Showing posts with label Public Bank. Show all posts
Showing posts with label Public Bank. Show all posts

Thursday 14 September 2023

Public Bank Berhad

 


From 2009 to 2022, it has grown its earnings per share 2.26 times, from 13.93 sen to 31.5 sen.  

It paid out 48.2% of its earnings as dividends and grew its earnings by 31.5 sen - 13.93 sen = 17.57 sen.  It retained 340.44 sen - 164.03 sen = 176.41 sen.  The return on its retained earnings is thus, 17.57 sen / 176.41 sen = 9.96%.

At the price of RM 4.14 per share, it is trading at a PE of 12.07x and its DY is 4.35%.  

Excluding the extremely high PEs and extremely low PEs,  the usual historical PE for PBB ranged from low PE of 13.4 to high PE of 15.7 and its average or signature PE was 14.5.

Its usual DY ranged from low DY of 3.04% to high DY of 4.35%.   





Thursday 18 May 2023

Public Bank (RM 3.97 per share on 18/5/2023)

Income Statement
Public Bank Bhd
Dec 2022

 Interest Income 16.79 B
 Interest Expense 5.76 B
 Loan Loss Provision 365.56 M
 Non-Interest Income 3.33 B

Balance Sheet
Public Bank Bhd
Dec 2022

 Investments 81.84 B
 Net Loans 387.86 B
 Total Deposits 394.72 B
 Tier 1 Capital 46.78 B
 Book Value Per Share 2.59 

Comments:  
Net Loans:  Commercial & Industrial Loans 98.4B; Consumer & Installment Loans 258.1B; Broker & Financial Institution Loans 15.6B, and others.
Total Deposits:  Demand Deposits 68.7B; Savings/Time Deposits  326B.
Loans are well diversified to various borrowers.  The majority of deposits are in Saving/Time Deposits.


Cash Flow 
Public Bank Bhd
Dec 2022
 Net Financing Cash Flow +25.93 B
 Free Cash Flow +2.00 B
 Cash Flow Per Share +0.18  
 Free Cash Flow Per Share +0.14 
Free Cash Flow Yield 4.39%


Comments:  
Its net interest income = 10.66 B.  
Its non-interest income or fee income is about 31% of its net interest income.

It loans out 4.73x more than the amount it invested.
Its total deposits are more than its net loans.  
Given its Tier 1 Capital, it only has to borrow a small amount.



Earnings & Estimates 
Public Bank Bhd 
Qtr. EPS Est. +0.10  Q1 2023
Qtr. Year Ago +0.07 Q1 2022 
Ann. EPS Est. +0.35 FY 2023
Ann. Year Ago +0.32 FY 2022 


Comments:  
At RM 3.97 per share, it is trading at a future 2023 P/E of 11.3x.



Per Share Data 
Public Bank Bhd 
All values updated annually at fiscal year end 

Earnings Per Share +0.32
Sales 1.04 
Tangible Book Value 2.45
Operating Profit - 
Working Capital -8.45
Long Term Liabilities - 
Capital Expenditure 0.01
Capital Expenditure TTM 0.01 


Ratios & Margins 
Public Bank Bhd 
All values updated annually at fiscal year end 

Valuation 

P/E Ratio (TTM) 12.59 
P/E Ratio (including extraordinary items) 12.53 
Price to Sales Ratio 4.17 
Price to Book Ratio 1.67 
Price to Cash Flow Ratio 10.96 
Enterprise Value to EBITDA 11.08 
Enterprise Value to Sales 5.06 
Total Debt to Enterprise Value 0.41 
Total Debt to EBITDA - 
EPS (recurring) 0.32 
EPS (basic) 0.32 
EPS (diluted) 0.32 


Comments:  
At Price to Book Ratio of 1.67, and taking into consideration its efficiency, ROE and ROA, it is trading at a fair price.


Efficiency 

Revenue/Employee - 
Income Per Employee - 
Receivables Turnover - 
Total Asset Turnover 0.04 

Liquidity 

Current Ratio 0.14 
Quick Ratio - 
Cash Ratio - 

Profitability 

Gross Margin - 
Operating Margin +43.82 
Pretax Margin +43.88 
Net Margin +30.41 
Return on Assets 1.28 
Return on Equity 12.45 
Return on Total Capital 10.62 
Return on Invested Capital 8.88 


Comments:  
The high operating margin and the high pretax margin show that this bank is run efficiently.
The ROA and ROE are indicative of a well run and profitably run bank.


Capital Structure 

Total Debt to Total Equity 76.90 
Total Debt to Total Capital 43.47 
Total Debt to Total Assets 7.82 
Interest Coverage - 
Long-Term Debt to Equity 59.39 
Long-Term Debt to Total Capital 33.57 
Long-Term Debt to Assets 0.03

Comments:  
Its total asset/total equity is about 9.0 x.  It is not over-leveraged.  

Sunday 14 May 2017

What future return can you get for investing into Public Bank Berhad?

We should keep our investing very simple and readily understandable.

Public Bank Berhad is a strong bank in Malaysia. Banking sector is highly regulated. Public Bank Berhad has done very well for decades building its banking business in Malaysia and increasingly in our neighbouring emerging countries. The challenge going forward is how well it adopts to new financial environment, in particular, that of fintech.

Its revenues, profits before tax and earnings per share have grown consistently over the last decade. It is this consistency and growth that confer to this company its high investment qualities.

It has also been distributing dividends regularly. Dividends have grown over the years (dividend growth investing). In the previous decade, it paid a higher dividend paid out relative to its earnings. It is presently paying out about 44% of earnings as dividends. It retained about 56% of its earnings in recent years. Its return on equity for the last 5 years averaged around 16.7%, which is remarkable. As an investor, I am happy that Public Bank Berhad is able to generate this high level of return on its equity. Its dividend payout ratio has declined in recent years due to its need to retain and build up its equity base in keeping with new Basel capital adequacy ratio guidelines.

It is a very well managed bank. It has been growing its net interest income and non-interest income satisfactorily without taking undue or too high risk.

At its present price of $19.98 per share, how attractive is Public Bank Berhad as an investment for the long term? Long term is taken to mean a period of at least 5 or 10 years.

Here are some facts and my opinion on Public Bank Berhad below.

1. At 19.98, it is trading at a PE ratio of 14.90.

2. It is trading at its fair price (neither undervalued or overvalued).

3. Its reward:risk ratio (based on my own method) is 6.84:1 (the probability risk of losing money is low and the reward: risk ratio is in your favour).

4. At the present price, assuming its future consistent growth in earnings per share of 6% per year (very conservative), this company can be expected to give about 13.07% simple average annual total return (= Annual capital appreciation of 9.62% and Average annual dividend yield of 3.45%) or 10% compound annual total return over the next 5 years.

5. At the present price of $19.98 and last FY dividend of 58 sen, its present Dividend Yield is 2.89%. Assuming its earnings and dividends grow consistently at 6% annually the next 5 years, we can expect a back of the envelop calculation return of approximately 2.89% + 6% = 9% annually (simple average). At such a conservative assumption in our calculation, this company may well surprise on the upside, making its investors happier.

I sought a higher return of 15% per year. This illustration shows that to get a return of 8% to 10% in the stock market or a stock, is actually quite achievable. To get a higher return, is more challenging than most realise.


Good luck in your investing.



Additional Notes:

Intrinsic value or Price
= Dividend / (required rate of return - growth)
= D / (r-g)

P = D / (r-g)
r-g = D / P
r = (D/P) + g
r = (Dividend Yield) + g

If you invest into a company that grows dividends at a constant rate of g, your expected return can be easily worked out as:

r = (Dividend Yield) + g

The present DY of Public Bank Berhad is 2.89%.

Our assumption is its dividend will grow at 6% per year.

Therefore, we can hope for a return of 2.89% + 6% = 8.89% or 9% per year.

Public Bank Berhad's last financial year dividend of 58 sen can support a share price of $16.25.


[Disclaimer:  Please do your own diligent analysis before investing.  Your investing should be based on your own analysis and informed decision.  This is not a recommendation.  You invest at your own risk.]

Sunday 4 September 2016

How I Analyze a Bank Stock

How I Analyze a Bank Stock
A four-part framework to clarify banking.

Anand Chokkavelu (TMFBomb) Apr 29, 2014

Here's the beauty of the banking industry: Banks are similar enough that once you learn how to analyze one, you're pretty much set to analyze 500 of them.

That's about how many banks trade on major U.S. exchanges.

Now, the details get messy when you factor in complicated financial instruments, heavy regulations, byzantine operating structures, arcane accounting rules, the macro factors driving the local economies these banks operate in, and intentionally vague jargon.

But at their core, each bank borrows money at one interest rate and then lends it out at a higher interest rate, pocketing the spread between the two.

And as investors we can get far by focusing on four things:


  1. What the bank actually does
  2. Its price
  3. Its earnings power
  4. The amount of risk it's taking to achieve that earnings power


To give a concrete example, let's walk through one of the banks I've bought in the banking-centric real-money portfolio I manage for the Motley Fool: Fifth Third Bancorp (NASDAQ:FITB).

As quick background, Fifth Third is a regional bank based out of Cincinnati whose 1,300+ branches fan out across 12 states. It's large enough to be in the "too big to fail" group that gets stress tested by the Fed each year but still less than a tenth the size of a Bank of America or a Citigroup -- and much simpler.

Alright, let's start with...


1.  What the bank actually does

When you read through a bank's earnings releases, it's easy to get sidetracked by management's platitudes and high-minded promises -- guess what, EVERY bank says it's customer-focused and a conservative lender!

Words are nice, but in banking, you are your assets -- the loans you make, the securities you hold, etc. They're the things that will drive future profitability when they're chosen carefully, and they're the things that will force you to fail (or get bailed out) when you get in trouble.

Here's the asset portion of Fifth Third's balance sheet. Take a look, let your eyes glaze over, and then I'll let you know the numbers I focus on (until we get to the "Its price" section, I'm using the financials from Fifth Third's last 10-K because they're more detailed for illustrative purposes).
































Loans are the heart of a traditional bank.

In my mind, the greater a bank's loans as a percentage of assets, the closer it is to a prototypical bank.

In this case, two-thirds of Fifth Third's assets are loans (87,032/130,443). This number can range far and wide, but Fifth Third's ratio is pretty typical. For context, note that Fifth Third's loan percentage is double the much more complex balance sheet of JPMorgan Chase.

If a bank isn't holding loans, it's most likely holding securities. You'll notice Fifth Third's various buckets of securities in the balance sheet lines between its cash and its loans. There are many reasons a bank could hold a high percentage of securities.

  • For example, its business model may not be loan-driven
  • it may be losing loan business to other banks, or 
  • it may just be being conservative when it can't find favorable loan terms. 
In any case, looking at loans as a percentage of assets gives you questions to explore deeper.

The next step of digging into the loans is looking at what types of loans a bank makes. You can see in the balance sheet that Fifth Third neatly categorizes its $88.6 billion in loans. Clearly, Fifth Third is a business lender first and foremost: When you add up "Commercial and industrial loans," "Commercial mortgage loans," "Commercial construction loans," and "Commercial leases," almost 60% of Fifth Third's loans are business-related. Also, given the almost $40 billion in "Commercial and industrial loans" (as opposed to mortgage loans), a lot of Fifth Third's loans aren't backed up by real estate (though other forms of collateral may be in play).

For simplicity, I'll stop here. The one-line summary: On the assets side, look at the loans.

Let's move on to the rest of the balance sheet:
































Just as the loans tell the story on the assets side, the deposits tell the story on the liabilities side. The prototypical bank takes in deposits and makes loans, so two ratios help get a feel for how prototypical your bank is:

  • 1) Deposits/Liabilities 
  • 2) Loans/Deposits.


Deposits are great for banks for the same reason you complain about getting low interest rates on your checking and savings accounts. Via these deposit accounts, you're essentially lending the bank money cheaply. If a bank can't attract a lot of deposits, it has to take on debt (or issue stock on the equity side), which is generally much more expensive. That can lead to risky lending behavior -- i.e. chasing yields to justify the costs.

Fifth Third's deposit/liabilities ratio is 86%, which is quite reasonable and leads to an equally reasonable 89% loan/deposit ratio. All of this confirms what we suspected after looking at the loans on the asset side. Fifth Third is a bank that, at its core, takes in deposits and gives out loans with those deposits. If that wasn't the case, we'd want to get comfortable with exactly what it's doing instead.

We're now ready to take a quick peek at the income statement:



The big thing to focus on here is the two different types of bank income: 

  1. net interest income and 
  2. (you guessed it) noninterest income.


Still lost in that mess above? See the lines

  1. "Net Interest Income After Provision for Loan and Lease Losses" (3,332, or $3.332 billion) and 
  2. "Total noninterest income" (3,227, or $3.227 billion).


I told you earlier that at its core, a bank makes money by borrowing at one rate (via deposits and debt) and lending at another higher rate (via loans and securities). Well, net interest income measures that profit.

Meanwhile, noninterest income is the money the bank makes from everything else, such as

  • fees on mortgages, 
  • fees and penalties on credit cards, 
  • charges on checking and savings accounts, and 
  • fees on services like investment advice for individuals and corporate banking for businesses.


For Fifth Third, it gets almost as much income via noninterest means ($3.2 billion) as it does from interest ($3.3 billion).

Like most of what we've covered so far, that's not necessarily good or bad. It furthers our understanding of Fifth Third's business model. For instance, the noninterest income can smooth interest rate volatility but it can also be a risk if regulators change the rules (e.g. banks can no longer automatically opt you in to overdraft protection...meaning they get less of those annoying but lucrative overdraft fees).

There are many, many line items I'm glossing over on both the balance sheet and the income statement, but these are the main things I focus on when I'm looking over the financial statements. As you'll see, many of the things I've ignored are covered a bit by the ratios we'll look at in the other sections.

Next up is...



2.  Its price

The oversimplified saying in banking is "buy at half of book value, sell at two times book value."

Just as if I told you to "buy a stock if its P/E ratio is below 10, sell if it's over 25" there are many nuanced pitfalls here, but it at least points you in the right direction.

If you're unfamiliar with book value, it's just another way of saying equity. If a bank is selling at book value, that means you're buying it at a price equal to its equity (i.e. its assets minus its liabilities).

To get a little more conservative and advanced than price/book ratio, we can look at the price/tangible book ratio. As its name implies, this ratio goes a step further and strips out a bank's intangible assets, such as goodwill. Think about it. A bank that wildly overpays to buy another bank would add a bunch of goodwill to its assets -- and boost its equity. By refusing to give credit to that goodwill, we're being more conservative in what we consider a real asset (you can't sell goodwill in a fire sale). Hence, the price-to-tangible book value will always be at least as high as the price-to-book ratio.

In Fifth Third's case, it currently has a price-to-book value of 1.3 and a price-to-tangible book value of 1.5. In today's market that's a slight premium to the median bank.

Like any company, the reason you'd be willing to pay more for one bank than another is if you think its earning power is greater, more growth-y, and less risky.

Our first clue on Fifth Third's earnings power is also our last valuation metric: P/E ratio. Fifth Third's clocks in at just 10.7 times earnings. That's lower than its peers. In other words, although we're paying an above average amount for its book value, we're seeing that it's able to turn its equity into quite a bit of earnings.

Let's look further into that...


3.  Its earnings power

I talked a bit about how Fifth Third has a lower than average P/E ratio (high Earnings Yield) despite having a higher-than-average P/B ratio. The metric that bridges that gap is called return on equity (ROE). Put another way, return on equity shows you how well a bank turns its equity into earnings. Equity's ultimately not very useful if it can't be used to make earnings.

Over the long term, an ROE of 10% is solid. Currently, Fifth Third is at 12.3%, which is quite good on both a relative and absolute basis.

Breaking earnings power down further, you can look at

  1. net interest margin and 
  2. efficiency.


Net interest margin measures how profitably a bank is making investments. It takes the interest a bank makes on its loans and securities, subtracts out the interest it pays on deposits and debt, and divides it all over the value of those loans and securities. In general, it's notable if a bank's net interest margin is

  • below 3% (not good) or 
  • above 4% (quite good). 
Fifth Third is at 3.3%, which is currently higher than some good banks, lower than others.

While net interest margin gives you a feel for how well a bank is doing on the interest-generating side, a bank's efficiency ratio, as its name suggests, gives you a feel for how efficiently it's running its operations.

The efficiency ratio takes the non-interest expenses (salaries, building costs, technology, etc.) and divides them into revenue. So, the lower the better.

  • A reading below 50% is the gold standard. 
  • A reading above 70% could be cause for concern. 

Fifth Third is at a good 58%.

There are nuances in all this, of course. For instance, a bank may have an unfavorable efficiency ratio because it is investing to create a better customer service atmosphere as part of its strategy to boost revenues and expand net interest margins over the long term.

Meanwhile, ROE and net interest margins can be juiced by taking more risk.

So that brings us to...


4.  The amount of risk it's taking to achieve that earnings power

There are a lot (and I mean a LOT) of ratios that try to measure how risky a bank's balance sheet is. For example, when the Fed does its annual stress test of the largest banks, it looks at these five:


  1. Tier 1 common ratio
  2. Common equity tier 1 ratio
  3. Tier 1 risk-based capital ratio
  4. Total risk-based capital ratio
  5. Tier 1 leverage ratio.


If you think that's confusing, you should see their definitions -- they're chockfull of terms like "qualifying non-cumulative perpetual preferred stock instruments."

Personally, I rely on a much simpler ratio: assets/equity.

When you buy a house using a 20% down payment (that's your equity), your assets/equity ratio is at five (your house's value divided by your down payment).

For a bank, I get comfort from a ratio that's at 10 or lower. My worry increases the farther above 10 we go. Fifth Third's is at a reasonable 8.7 after its most recent quarter (8.9 if you're doing the math on the year-end balance sheet above).

We can get more complicated by using tangible equity, but this is a good basic leverage ratio to check out. If you're looking at a bigger bank like Fifth Third, it's also a good idea to check out the results of those Fed stress tests I talked about.

That leverage ratio gives us a good high-level footing. Getting deeper into assessing assets, we need to look at the strength of the loans. Let's focus on two metrics for this:


  1. Bad loan percentage (Non-performing Loans/Total Loans)
  2. Coverage of bad loans (Allowance for non-performing loans/Non-performing loans)


Non-performing loans are loans that are behind on payment for a certain period of time (90 days is usually the threshold). That's a bad thing for obvious reasons.

Like most of these metrics, it really depends on the economic environment for what a reasonable bad loan percentage is. 

  • During the housing crash, bad loan percentages above five percent weren't uncommon. 
  • In general, though, I take notice when a bank's bad loans exceed two percent of loans. 
  • I get excited when the bad loan percentage gets below one percent (so Fifth Third's 0.8% is looking good).


Banks know that not every loan will get paid back, so they take an earnings hit early and establish an allowance for bad loans. As you've probably guessed, banks can play a lot of games with this allowance.

  • Specifically, they can boost their current earnings by not provisioning enough for loans that will eventually default. 
  • That's why I like to see the coverage of bad loans to be at least 100%. Fifth Third's is at a conservative-looking 202%.


Finally, I use dividends as an additional comfort point. In an industry that has periods that incent loose lending, I like management consistently taking some capital out of its own hands. I like to see banks paying at least a two percent dividend. A bigger dividend isn't a foolproof way to gauge riskiness, but I get warm fuzzies from a bank that can commit to a decent-sized dividend. As for Fifth Third, it pays out about a quarter of its earnings for a dividend yield of 2.3%.


Putting it all together

I've tried to simplify analyzing a bank as much as I can. I've left out many metrics and concepts, but you've still been bombarded with a lot of potentially boring information.

What's important to remember is that a bank (through its management) is telling you a story about itself. It's our job to figure out whether we believe the tale enough to buy it at current prices.

Because most banks share similar business models, the numbers will go a long way to help you determine if those stories hold water.

If a bank says it's a conservative lender, but half of its loans are construction loans, it has a 10% bad debt ratio, and it's leveraged 20:1, I'm trusting the numbers not the words.

Look at the numbers over the last decade or two and you'll see many clues. When a bank has been able to deliver large returns across a few economic cycles while keeping the same general business model, that's a very good thing. Even better if the same management team has been there the whole time or if the bank clearly has a conservative culture in place that stays in place between management teams.

It's easy to get lost in the minutiae of analyzing a bank, but going in with a framework helps you keep your eyes on the big picture. What I've shared today are the four tenets of my basic framework...I hope it helps clarify yours.




Anand Chokkavelu, CFA owns shares of Bank of America, Citigroup, and Fifth Third Bancorp as well as warrants in Citigroup. He swears his other articles are more interesting. The Motley Fool recommends Bank of America. The Motley Fool owns shares of Bank of America, Citigroup, and Fifth Third Bancorp. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

http://www.fool.com/investing/general/2014/04/29/how-i-analyze-a-bank-stock.aspx

Thursday 20 September 2012

Public Bank Berhad

Public Bank Berhad : Income Statement Evolution


Public Bank Berhad : EPS Dividend



Company Value50 080 M MYR50 090 M MYR
Valuation2012e2013e
PER (Price / EPS)13,3x12,1x
Capitalization / Revenue6,08x5,55x
EV / Revenue--
EV / EBITDA--
Yield (DPS / Price)3,93%4,14%
Profitability2012e2013e
Operating Margin (EBIT / Sales)66,0%66,4%
operating laverage (Delta EBIT / Delta Sales)-1,07x
Net Margin (Net Profit / Revenue)46,0%46,7%
ROA (Net Profit / Asset)1,46%1,45%
ROE (Net Profit / Equities)23,1%22,7%
Rate of Dividend52,3%50,0%
Balance Sheet Analysis2012e2013e
CAPEX / Sales  --
Cash Flow / Sales (Taux d'autofinancement)--
Capital Intensity (Assets / Sales)31,6x32,3x
Financial Leverage (Net Debt / EBITDA)-0,00x
Price Earning Ratio
Public Bank Berhad : Price Earning Ratio




Public Bank Berhad : Balance Sheet Analysis

Monday 23 July 2012

Public Bank Q2 earnings at RM952.69m, 20 sen dividend


KUALA LUMPUR: Public Bank Bhd posted net profit of RM952.69mil in the second quarter ended June 30, 2012, a slight dip of 0.2% compared with RM954.88mil a year ago due to a change in accounting policy a year ago.
It said on Monday its revenue increased by 9.3% to RM3.465bil from RM3.170bil. Earnings per share were 27.20 sen compared with 27.27 sen. It declared a dividend of 20 sen a share, similar to a year aof.
The banking group as a result of the change in accounting policy, the results for Q2 a year ago were restated, with pre-tax profit restated from RM1.16bil to RM1.262bil. Net profit attributable to equity holders was restated from RM880.4mil to RM954.9mil.
In the first half, its earnings rose 2.96% to RM1.893bil from RM1.839bil in the previous corresponding period while its revenue increased by 10.9% to RM6.839bil from RM6.162bil.
Tan Sri Teh Hong Piow
The banking group's founder and chairman,Tan Sri Teh Hong Piow said the group achieved another strong set of results in the first half of 2012 with pre-tax profit of RM2.49bil in the January-June period.
"As a result of the retrospective application of MFRS 139, the Public Bank group's pre-tax profit and net profit for the corresponding first half of 2011 were restated upwards by RM175mil and RM131mil to RM2.43bil and RM1.84bil respectively," he said.
Teh said hence, the group's pre-tax profit and net profit for the first half of 2012 grew by 2.1% and 3.0% respectively as compared to the higher restated pre-tax profit and net profit for the corresponding first half of 2011.
"Excluding the effects of higher restated profits for the last corresponding period, the group's pre-tax profit and net profit for the same period recorded double-digit growth of 10.0% and 10.9% respectively.
"As compared to the first quarter of 2012, the group's net profit attributable to shareholders for the second quarter grew by RM11.9mil or 1.3% to RM953mil," he said.
The banking group's gross loans increased at an annualised rate of 10.8% in the first half of 2012 to reach RM187.3bil as at end-June. Domestic loans grew at a stronger annualised rate of 12.3%.
As for customer deposits, they grew at an annualised rate of 11.3% in the first half of 2012 while domestic customer deposit growth recorded an annualised growth rate of 12.0%.

Monday July 23, 2012



Sunday 11 July 2010

Public Bank launches PB Templeton BRIC

Public Bank launches PB Templeton BRIC
Written by Edge
Tuesday, 08 September 2009 14:02


KUALA LUMPUR: Public Bank Bhd has launched a structured investment product, PB Templeton BRIC, offering investors the opportunity to capitalise on the growth potential of the Brazil, Russia, India and China (BRIC) economies.

“PB Templeton BRIC provides an annual variable coupon of up to 3% (subject to the US$/RM movement) for the first three years of the investment and at maturity, the potential is unlimited enhanced return based on the average performance of the underlying asset performing above 110%,” said Public Bank managing director Tan Sri Tay Ah Lek in a statement yesterday. He said the investment would provide its customers with immediate access to invest in equities in countries like Brazil, Russia, India and China.

Tay said according to the International Monetary Fund, the BRIC countries were four of the fastest-growing economies in the world, accounting collectively for about 30% of the world’s gross domestic product (GDP).

He said their outlook remained positive due to their relatively strong fundamental characteristics and faster growth compared to their developed counterparts, and the accumulation of foreign exchange reserves also put the BRIC countries in a much stronger position to weather external shocks.

Tay said despite the global economic slowdown, the Chinese and Indian markets continued to record exceptionally robust growth rates, while Brazil and Russia were likely to benefit from increasing global demand for commodities.

“This Investment is suitable for investors who are seeking potentially higher returns compared to the current fixed-deposit rates without taking undue risk on their wealth if the Investment is held to maturity, and for those seeking to diversify their investment portfolio into emerging markets,” said Tay.

Templeton BRIC is managed by Franklin Templeton Investments, which is one of the world’s largest investment-management companies.

Templeton is one of the pioneers in emerging markets investing, having been the first to set up a dedicated emerging markets equity team in 1987 under the leadership of Dr Mark Mobius, who is the lead manager of the Templeton BRIC Fund. Public Bank said this investment was for a three-year, nine-month period via floating rate negotiable instruments of deposit (FRNID) and was 100% capital-protected in ringgit terms if held to maturity. The product is available from yesterday to Oct 2, 2009. The minimum investment is RM65,000, with multiples of RM5,000 thereafter.

http://www.theedgemalaysia.com/personal-finance/148892-public-bank-launches-pb-templeton-bric-.html

Comment:  Capital-protected in ringgit terms if held to maturity.  These capital protected or guaranteed funds are unlikely to give exceptionall return.  A large part of the fund will be invested in "safe" investments to ensure the safety of capital and only a small proportion of the fund is invested in "more risky" investments for "higher returns."