Public Bank Bhd has achieved a significant upgrade in its Environmental, Social and Governance (ESG) score, now rated at 73 out of 100 by Maybank Investment Bank Bhd (Maybank IB). This latest score is a leap from the previous 63 and places Public Bank among the highest in the Malaysian banking sector in terms of ESG.
Reflecting this upward trajectory, Maybank IB has reaffirmed its BUY call on Public Bank, maintaining a target price of RM5.40, based on a projected 1.7 times price-to-book value for the financial year ending 2025 (FY25).
Public Bank's improved ESG rating can be attributed to comprehensive disclosures and sustained corporate governance practices. As of FY23, approximately 81% of the bank's loans were allocated to finance projects in both domestic and international markets.
The bank has also outlined several sustainability goals, including achieving carbon neutrality (Scope 1 & 2) by 2030, mobilising RM100 billion in sustainable finance by 2030 and ensuring full compliance from suppliers with its Vendor Code of Conduct by 2025.
Additionally, Public Bank is committed to reaching a 30% reduction in energy and water usage from its baseline by 2030 and a minimum of 45% female representation in senior management roles.
Financial targets for FY24 are also progressing as expected. The bank increased its return on equity (ROE) target to over 12.5%, a step up from the previous goal of 12%. The bank is on track with a first-half 2024 ROE of 12.8% and maintains stable targets for loan growth at 5%–6%, alongside a cost-to-income ratio of around 35% and a credit cost expectation of five to 10 basis points. Additionally, Public Bank's net interest margin has remained stable at 2.2%.
With a share price of RM4.48, Public Bank continues to dominate retail banking in Malaysia, particularly in residential property, commercial property and auto financing segments. The bank's market capitalisation stands at RM87 billion, with major shareholders including Consolidated Teh Holdings Bhd, the Employees Provident Fund and Retirement Fund Incorporated.
The forward-looking projections and strong ESG focus position Public Bank favourably within the sector as it aims to reinforce its environmental and social responsibilities while delivering consistent returns to shareholders.
