Bukit Bintang Sun Complex, Jalan Bukit Bintang 03-21445755 03-21445751
55100 Kuala Lumpur 03-21445759
03-21445760

Jalan Hang Lekiu 20 – 26, Jalan Hang Lekiu 03-20781115 03-20726155

50100 Kuala Lumpur 03-20787077

Jalan Ipoh 480, Wisma Yap Ka, 3rd Mile, Jalan Ipoh 03-40427487 03-40420032
51200 Kuala Lumpur 03-40427488
03-40427489

Jalan Kelang Lama 3045 – 3051, Batu 4½ 03-79811211 03-79816939

Jalan Kelang Lama, 58000 Kuala Lumpur 03-79811212
03-79811213

Jalan Kuchai Lama 44, 46, 48 & 50, Jalan 6/116B 03-79804377 03-79843411
Kuchai Entrepreneurs’ Park 03-79804575
Off Jalan Kuchai Lama 03-79804683
58200 Kuala Lumpur

Jalan Pasar 44 & 46, Jalan Pasar 03-21429110 03-21429916

55100 Kuala Lumpur 03-21429144
03-21429160

Jalan Raja Chulan Wisma Lim Foo Yong 03-21418255 03-21422893

86, Jalan Raja Chulan, 50200 Kuala Lumpur 03-21418366 03-21487721

Jalan Raja Laut Lot G3 & 1A.2, Bangunan KWSP 03-26930722 03-26914624
5, Jalan Raja Laut, 50350 Kuala Lumpur

w w w . p u b l i c b a n k . c o m . m y
 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
Group Corporate Directory 431

BRANCH ADDRESS TELEPHONE FAX

FEDERAL TERRITORY

Jalan Sultan Sulaiman Bangunan Public Bank 03-20702711 03-22745909

6, Jalan Sultan Sulaiman 03-22732101
50000 Kuala Lumpur 03-22722145

Jalan Sungei Besi 12, Jalan Sungei Besi 03-92214771 03-92212968

57100 Kuala Lumpur 03-92215650
03-92215655

Jalan Tun H.S. Lee Lot G. 01, Plaza First Nationwide 03-20702121 03-20702250
161, Jalan Tun H.S. Lee 03-20702234
50000 Kuala Lumpur 03-20702235

Jalan Tun Sambanthan 68, Jalan Tun Sambanthan 03-22725930 03-22736513

50470 Brickfields, Kuala Lumpur 03-22736494
03-22736495

Jinjang 3476 & 3477, Garden Street 03-62523355 03-62522422

Jinjang Utara, 52000 Kuala Lumpur 03-62523356 03-62588627
03-62523357

Kampung Baru Wisma Le Proton, 134 03-26927269 03-26927188

Jalan Raja Abdullah, Kampung Baru 03-26928749
50300 Kuala Lumpur

Kepong 147, 149, 151 & 153 03-62570032 03-62516611

Jalan Rimbunan Raya 1, Laman Rimbunan 03-62574690
Kepong, 52100 Kuala Lumpur

KL City Main Office Ground Floor, Menara Public Bank 03-21638866 03-21639901
146, Jalan Ampang 03-21767888
50450 Kuala Lumpur

Medan Idaman 4, 6 & 8 Jalan 2/21D 03-40234467 03-40234497

Medan Idaman Business Centre 03-40234468
Batu 5, Jalan Gombak 03-40234478
53000 Kuala Lumpur

Mont’ Kiara 1 & 3, Jalan Solaris 1 03-62036363 03-62036639

Solaris Mont’ Kiara 03-62037878
50480 Kuala Lumpur

Overseas Union Garden 3 & 5, Medan Hujan Rahmat 03-77856409 03-77856412

Taman Overseas Union 03-77856410
58200 Kuala Lumpur 03-77856411

Pandan Indah 1, 3 & 5, Jalan Pandan Indah 1/23 03-92742495 03-92746497

Pandan Indah, 55100 Kuala Lumpur 03-92742496
03-92747494
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
432 Group Corporate Directory

BRANCH ADDRESS TELEPHONE FAX

FEDERAL TERRITORY

Pandan Jaya 44, Jalan Pandan 2/2 03-92812199 03-92812206

Pandan Jaya, 55100 Kuala Lumpur 03-92863149
03-92863160

Salak South 31 – 33, Ground Floor, Jalan 3/108C 03-79802921 03-79805230

Taman Sungai Besi, Salak South 03-79804293
57100 Kuala Lumpur 03-79805190

Segambut 75 & 77, Jalan Segambut Pusat 03-62526636 03-62526620

51200 Kuala Lumpur 03-62527052 03-62527057
03-62527054

Selayang 45, 47 & 49, Jalan 2/3A 03-61205099 03-61368651

Pusat Bandar Utara Selayang 03-61368644 03-61383723
68100 Batu Caves, Kuala Lumpur 03-61368645

Sentul 36, 38 & 40, Jalan 14/48A 03-40421509 03-40421822

Sentul Raya Off Jalan Sentul 03-40421652
51000 Kuala Lumpur 03-40421811

Seri Petaling 40 – 42, Jalan Radin Tengah 03-90585711 03-90570415

Bandar Baru Seri Petaling 03-90585712 03-90582026
57000 Kuala Lumpur 03-90585713

Setapak 263, 265, 267 & 269 03-40219341 03-40219351

Jalan Genting Kelang, Setapak 03-40219343
53300 Kuala Lumpur

Taman Cheras 1, 3 & 5, Jalan 4/96A 03-91313581 03-91304586

Taman Cheras Makmur 03-91313466
56100 Kuala Lumpur 03-91313534

Taman Connaught 80 & 82, Jalan Cerdas 03-91023649 03-91023645

Taman Connaught, Cheras 03-91023650
56000 Kuala Lumpur

Taman Desa Lot 1A – 3A, Business Centre 03-79837811 03-79818069

Taman Desa, Off Jalan Kelang Lama 03-79837812
58100 Kuala Lumpur 03-79837813

Taman Maluri 275 & 277, Jalan Mahkota 03-92859994 03-92855197

Taman Maluri, Cheras, 55100 Kuala Lumpur 03-92859995 03-92856811
03-92859996

Taman Melawati 262 – 265, Jalan Bandar 12 03-41052003 03-41052009

Taman Melawati, 53100 Kuala Lumpur 03-41052004
03-41052005

Taman Midah 2, Jalan Midah 3, Taman Midah, Cheras 03-91300234 03-91309226

56000 Kuala Lumpur 03-91300533
03-91300906

Taman Tun Dr. Ismail 66, 68 & 70, Jalan Burhanuddin Helmi 03-77294672 03-77298754
Taman Tun Dr. Ismail, 60000 Kuala Lumpur 03-77299440 03-77223719
03-77296671
 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
Group Corporate Directory 433

BRANCH ADDRESS TELEPHONE FAX

FEDERAL TERRITORY

Tiong Nam Wisma Public Bank, 300, Jalan Raja Laut 03-26939526 03-26914673
50350 Kuala Lumpur 03-26939528
03-26939555

Wangsa Maju 24 – 26, Jalan 1A/27A, Section 1 03-41428577 03-41429281

Wangsa Maju, 53300 Kuala Lumpur 03-41428579 03-41425445
03-41428581

FEDERAL TERRITORY – LABUAN

Labuan Lucas Kong Building, 5, Jalan Merdeka 087-414201 087-412388

87007 Wilayah Persekutuan, Labuan 087-414278
087-414373

SELANGOR

Ampang Wisma Saudagar, 420, Batu 5, Jalan Ampang 03-42562333 03-42578964

68000 Ampang, Selangor 03-42562636

Bandar Bukit Tinggi 69 & 71, Jalan Batu Nilam 1 03-33231661 03-33237700
Bandar Bukit Tinggi 03-33236006 03-33237117
41200 Klang, Selangor 03-33236996

Bandar Puchong Jaya 9 & 10, Jalan Kenari 1 03-58821888 03-58821299

Bandar Puchong Jaya 03-58821889 03-80766093
47100 Puchong, Selangor 03-58821890

Bandar Puteri Puchong 1 & 3, Jalan Puteri 2/3 03-80627799 03-80627788

Bandar Puteri, 47100 Puchong, Selangor 03-80628899

Bandar Sunway 48 & 50, Jalan PJS 11/28A 03-56364138 03-56363556

Bandar Sunway 03-56362256
46150 Petaling Jaya, Selangor 03-56361050

Banting 5, 7, 9, Jalan Sultan Abdul Samad 03-31872466 03-31872488

42700 Banting, Selangor 03-31878586 03-31872708
03-31875992

Batang Kali 3, 4 & 5, Jalan CKC 1 03-60571200 03-60572277

Bandar Baru Batang Kali 03-60572401 03-60572405
44300 Ulu Selangor, Selangor 03-60572402

Bukit Beruntung 23 & 25, Jalan Melati 2B, Seksyen BB11 03-60282168 03-60282173
Bandar Bukit Beruntung 03-60282169
48300 Rawang, Selangor 03-60282170

Damansara Jaya 1, 3 & 5, Jalan SS 22/23 03-77287353 03-77288125

Damansara Jaya 03-77298588
47400 Petaling Jaya, Selangor 03-77298589

Damansara Utama 49, 51 & 53, Jalan SS 21/60 03-77289376 03-77278064

Damansara Utama 03-77289406
47400 Petaling Jaya, Selangor

Jalan SK 10/4 Bangunan MCA Seri Kembangan 03-89483557 03-89481412

1260, Jalan SK 10/4 03-89488700 03-89485700
43300 Seri Kembangan, Selangor
PUBLIC BANK BERHAD
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BRANCH ADDRESS TELEPHONE FAX

SELANGOR

Jalan Tapah 62, 64 & 66, Jalan Tapah 03-33419036 03-33411353

Off Jalan Goh Hock Huat 03-33419037
41400 Kelang, Selangor 03-33414889

Kapar 252, 252A & 256, Jalan Besar 03-32500916 03-32500915

42200 Kapar, Selangor 03-32500917
03-32502799

Kajang 14, 15 & 16, Jalan Raja Haroun 03-87335752 03-87365369

43000 Kajang, Selangor 03-87368891 03-87367278
03-87368894

Kampung Baru Subang 34 – 36, Jalan Lebuh Besar 03-78468986 03-78463351

Kampung Baru Subang 03-78468012
40150 Shah Alam, Selangor 03-78468714

Kelana Jaya F-07, F-08 & F-09, Jalan SS 6/5B 03-78034928 03-78032478
Dataran Glomac, Pusat Bandar Kelana Jaya 03-78031267
47301 Petaling Jaya, Selangor 03-78034981

Klang 28 – 32, Persiaran Sultan Ibrahim 03-33423567 03-33423566

41300 Klang, Selangor

Kuala Selangor 1 & 3, Jalan Raja Lumu 03-32894193 03-32894133

45000 Kuala Selangor, Selangor 03-32894194
03-32894195

Pandamaran 306, Jalan Besar, Pandamaran 03-31672830 03-31675440

42000 Port Klang, Selangor 03-31672831
03-31672832

Petaling Jaya New Town 1, 3 & 5, Jalan 52/2 03-79570007 03-79579601

46200 Petaling Jaya, Selangor 03-79569924
03-79570211

Petaling Jaya Old Town N19 & O19, Jalan Pasar 03-77835763 03-77836562
Off Jalan Othman 03-77835785
46000 Petaling Jaya, Selangor 03-77836566

Port Klang 82, Lebuh Beringin, Off Jalan Berangan 03-31674550 03-31685510
42000 Port Klang, Selangor 03-31674668
03-31673987

Rawang 45, Jalan 1B, Batu 17, Taman Jati 03-60924936 03-60924935
48000 Rawang, Selangor 03-60924937
03-60924934

Sabak Bernam 2180 & 2181, Jalan Menteri 03-32162500 03-32162809

45200 Sabak Bernam, Selangor 03-32162805
03-32162612

SEA Park 8 & 10, Jalan 21/12, Sea Park 03-78738931 03-78744798
46300 Petaling Jaya, Selangor 03-78738932
03-78738934
 PUBLIC BANK BERHAD
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BRANCH ADDRESS TELEPHONE FAX

SELANGOR

Section 14 12, 14 & 16, Jalan 14/14 03-79582585 03-79582593

46100 Petaling Jaya, Selangor 03-79582586
03-79582591

Sekinchan 102, Jalan Bernam 03-32411263 03-32411644

45400 Sekinchan, Selangor 03-32411264 03-32411229
03-32410093

Semenyih 22B & 23, Jalan Besar 03-87238811 03-87237455

43500 Semenyih, Selangor 03-87238812
03-87238706

Seri Gombak 19, 21 & 23, Jalan SG 1/6 03-61852980 03-61886236

Taman Seri Gombak 03-61889611 03-61852979
68100 Batu Caves, Selangor 03-61889612

Seri Kembangan Lot 255, Jalan Kolej 03-89421096 03-89422537

43300 Seri Kembangan, Selangor 03-89422671
03-89422916

Seri Setia B01 & G01, Plaza Seri Setia 03-78741944 03-78769411
1, Jalan SS9A/2 03-78741966
47300 Petaling Jaya, Selangor 03-78754009

Shah Alam Lot 31 – 35, Jalan Utas B, Seksyen 15/B 03-55100567 03-55101288
40000 Shah Alam, Selangor 03-55101313
03-55101323

SS 2 61-1, 61-2 & 61-3, Jalan SS 2/75 03-78740436 03-78741491

47300 Petaling Jaya, Selangor 03-78741911
03-78741933

Subang Jaya B1 – B4, Jalan SS 15/4D, Subang Jaya 03-56332420 03-56347713

47500 Petaling Jaya, Selangor 03-56332421
03-56341132

Sungai Buloh Lot 403 & 404, Jalan 1A/1 03-61561983 03-61562138
Bandar Baru Sungai Buloh 03-61562056
47000 Sungai Buloh, Selangor 03-61562083

Sungai Chua 1 & 3, Jalan M/J 2, Taman Majlis Jaya 03-87370228 03-87345570
Jalan Sungai Chua, 43000 Kajang
Selangor

Sungai Jarom S11 – 12, Jalan Rajawali 03-31912031 03-31912080

42600 Sungai Jarom, Selangor 03-31912032
03-31912033

Sungai Pelek 24-C, Jalan Besar 03-31411236 03-31411233

43950 Sungai Pelek, Selangor 03-31411237

Taman Chi Liung 22, 24, 26 & 28, Lintang Menalu 03-33718899 03-33720319
Taman Chi Liung, 41200 Klang, Selangor 03-33718482
03-33718433
PUBLIC BANK BERHAD
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BRANCH ADDRESS TELEPHONE FAX

SELANGOR

Taman Indah 23, Jalan Kasturi 1, Plaza Kasturi 03-90755202/211 03-90755769

Off Jalan Balakong, Batu 11 03-90755200 03-90802915
43200 Cheras, Selangor

Taman Mayang 21 & 23, Jalan SS 25/23 03-78039247 03-78039447

Taman Plaza, 47301 Petaling Jaya 03-78030124
Selangor 03-78030151

Taman Muda 36, Jalan Bunga Tanjung 8A 03-42979335 03-42961810

Taman Muda, 68000 Ampang, Selangor 03-42969506
03-42961806

Taman Sentosa Klang 2, Jalan Dato’ Yusof Shahbudin 30 03-51613369 03-51613524

Taman Sentosa, 41200 Klang, Selangor 03-51613414
03-51613449

Taman Sri Muda 2, Jalan Sepadu B25/B 03-51216394 03-51216372

Taman Perindustrian Axis, Section 25 03-51216395
40400 Shah Alam, Selangor 03-51216397

Taman Taming Jaya No. 2-1-G, 2-1-1 & 2-1-2, Wisma Pauson 03-89614980 03-89614985
Jalan Taming Kanan 1 03-89614984
Taman Taming Jaya 03-89614990
43300 Balakong, Selangor

USJ 3, 5 & 7, Jalan USJ 10/1F 03-56350617 03-56329196

47620 UEP Subang Jaya, Selangor 03-56350760

JOHOR

Bandar Baru Permas Jaya 17 & 19, Jalan Permas 10/1 07-3883252 07-3883259
Bandar Baru Permas Jaya 07-3883253
81750 Masai, Johor 07-3883254

Batu Pahat 116, 117 & 118 07-4344941 07-4319120

Jalan Chengal, Taman Makmur 07-4344942
83000 Batu Pahat, Johor

Bukit Pasir 36-2 & 36-3, Taman Bahagia 06-9857261 06-9856811

Jalan Panchor, Bukit Pasir 06-9856878
84300 Muar, Johor

Chaah 3 & 5, Taman Sri Chaah, Jalan Yong Peng 07-9262001 07-9262008
85400 Chaah, Johor 07-9262002

Endau 811 & 812, Jalan Aman 07-7944051 07-7944086

Taman Bahagia, 86900 Endau, Johor 07-7944155

Jalan Abdullah 74, 76 & 78, Jalan Abdullah 06-9518753/60 06-9519550

84000 Muar, Johor 06-9533659

Johor Bahru Level 1 & 12, Public Bank Tower 07-2186888 07-2221988
19, Jalan Wong Ah Fook
80000 Johor Bahru, Johor

P.O. Box 231, 80720 Johor Bahru, Johor

 PUBLIC BANK BERHAD
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BRANCH ADDRESS TELEPHONE FAX

JOHOR

Kahang 11 & 12, Jalan Parang 1, Taman Sri Kahang 07-7882294 07-7882297
86700 Kahang, Johor 07-7882295
07-7882296

Kluang 3A, 3B & 3C, Jalan Dato’ Teoh Siew Khor 07-7735112 07-7735117
86000 Kluang, Johor 07-7735113

Kota Tinggi 10A, 10B & 10C, Jalan Tun Habab 07-8834192 07-8834852
81900 Kota Tinggi, Johor 07-8834195
07-8834835

Kulai 42-1, 42-2 & 42-3, Jalan Raya 07-6634166 07-6635761

Kulai Besar, 81000 Kulai, Johor 07-6634167
07-6634171

Masai 1 & 3, Jalan Suria 3 07-2522498 07-2511795

Bandar Seri Alam, 81750 Masai, Johor 07-2522500
07-2522501

Mersing 21 & 22, Jalan Sulaiman 07-7992477 07-7992530

86800 Mersing, Johor 07-7992478 07-7993912

Muar 47, 48, 49 & 50 06-9517505 06-9523033

Jalan Sayang, 84000 Muar, Johor 06-9517520
06-9517521

Parit Raja 11 & 12, Jalan Kristal, Taman Kristal 2 07-4542855 07-4542844
86400 Parit Raja, Batu Pahat, Johor 07-4542857
07-4542859

Pekan Nenas SH 9 & SH 10, Main Road 07-6995352 07-6995351

81500 Pekan Nenas, Johor 07-6995594
07-6995597

Pontian Kecil 761 & 762, Jalan Taib 07-6877861 07-6876144

82000 Pontian, Johor 07-6879601 07-6877844
07-6879602 07-6878424

Segamat 62H & 62I, Jalan Genuang 07-9313900 07-9310854

85000 Segamat, Johor 07-9313930
07-9313931

Simpang Renggam 17 & 19, Jalan Bintang Ria 1 07-7550510 07-7550513

Taman Bintang Ria 07-7550511 07-7550523
86200 Simpang Renggam, Johor 07-7550512

Skudai 2 & 4, Jalan Nakhoda 12 07-5570007 07-5560303

Taman Ungku Tun Aminah 07-5570008
81300 Skudai, Johor 07-5564625

Tangkak 125, Jalan Muar, 84900 Tangkak 06-9782123 06-9783733

Johor 06-9782124

Taman Desa Cemerlang 2, 4 & 6, Jalan Johar 2 07-8616450 07-8616884

Taman Desa Cemerlang
81800 Ulu Tiram, Johor
PUBLIC BANK BERHAD
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BRANCH ADDRESS TELEPHONE FAX

JOHOR

Taman Johor Jaya 29, 31, 33 & 35, Jalan Rosmerah 2/10 07-3546755 07-3547113
Taman Johor Jaya
81100 Johor Bahru, Johor

Taman Munsyi Ibrahim 48 & 50, Jalan Dian 8 07-2346820 07-2346790

Taman Munsyi Ibrahim 07-2346821
81200 Johor Bahru, Johor 07-2346859

Taman Perling 31, 33 & 35, Jalan Persisiran Perling 07-2344426 07-2345850
Taman Perling, 81200 Johor Bahru, Johor 07-2344608
07-2344919

Taman Sentosa G1 & G2, Wisma Daiman 07-3312266 07-3312666

64 Jalan Sulam, Taman Sentosa
80150 Johor Bahru, Johor

Tampoi 14 & 16, Jalan Sri Bahagia 10 07-2377184 07-2378042

Taman Sri Bahagia, Off Jalan Tampoi 07-2377519
81200 Johor Bahru, Johor 07-2377801

Ulu Tiram 8 & 9, Jalan Raya, Taman Tiram Baru 07-8613291 07-8612666
81800 Ulu Tiram, Johor 07-8613292
07-8613293

PULAU PINANG

Bandar Baru Air Itam 54, 56 & 58, Lintang Angsana 04-8273742 04-8280678
Bandar Baru Air Itam 04-8284088
11500 Pulau Pinang 04-8285088

Bagan Ajam 6862 – 6864, Jalan Bagan Jermal 04-3317822 04-3312248

Bagan Ajam, 13000 Butterworth 04-3317823
Pulau Pinang 04-3317824

Bandar Bayan Baru 5, 7, 9 & 11, Lorong Kampung Jawa 04-6438200 04-6441877
Bandar Bayan Baru 04-6438390
11900 Bayan Lepas, Pulau Pinang 04-6438723

Bandar Seberang Jaya 11, Jalan Todak 2 04-3971096 04-3971107

Pusat Bandar Seberang Jaya 04-3971105
13700 Seberang Jaya, Pulau Pinang 04-3971106

Bukit Mertajam 2644 – 2648, Jalan Che Bee Noor 04-5392205 04-5392164
14000 Bukit Mertajam, Pulau Pinang 04-5392207
04-5392209

Butterworth 85, 87 & 89, Jalan Selat, Taman Selat 04-3329837 04-3329836
12000 Butterworth, Pulau Pinang 04-3329839 04-3230349
04-3326416

Jalan Air Itam 27A-G-1, 27B-G-1 & 27C-G-1 04-8288591/95 04-8288537

Jalan Air Itam, 11500 Air Itam 04-8265261
Pulau Pinang
 PUBLIC BANK BERHAD
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BRANCH ADDRESS TELEPHONE FAX

PULAU PINANG

Jalan Datuk Keramat Ground & 1st Floor 04-2264571 04-2291978

456 Jalan Datuk Keramat 04-2292459
10460 Pulau Pinang 04-2281045

Jalan Macalister 104, 104A & 104B, Jalan Macalister 04-2276842 04-2276850
10400 Pulau Pinang 04-2276843/45

Jalan Raja Uda 7320-7322, Ground & 1st Floor 04-3245297 04-3245301
Jalan Raja Uda 04-3245298
12300 Butterworth, Pulau Pinang

Jelutong 407-A & 409-A, Jalan Jelutong 04-2813227 04-2825232

11600 Jelutong, Pulau Pinang 04-2825230

Kepala Batas 21 & 23, Jalan Bertam 04-5759085 04-5759088

13200 Kepala Batas 04-5759086
Seberang Perai Utara, Pulau Pinang 04-5759087

Lebuh Macallum Harbour Trade Centre, 2-1-20 & 2-1-30 04-2628442 04-2630057
2, Gat Lebuh Macallum 04-2627732
10300 Pulau Pinang 04-2627886

Nibong Tebal 3619 – 3620, Jalan Che Ahmad 04-5932216 04-5931590

14300 Nibong Tebal 04-5931433
Seberang Perai Selatan, Pulau Pinang 04-5931460

Prai 2684 & 2685, Jalan Chain Ferry 04-3901241 04-3902394

Taman Inderawasih, 13600 Prai 04-3901246
Pulau Pinang 04-3901981

Pulau Pinang 87, Lebuh Bishop 04-2613415 04-2617417

10200 Pulau Pinang 04-2616755
04-2611416

Pulau Tikus 58, Jalan Cantonment 04-2286017 04-2287075

10250 Pulau Pinang 04-2286018
04-2286019

Relau 1 & 3, Jalan Relau 04-6443112 04-6443128

11900 Pulau Pinang 04-6443102
04-6443097

Simpang Ampat 19, 21 & 23, Jalan Keruing 04-5887000 04-5888080

Kawasan Perniagaan Simpang Ampat 04-5886744
14100 Seberang Perai Selatan 04-5883431
Pulau Pinang

Sungai Nibong 33, 35 & 37, Jalan Pantai Jerjak 13 04-6586000 04-6576212
Sungai Nibong, 11900 Pulau Pinang

Taman Bandar Raya 15 – 18, Lorong Sepakat 1 04-5300288 04-5377288

Taman Bandar Raya 04-5306327 04-5306195
14000 Bukit Mertajam, Pulau Pinang 04-5306328
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
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BRANCH ADDRESS TELEPHONE FAX

MELAKA

Air Keroh 26 & 27, Lorong Setia Satu 06-2327208 06-2327205

Air Keroh Heights, 75450 Melaka 06-2327209
06-2327210

Batu Berendam 1, 3 & 5, Jalan Mutiara Melaka 4 06-3176200 06-3191822

Taman Mutiara Melaka, Batu Berendam 06-3176205
75350 Melaka 06-3179688

Masjid Tanah Lot 367 & 368, Kompleks Perniagaan 06-3847712 06-3847717
78300 Masjid Tanah, Melaka 06-3847713

Melaka 60-68, Jalan Laksamana 06-2830233 06-2844552

75000 Melaka

Taman Malim Jaya 4, 6 & 8, Jalan Suria 2 06-3346397 06-3346412

Taman Malim Jaya, 75250 Melaka 06-3346404
06-3346405

Taman Melaka Raya 566, 567 & 568, Jalan Merdeka 06-2817527 06-2818806
Taman Melaka Raya, 75000 Melaka 06-2817528
06-2817529

Tengkera 300, 300A, 300B & 300-1 06-2832052 06-2832159

Jalan Ong Kim Wee, 75300 Melaka 06-2832054 06-2839591
06-2832072

NEGERI SEMBILAN

Bahau 120 & 121, Jalan Gurney 06-4544102 06-4545270

72100 Bahau, Negeri Sembilan 06-4544103/104

Gemas 12, Jalan Mahkamah 07-9481770 07-9481110

73400 Gemas, Negeri Sembilan 07-9481780

Kuala Pilah 564, Jalan Perpateh 06-4812277/99 06-4815544

72000 Kuala Pilah, Negeri Sembilan

Kuala Kelawang 128A & 128B, Jalan Syed Ali 06-6136925 06-6137110
71600 Kuala Kelawang, Jelebu 06-6136926
Negeri Sembilan 06-6136939

Nilai 168 – 170, Jalan Besar 06-7991066 06-7991337

71800 Nilai, Negeri Sembilan 06-7991067
06-7991391

Port Dickson 866 & 867, Jalan Pantai 06-6472942 06-6474831

71000 Port Dickson, Negeri Sembilan 06-6472943 06-6474709
06-6471655

Rasah 1281 – 1284, Jalan Rasah 06-7620623 06-7637622

70300 Seremban, Negeri Sembilan 06-7625144 06-7616671
06-7628289

Seremban 44 – 46, Jalan Dato’ Lee Fong Yee 06-7630661 06-7634500

70000 Seremban, Negeri Sembilan 06-7630662
 PUBLIC BANK BERHAD
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BRANCH ADDRESS TELEPHONE FAX

NEGERI SEMBILAN

Tampin 4707 & 4708, Jalan Besar 06-4412511 06-4414814

73000 Tampin, Negeri Sembilan 06-4412512
06-4412513

PERAK

Ayer Tawar 139 & 141, Jalan Besar 05-6726399 05-6726402

32400 Ayer Tawar, Perak 05-6726400

Bagan Serai 244 & 244A, Jalan Besar 05-7212842 05-7212845

34300 Bagan Serai, Perak 05-7212843

Bidor 62D & 62E, Jalan Besar 05-4341257 05-4341241

35500 Bidor, Perak 05-4340964

Bercham 4, 6, 8, & 10, Persiaran Bercham Selatan 2 05-5480058 05-5480333

31400 Ipoh, Perak 05-5480632 05-5473888
05-5482462
05-5468444

Chemor 12 – 16, Laluan Chemor Sinaran 05-2011124 05-2011573

Desa Chemor Sinaran 05-2011125
31200 Chemor, Perak

Gunung Rapat 296 & 298, Jalan Raja Dr. Nazrin Shah 05-3131646 05-3132023
Gunung Rapat, 31350 Ipoh, Perak 05-3131649 05-3112593
05-3113144

Ipoh Garden 133, 133A-D, Jalan Dato’ Lau Pak Khuan 05-5480951 05-5480958
31400 Ipoh, Perak 05-5480952

Ipoh Main Office 7 – 13, Jalan Dato’ Maharajalela 05-2530115 05-2535505

30000 Ipoh, Perak 05-2531034

Jalan Pasir Putih 135 – 139, Jalan Pengkalan Barat 05-3222453 05-3225714
Off Jalan Pasir Putih, 31650 Ipoh, Perak 05-3219892

Jalan Sultan Idris Shah 76 – 80, Jalan Sultan Idris Shah 05-2551068 05-2556555
30000 Ipoh, Perak 05-2551069 05-2413679
05-2551070

Jalan Yang Kalsom 46 – 54, Jalan Yang Kalsom 05-2531998 05-2535528

30250 Ipoh, Perak 05-2531514 05-2558430

Jelapang 291, 293 & 295, Jalan Silibin 05-5264014 05-5264485

30100 Ipoh, Perak 05-5264015

Kampar 3 & 4, Jalan Balai 05-4651044 05-4651400

31900 Kampar, Perak 05-4652160

Kamunting 27 – 29, Regat Kamunting 05-8081110 05-8079363

Off Jalan Kamunting 05-8081112
34600 Kamunting, Perak

Kuala Kangsar 12, Jalan Daeng Selili 05-7769895 05-7769892

33000 Kuala Kangsar, Perak 05-7769896
PUBLIC BANK BERHAD
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BRANCH ADDRESS TELEPHONE FAX

PERAK

Menglembu 67 – 73, Jalan Besar 05-2811014 05-2815015

31450 Menglembu, Perak 05-2814978 05-2815580

Parit Buntar 135 & 137, Jalan Taiping 05-7160078/9/80 05-7160077

34200 Parit Buntar, Perak

Pantai Remis 66 – 70, Jalan Damar Laut 05-6771251 05-6771495

34900 Pantai Remis, Perak 05-6771252

Pusing 293, Jalan Besar 05-2884077 05-2883975

31550 Pusing, Perak 05-2884078
05-2883942

Seri Manjung Lot No. 2274 – 2277, Taman Samudera 05-6882927 05-6884952
32040 Seri Manjung, Perak 05-6882987

Simpang Pulai 39 & 41, Persiaran Sengat Baru 2 05-3575360 05-3575358

Taman Bersatu 05-3575361
31300 Simpang Pulai, Ipoh, Perak

Sitiawan Lot 166 – 168, Jalan Raja Omar 05-6913526 05-6917198

32000 Sitiawan, Perak 05-6913527 05-6926875

Sungai Siput 161 & 162, Jalan Besar 05-5986116 05-5986081

31100 Sungai Siput, Perak 05-5984114

Taiping 29 – 35, Jalan Kota 05-8085070 05-8077362

34000 Taiping, Perak 05-8085071 05-8057145

Tanjong Malim Lot 336-337, Jalan Chong Ah Peng 05-4597602 05-4597605

35900 Tanjong Malim, Perak 05-4597603

Tanjong Piandang 12  & 14, Jalan Piandang 1 05-7257941 05-7257943

Taman Piandang Indah 05-7257942
34250 Tanjong Piandang, Perak

Teluk Intan Wisma Boltex, Jalan Pasar 05-6223282 05-6215518

36000 Teluk Intan, Perak 05-6212325

KEDAH

Alor Setar 1070 & 1071, Jalan Telok Wanjah 04-7315411 04-7315778
05200 Alor Setar, Kedah 04-7315412
04-7317509

Changlun 73, Jalan Sintok 04-9241457 04-9241870

Pekan Baru, 06010 Changlun, Kedah 04-9241085

Gurun 39 – 41, Jalan Raya 04-4686143 04-4687024

08300 Gurun, Kedah 04-4686325
04-4686326

Jalan Kota 1557, Jalan Kota 04-7310559 04-7317716

05000 Alor Setar, Kedah 04-7311384

Jitra 9 & 10, Kompleks Jitra 04-9174926/27 04-9174931

06000 Jitra, Kedah
 PUBLIC BANK BERHAD
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BRANCH ADDRESS TELEPHONE FAX

KEDAH

Kuala Ketil 45 & 46, Jalan Putra, Taman Tanjung Peteri 04-4163318 04-4163103
09300 Kuala Ketil, Kedah 04-4163278
04-4163624

Kulim No. 2, Jalan Tunku Putra 04-4901090 04-4907502

09000 Kulim, Kedah 04-4901096/97

Pokok Sena A-01, Jalan Semarak 1 04-7822000 04-7821019

Taman Bandar Baru 04-7822008
06400 Pokok Sena, Kedah 04-7825872

Pulau Langkawi 23, 25 & 27, Jalan Pandak Mayah 4 04-9667372 04-9667435
Pusat Bandar Kuah, Pejabat Pos Kuah 04-9667373
07000 Pulau Langkawi, Kedah

Sik 443 & 444, Jalan Tunku Ibrahim 04-4695691 04-4695664

08200 Sik, Kedah 04-4695764

Sungai Petani 83A-D, 84A-D & 85A-D 04-4217622 04-4211979

Jalan Pengkalan, Susur Kiri 04-4217623 04-4210475
Taman Pekan Baru 04-4217624
08000 Sungai Petani, Kedah

PERLIS

Kangar 9, Jalan Raja Syed Alwi 04-9763311 04-9760503

01000 Kangar, Perlis 04-9763432
04-9763413

PAHANG

Benta 21 & 22, Rumah Kedai LKNP 09-3238622 09-3238614

27300 Benta, Pahang 09-3238621

Bentong 25 – 27, Jalan Chui Yin 09-2225653 09-2225663

28700 Bentong, Pahang 09-2225659

 ureau de Change Resorts

B Bureau Change Resorts Hotel @ Latte Casino 03-61011239 03-61011257
Hotel Genting Highlands 5th Floor, Resorts Hotel
Genting Highlands Resorts
69000 Genting Highlands, Pahang

Brinchang MDCH 41 – 43, Bandar Baru Brinchang 05-4911590 05-4911508

39100 Brinchang, Cameron Highlands 05-4912682
Pahang 05-4913045

Genting Highlands Lot F/L 1.2, First World Hotel 03-64360088 03-64360099
Genting Highlands Resort 03-64360145
69000 Genting Highlands, Pahang

Jalan Beserah A379/1, A379/2, A379/3, A379/4 09-5678461 09-5686366

Jalan Beserah, 25300 Kuantan, Pahang 09-5688088 09-5669272
09-5673862

Jerantut 1 & 2 Jalan Inderapura 09-2661972 09-2661875

Bandar Inderapura 09-2661917
27000 Jerantut, Pahang 09-2662351
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
444 Group Corporate Directory

BRANCH ADDRESS TELEPHONE FAX

PAHANG

Kemayan 30 & 32, Ground Floor 09-2409824 09-2409825

Jalan Besar, 28380 Kemayan, Pahang 09-2409866

Kuala Lipis 5G & 5H, Jalan Pekeliling 09-3122077 09-3123588

27200 Kuala Lipis, Pahang 09-3121722
09-3121723

Kuantan 79 – 85, Jalan Haji Abdul Aziz 09-5161217 09-5161519

25000 Kuantan, Pahang 09-5161218
09-5178216

Mentakab 16 – 18, Jalan Bunga Matahari 09-2775800 09-2773011

28400 Mentakab, Pahang 09-2775801
09-2775802

Raub 18 & 19, Bandar Raub Perdana 09-3553471 09-3554918

Jalan Lipis, 27600 Raub, Pahang 09-3553502
09-3551850

Temerloh 10, 11 & 12, Jalan Ahmad Shah 09-2965652 09-2965643

Bandar Sri Semantan 09-2965662 09-2965714
28000 Temerloh, Pahang 09-2965653

Triang 38 & 39, Jalan Temerloh 09-2553480 09-2553486

28300 Triang, Pahang 09-2553481
09-2553484

TERENGGANU

Chukai KCP 1, Kemaman Centre Point 09-8595962 09-8594943

24000 Kemaman, Terengganu 09-8594069
09-8594139

Kuala Dungun K-156 & K-157, Jalan Paka, Batu 48 09-8482511 09-8484549
23000 Kuala Dungun, Terengganu 09-8483377
09-8482507

Kuala Terengganu No. 1849, Bangunan Wisma Maju 09-6226998 09-6233409

Jalan Sultan Ismail
20300 Kuala Terengganu, Terengganu

KELANTAN

Gua Musang 42, Jalan Besar 09-9122600 09-9122603

18300 Gua Musang, Kelantan 09-9122602

Kota Bharu PT282 – PT285, Jalan Kebun Sultan 09-7447143 09-7482110

15300 Kota Bharu, Kelantan 09-7446944 09-7482810
09-7442269

Kuala Krai 91 & 92, Jalan Chin Hua 09-9664027 09-9664042

18000 Kuala Krai, Kelantan 09-9664028

Tanah Merah 443 – 444, Jalan Dato’ Nik Mustapha 09-9556244 09-9556944
17500 Tanah Merah, Kelantan 09-9556139

Wakaf Siku 6-9, Wakaf Siku, Jalan Sultan Yahya Petra 09-7470111 09-7461177
15200 Kota Bharu, Kelantan 09-7477676
 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
Group Corporate Directory 445

BRANCH ADDRESS TELEPHONE FAX

SABAH

Beaufort Lot 6 & 7, Lo Chung Park 087-214871 087-214839

89808 Beaufort, Sabah 087-214844
087-214869

City Parade Lot No. 1-0-M45-M51, 1 Jalan Centre Point 088-251812 088-251816
City Parade Centre Point Sabah 088-251813
88000 Kota Kinabalu, P. O. Box 13026 088-258812
88833 Kota Kinabalu, Sabah

Donggongon Lot A-5 & A-6, Donggongon New Township 088-722780 088-727780
Jalan Tapikong, 89500 Penampang, Sabah 088-723780
088-726780

Inanam Lot No. 1, 2 & 3, Block C, K.K. Taipan 088-429113/114/112 088-429987

Inanam New Township, Jalan Tuaran
88450 Kota Kinabalu, Sabah

Jalan Apas TB 1280 & TB 1281, Bintang Garden 089-913262 089-913936

3rd Mile, Jalan Apas 089-913693
91000 Tawau, Sabah

Jalan Pantai 39, Jalan Pantai 088-236800 088-238863

88000 Kota Kinabalu, Sabah 088-237883

Keningau 1 & 2, Block A, Keningau Plaza 087-335841 087-335842

89000 Keningau, Sabah 087-335846
087-336103

Kota Belud Lot B6 & B7, Kompleks Centenary 088-977784 088-977798

Jalan Sabar, 89150 Kota Belud, Sabah 088-977807/809

Kota Kinabalu Lot G.1  & Lot 1.1, Menara MAA 088-239611 088-236630
6, Lorong Api-Api 1, Api-Api Centre 088-239612
88000 Kota Kinabalu, Sabah 088-239613

Lahad Datu MDLD 0088, Jalan Teratai 089-882472 089-884087

91100 Lahad Datu, Sabah 089-884357 089-882971
089-882962

Lido Lot 8,  9  & 10, Block P 088-245687 088-245496

Taman Che Mei Shophouse 088-217125
Jalan Penampang, Lido 088-217669
88300 Kota Kinabalu, Sabah

Papar Lot 8023, 162, Jalan Besar 088-912522 088-912211

Pekan Papar, 89600 Papar, Sabah 088-912523/524

Sandakan Wisma Sandaraya 089-214257 089-272815

Third Avenue, 90009 Sandakan, Sabah 089-214258/259 089-213120

Tawau TB 304A & 304B, Block 34 089-761311 089-761355

Fajar Complex, 91000 Tawau, Sabah 089-761322 089-771355
089-761333 089-761270
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
446 Group Corporate Directory

BRANCH ADDRESS TELEPHONE FAX

SARAWAK

Batu Niah Lot 643, Batu Niah Town Extension 085-737111 085-737110
98200 Batu Niah, Sarawak

Bintangor Lot No. 1585 & 1586, Jalan Kelupu 084-693622 084-693255
96500 Bintangor, Sarawak

Bintulu 29 – 32, Jalan Sommerville 086-331433 086-336028

97000 Bintulu, Sarawak

China Street 28, China Street 085-417227 085-419855

98000 Miri, Sarawak 085-417228

Jalan Central 3, Jalan Central 084-335677 084-320052

96000 Sibu, Sarawak

Jalan Penrissen 143A – 145A, Kota Sentosa, Batu 7 082-613377 082-615961

Jalan Penrissen, 93250 Kuching, Sarawak

Jalan Tun Zaidi Lots 2775 & 2776, Block 10, 3rd Mile 082-245271 082-245542
Jalan Tun Ahmad Zaidi Adruce
93250 Kuching, Sarawak

Kapit 63 – 64, Jalan Wharf 084-797677 084-797628

96800 Kapit, Sarawak 084-797652

Kuching City Nos. 102 – 110, Jalan Song Thian Cheok 082-417922 082-424248
93100 Kuching, Sarawak 082-417923
082-417924

Limbang Lot 1082 – 1083, Jalan Buangsiol 085-212511 085-212676

98700 Limbang, Sarawak 085-212443
085-212933

Li Hua No. 2, Lorong Pahlawan 7B1 084-216996 084-216236

Jaya Li Hua Commercial Centre
96000 Sibu, Sarawak

Marudi 59 & 60, Jalan Kapitan Lim Ching Kiat 085-755000 085-755018
Marudi, 98050 Baram, Sarawak 085-755009

Miri Moh Heng Building, 14, Jalan Bendahara 085-412944 085-417273

98000 Miri, Sarawak 085-412955/57

Mukah 41 & 42, Block 68, Mukah New Township 084-871900 084-871319
96400 Mukah, Sarawak

Medan Sentral 1, 2 & 3, Medan Sentral Commercial Centre 086-318883 086-318886

97000 Bintulu, Sarawak 086-311116

Padungan 7, 8 & 9, Jalan Chan Bee Kiew 082-489904 082-330488

Off Jalan Padungan, 93100 Kuching, Sarawak 082-489905/906

Sarikei 51-52, Jalan Masjid, 96100 Sarikei, Sarawak 084-652490 084-653137

Sibu 2, 4, 6 & 8, Lorong 2, Jalan Tuanku Osman 084-320088 084-314088

96000 Sibu, Sarawak 084-316511 084-335739
P.O. Box 591, 96007 Sibu, Sarawak
 PUBLIC BANK BERHAD
ANNUAL REPORT 2009
Group Corporate Directory 447

BRANCH ADDRESS TELEPHONE FAX

SARAWAK

Sri Aman 840 & 841, Jalan Sabu 083-323031 083-323034

Simanggang Town, Land District 083-323032
95000 Sri Aman, Sarawak 083-322110

Stutong 71, 72 & 73, Stutong Parade 082-363889 082-368839

Jalan Setia Raja 082-369389
93350 Kuching, Sarawak

Wisma Saberkas Lot G.01 & G.02A, Wisma Saberkas 082-419889 082-424662
Off Jalan Green, Jalan Tun Abang Haji Openg 082-428800 082-412016
93000 Kuching, Sarawak 082-428802

OVERSEAS BRANCHES

Sri Lanka 340, R A de Mel Mawatha 94-11-2576288 94-11-2573958

Colombo 3, Sri Lanka (Country Head)
Email Address: pbbslk@publicbank.lk 94-11-2576287
Swift: PBBELKX (Banking Service Manager)
94-11-2576289
94-11-2576290
94-11-2576291
94-11-2576292
(General Lines)

 ao P.D.R
L 100/1-4 Talat Sao Road P.O. Box 6614 856-21-223395 856-21-222743
Vientiane Branch Vientiane, Lao P.D.R. (Country Head)
Email: pbbvte@publicbank.com.la 856-21-223394
Swift: PBBELALA 856-21-216614
Telex: 4310 PBBVTE LS (General Lines)

Savannakhet Branch 308/3 Sisavangvong Road 856-41-252134 856-41-252133

Group 24 Sainuntha Village (Branch Manager)
Kaisone Phoanvihan District 856-41-252131
Savannakhet Province, Lao P.D.R. 856-41-252132
Email: pbbsvn@publicbank.com.la (General Lines)

Sikhai Branch 006, Luangphabang Road 856-21-219868 856-21-219876

Meuangwa Tha Village (Branch Manager)
Sikhottabong District 856-21-219869
Vientiane Capital, Lao P.D.R. 856-21-219870
(General Lines)
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
448 Group Corporate Directory

SUBSIDIARIES ADDRESS TELEPHONE FAX

 ublic Investment
P Head Office: 03-21669382 03-21669362
Bank Berhad 25th Floor, Menara Public Bank
146, Jalan Ampang
50450 Kuala Lumpur, Malaysia
Email: pivb@publicinvestbank.com.my
Website: www.publicbankinvestbank.com

Branch Office: 03-20313011 03-20312533

27th Floor, Bangunan Public Bank 03-20313733 03-20312530
6, Jalan Sultan Sulaiman, 50000 Kuala Lumpur

Public Mutual Berhad
Block B, Sri Damansara Business Park 03-62796800 03-62779800
Persiaran Industri, Bandar Sri Damansara
52200 Kuala Lumpur
Email: mktg@publicmutual.com.my
Website: www.publicmutual.com.my
(26 branches and 2 agency offices nationwide)

 ublic Invest Nominees

P 27th Floor, Bangunan Public Bank 03-20313011 03-20312533
(Asing) Sdn. Bhd. 6, Jalan Sultan Sulaiman
50000 Kuala Lumpur

 ublic Invest Nominees

P 27th Floor, Bangunan Public Bank 03-20313011 03-20312533
(Tempatan) Sdn. Bhd. 6, Jalan Sultan Sulaiman
50000 Kuala Lumpur

 ublic Nominess (Asing)

P 6th Floor, Menara Public Bank 03-21626077 03-20626078
Sdn. Bhd. 146, Jalan Ampang, 50450 Kuala Lumpur

 ublic Nominess (Tempatan)

P 6th Floor, Menara Public Bank 03-21626077 03-20626078
Sdn. Bhd. 146, Jalan Ampang, 50450 Kuala Lumpur

 B International Factors
P 7th Floor, Menara Public Bank 03-2162955 03-21622962
Sdn. Bhd. 146, Jalan Ampang, 50450 Kuala Lumpur

PB Trust (L) Ltd
Level 8(B), Main Office Tower 06-087-411898 06-087-451193
Financial Park Labuan, Jalan Merdeka
87000 Federal Territory of Labuan, Malaysia
Email: pbtrust@streamyx.com
Website: www.pbtrust.com.my

Public Holdings Sdn. Bhd. 8th Floor, Menara Public Bank 03-21766000 03-21639903
146, Jalan Ampang, 50450 Kuala Lumpur

PB Properties Sdn. Bhd. 8th Floor, Menara Public Bank 03-21766000 03-21639903
146, Jalan Ampang, 50450 Kuala Lumpur

Public Bank (L) Ltd Level 8(A) & (B), Main Office Tower 06-087-411898 06-087-413220
Financial Park Labuan, Jalan Merdeka
87000 Federal Territory of Labuan, Malaysia
Swift ID: PBLLMYKA

 ublic Financial Holdings

P Room 1105-07, Wing On House 852-25419222 852-25455665
Limited 71, Des Voeux Road
Central, Hong Kong
Website: www.publicfinancial.com.hk

SUBSIDIARIES
 ublic Bank
P Public Bank Centre
(Hong Kong) Limited
Public Finance Limited
Winton (B.V.I.) Limited
 ublic Securities (Nominees)
P Room 1108, Wing On House
Limited
Public Securities Limited
 ambodian
C Campu Bank Building
Public Bank Plc
 ampuBank Lonpac
C Campu Bank Building
Insurance Plc
OVERSEAS ASSOCIATED COMPANIES
VID Public Bank
PUBLIC BANK BERHAD
ANNUAL REPORT 2009
Group Corporate Directory 449
ADDRESS TELEPHONE FAX
852-25419222 852-25410009
120, Des Voeux Road
Central, Hong Kong
Email: contact@publicbank.com.hk
Website: www.publicbank.com.hk
(30 branches in Hong Kong, 3 branches in
Shenzhen, China & 1 representative office
in each of Shanghai, Shangyang, China &
Taipei, Taiwan)
Room 1105-07, Wing On House 852-25259351 852-28450681
71, Des Voeux Road
Central, Hong Kong
Email: info@publicfinance.com.hk
Website: www.publicfinance.com.hk
(42 branches in Hong Kong)
Room 1101 – 1110, 11/F, Phase 1 852-23919388 852-23915366
Argyle Centre, 688 Nathan Road
Mongkok, Kowloon, Hong Kong
Website: www.wintongroup.com.hk
(8 branches in Hong Kong)
852-28778622 852-28455240
71, Des Voeux Road
Central, Hong Kong
Room 1108, Wing On House 852-28778622 852-28455240
71, Des Voeux Road
Central, Hong Kong
855-23-222880 855-23-222887
No. 23, Street No. 114 855-23-222881
Sangkat Phsar Thmey II 855-23-222882
Khan Daun Penh, Phnom Penh, Cambodia (General Lines)
Telex No: (51) 94079463 CPBB G
Swift: CPBLKHPP
Website: www.cpbebank.com
Email: campuhoe@campubank.com.kh
(15 branches in Cambodia)
855-23-986313 855-23-986308
No. 23, Street No. 114
Sangkat Phsar Thmey II
Khan Daun Penh, Phnom Penh, Cambodia
Email: enquiries@campubanklonpac.com.kh
Hanoi Head Office 844-39439130 844-39439005
7th Floor, Prime Centre Building (General Director)
53, Quang Trung Street 844-39438999
Hai Ba Trung District, Hanoi, Vietnam 844-39439011
Swift: VIDPVNV5 844-39439012
Email: vpb.han@hn.vnn.vn (Hanoi HO), (General Line)
vidpbho@vnn.vn (GD)
Website: www.vidpublicbank.com.vn
(7 branches in Vietnam)
form of In case of a vote taken by a show of hands, *First Proxy “A”/*Second Proxy “B” shall vote on my/our behalf.

proxy My/our proxy/proxies shall vote as follows:

(Please indicate with an “X” in the space provided below how you wish your votes to be cast on the resolutions specified in the notice of meeting. If
you do not do so, the proxy/proxies will vote, or abstain from voting on the resolutions as he/they may think fit.)

Number of shares held CDS Account No. FIRST PROXY “A” SECOND PROXY “B”

– – NO. ORDINARY RESOLUTIONS FOR AGAINST FOR AGAINST

1. Receipt of Audited Financial Statements for the financial year ended
31 December 2009 and the Reports of the Directors and Auditors
“A” I/We NRIC/Co. No. thereon
(FULL NAME IN BLOCK LETTERS) 2. Re-election of Dato’ Yeoh Chin Kee as Director
of 3. Re-election of Y.A.M. Tengku Abdul Rahman Ibni Sultan Haji Ahmad
(FULL ADDRESS) Shah Al-Mustain Billah as Director
4. Re-appointment of Tan Sri Dato’ Sri Dr. Teh Hong Piow as Director
Tel No.  being a Member of PUBLIC BANK BERHAD, hereby appoint
5. Re-appointment of Tan Sri Dato’ Thong Yaw Hong as Director
6. Re-appointment of Dato’ Dr. Haji Mohamed Ishak bin Haji Mohamed
NRIC No.
Ariff as Director
(FULL NAME IN BLOCK LETTERS AS PER NRIC)
7. Approval of payment of Directors’ fees
of 8. Re-appointment of Messrs KPMG as Auditors and authority to the
(FULL ADDRESS)
Directors to fix the Auditors’ remuneration
or failing him, NRIC No. 9. Proposed Share Buy-Back
(FULL NAME IN BLOCK LETTERS AS PER NRIC)

of
(FULL ADDRESS)
Signed this __________ day of _______________________ 2010
or failing him, the CHAIRMAN OF THE MEETING as my/our *first proxy to attend and vote for me/us on my/our behalf
at the Forty-Fourth Annual General Meeting of the Company to be held at the Grand Ballroom, Shangri-La Hotel, Jalan
Sultan Ismail, 50250 Kuala Lumpur on Tuesday, 2 March 2010 at 11.00 a.m., or any adjournment thereof.  ____________________________________
Signature of Member/Common Seal
* Delete if inapplicable.
“B” Where it is desired to appoint a second proxy, this section must also be completed, otherwise it should be deleted.

I/We NRIC/Co. No. NOTES:

(FULL NAME IN BLOCK LETTERS) 1. In respect of deposited securities, only Members whose names appear in the Record of Depositors on 22 February 2010 (General Meeting Record
of Depositors) shall be eligible to attend the Meeting.
of 2. The right of Foreigners to vote in respect of deposited securities is subject to Section 41(1)(e) and Section 41(2) of the Securities Industry (Central
(FULL ADDRESS) Depositories) Act, 1991; the Securities Industry (Central Depositories) (Foreign Ownership) Regulations, 1996 and the Articles of Association of the
Company. Where a Foreigner, based on the General Meeting Record of Depositors, holds deposited securities in a Securities Account and such
Tel No.  being a Member of PUBLIC BANK BERHAD, hereby appoint securities raise the ownership of shares in the Company by Foreigners beyond the Company’s foreign shareholding limit of 30%, such Foreigner or
the proxy appointed by him, in respect of such securities, shall not be entitled to exercise in any manner whatsoever any voting rights in respect of
the aforesaid securities at the Meeting.
NRIC No. 3. A Member entitled to attend and vote at the Meeting may appoint a proxy to attend and vote on his behalf. A proxy need not be a Member of the
(FULL NAME IN BLOCK LETTERS AS PER NRIC) Company.

of 4. A Member shall not be entitled to appoint more than two (2) proxies to attend and vote at the Meeting provided that where a Member is an authorised
(FULL ADDRESS) nominee as defined in accordance with the provisions of the Securities Industry (Central Depositories) Act, 1991, it may appoint up to two (2) proxies
in respect of each Securities Account it holds with ordinary shares in the Company standing to the credit of the said Securities Account.
or failing him, NRIC No. Where a Member appoints two (2) proxies, the appointment shall be invalid unless he specifies the proportions of his shareholdings to be represented
(FULL NAME IN BLOCK LETTERS AS PER NRIC) by each proxy.

5. The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorised in writing or if the appointor
of is a corporation, either under its common seal or under the hand of an officer or attorney of the corporation duly authorised.
(FULL ADDRESS)
6. The instrument appointing a proxy must be deposited at the office of the Share Registrar, Tricor Investor Services Sdn Bhd at Level 17, The Gardens
or failing him, the CHAIRMAN OF THE MEETING as my/our second proxy to attend and vote for me/us on my/our behalf North Tower, Mid Valley City, Lingkaran Syed Putra, 59200 Kuala Lumpur, Malaysia not less than 48 hours before the Meeting.
at the Forty-Fourth Annual General Meeting of the Company to be held at the Grand Ballroom, Shangri-La Hotel, Jalan
Sultan Ismail, 50250 Kuala Lumpur on Tuesday, 2 March 2010 at 11.00 a.m., or any adjournment thereof.

The proportions of my/our holding to be represented by my/our proxies are as follows:

First Proxy “A” %

Second Proxy “B” %

100%
Please fold here to seal

Please fold here

STAMP

Share Registrar
Tricor Investor Services Sdn Bhd
Level 17, The Gardens North Tower
Mid Valley City
Lingkaran Syed Putra
59200 Kuala Lumpur
Malaysia

Please fold here

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