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.  

Warren Buffett: Earnings and not book value are what determine the value of a business.

 

 

@5.45  

Earnings are what determine value and not book value.  Book value is not a factor we consider.  Future earnings are a factor we consider.  

Earnings have been poor for many great Japanese companies.  If you think the return on equity of the Japanese companies is going to increase dramatically, then you are going to make a lot of money in Japanese stocks.  But the returns on equity of Japanese businesses have been quite low, and that makes a  low price to book ratio very appropriate because earnings are measured against books.  

A company earning 5% on book value, I do not want to buy it at book value, if I think it is going to keep earning 5% on book value.     A low price to book ratio means nothing to us.  It does not intrigue us.  In fact, if anything, we are less likely to look at something that sells at a lower value in relation to book than something that sells at a higher relation to book.  The chances are we are looking at a poor business in the first case and a good business in the second case.

Coastal is one of the leading shipbuilders in Malaysia.

Coastal is one of the leading shipbuilders in Malaysia.  

1.  It specialises in offshore support vessel (OSV) and marine transportation vessels. 

2.  It is also an established vessel chartering services provider in South East Asia with vessels deployed to transport various types of dry and liquid bulk commodities.

3.  In 2013, Coastal diversified into the oil and gas upstream sector with its entry into the jack-up drilling rig business. 

• In 2013, it fabricated a jack-up Gas Compression Service Unit (GCSU) for use by Mexico's national oil company, Petroleos Mexicanos.  It sold its maiden jack-up rig, Coastal Driller 4001, for RM877.2m in 3Q16. 
• It fabricated its second Jack-up Gas Compression Service Unit (JUGCSU) in 4Q13 and is contracted under a USD372 million, 12-year charter for Mexico's state-owned company, Petroleos Mexicanos, from January 2016 onwards. 

4.  In December 2021, Coastal secured a 10-year mega contract worth USD1.06 bn from Petroleos Mexicanos to undertake an onshore gas conditioning plant project with a gas conditioning capacity of 300 million standard cubic meter feet per day (MMCFD) in Tierra Blanca, Veracruz. Mexico.

Y2022

COASTAL's adjusted core earnings more than tripled to RM173.4 m y-o-y. 

• riding on the back of a jump in revenue of 44.0%, 
• a more than doubling of Other Income to RM98.9 m and 
• a sizable share of profit from the group's JV of RM51.5 m in FY22, 

The surge of revenue in FY22 was driven primarily by 

• a more than tripling of revenue from the Vessel Chartering Segment to RM64.09 m, as a result of the acquisition of liftboat chartering business in February 2021; 
• coupled with increased revenue contribution from the Gas Processing Segment (+17.7%), arising from the contribution by the Perdiz onshore gas plant and construction revenue by the Papan onshore gas plant project. 

The sharp increase in Other Income was largely due to 

• interest income earned from loans granted to the group's JV 
• as well as a disposal gain on offshore support vessel of RM33.2 m. 

The group recorded adjusted FY22 EPS of 32.92 sen. 

Warren Buffett: How to Easily Value almost Any Business

Valuing a business and applying a margin of safety

How to get better and better at doing this.

1.20  

Ben Graham taught him about a certain types of businesses.

Charlie taught him about durable competitive advantage and first class businesses.

Over time, he learned more about other types of businesses.

Not important to know every businesses.

Important to know where your circle of competence is.

You don't have to be an expert on 90% of the businesses but you do have to know the ones that you put your money into, and that is a very small part of the universe.

2.30

Think about the businesses you would pay in your own hometown.

Which would you like to buy into, which do you understand their economics, which do you think will be around in the next 10 or 20 years from now, which do you think will be very tough to compete with.

Just keep asking yourself questions about businesses, talk about this with other people about them, and you will extend your knowledge over time.

Always remember that margin of safety and I think you basically have the right attitude because you recognise your own limitations and that is enormously important in this business you will find things to do.

3.17

6 to 7 years ago, Buffett invested into Korean stocks.  He invested into 20 stocks which he felt had margin of safety.  Why 20 stocks?  Because he cannot anticipate which counter might be problematic (due to crooked managers or due to competition).  They were so cheap and this form of investing was based on Ben Graham approach.

4.00

If you wish to be good at something, you have to think about it a lot and learn a lot and practice doing it a lot, and in this field you have to keep learning because the world keep changing and your competitors keep learning.   Try to wake up each morning a bit wiser than when you went to bed the night before.  When you keep doing that for a long time, and accumulate experience (good and bad), as you try and master what you are trying to do; people who do that never fail utterly.  They may have a bad period when luck goes against them or something, but very few people have ever failed with that. If you have the right temperament, you may rise slowly but you are sure to rise.

5.15

Charlie, did you take any business course in school?   No, I took some accounting.  A gentleman in Omaha Club seemed so prosperous and Charlie wondered how he achieved this.  Well this man enjoys practically no competition in his business.  He gathers up and renders dead horses.  That was avoiding competition by one strategem..  By asking such questions from a young age, you eventually learn the same thing.   A lot of businesses gone broke, a lot of businesses sold out under distress, and some of the people who rose from small beginnings which nobody thought of as the great glories of that early time and that is the kind of the way life is.  It is hard to get anywhere near the top and it is hard to hold any position once you have attained it.  But I think it was likely to predict that this man is likely to win because he cared more about doing it right, they cared more about avoiding trouble, they are more discipline on themselves.  I was automatically doing it, what was working, what was failing, why was it failing, and if you have that temperament, you are gradually going to learn and if you don't have the temperament, I cannot help you.

8.20

It is avoiding the dumb things.  You don't really have to be brilliant.

9.10

Charlie was incapable of looking at a business without thinking the economic fundamentals of it.

10.00  

What businesses have the best return on capital on earth?

Capital necessary to run the business versus the capital we might have to pay for the business.

If you run the Coca Cola company excluding the bottling business, you can run it without any capital.  On the other hand, when you buy it for $100 million. you can look at this as the base capital.

When we define what is a good business, we look at the capital actually needed in the business and 

 whether it is a good investment or not depends on how much we pay for it in the end.

There are a number of businesses that operate on negative capital.  Any of the great magazines operate with negative capital (eg. Fortune).  Subscribers pay in advance, and there is no fixed assets and the receivables are not that much and the inventories are nothing.   There are many great businesses that operate needing very little capital, eg. Apple.  The best ones are those who can get very large while needing no capital.  See's Candy requires very little capital.  Generally, the great consumer businesses need relatively very little capital.  The businesses where the people pay you in advance, eg. magazines, insurance,  you are using your customers capital.  Of course, many other people like them too, so this can become very competitive and buying them.    Many of the service types businesses and consumer businesses require very little capital; and when they get to be successful, they really can be something.

13.18

Charlie:  The formula never changes.    If you were to own only one business in the world, what would it be?  If you name some businesses with incredible pricing power, you are talking about businesses that is a monopoly or a near monopoly.  

Bond investing can sometimes fail

Bond investing can sometimes fail, despite being traditionally considered a safe and steady investment. 

Interest rates, inflation, and credit ratings can all affect the value of bonds, and investors need to carefully consider these factors before investing in them. 

For example, the Puerto Rican government's default on its bond payments, which resulted in losses for many investors who had bought the bonds. 

Be wary of the risks associated with high-yield or "junk" bonds, which offer higher returns but also come with a higher risk of default. 

Conclusion:

While bond investing can be a useful tool for investors looking for steady income, it is important to understand the risks involved and to diversify one's portfolio across different types of investments.

https://www.youtube.com/watch?v=s_sNy-SZ4MM&t=2s

Salutica share price had a big drop after having increased from RM 0.375 to a high of RM 1.72 over 13 days from 31/3/2023.

 

Date	Adj Close Price	Volume
3/1/2023 12:00:00 AM	0.26	122,800
4/1/2023 12:00:00 AM	0.255	112,200
5/1/2023 12:00:00 AM	0.255	469,000
6/1/2023 12:00:00 AM	0.25	129,700
9/1/2023 12:00:00 AM	0.255	1,733,000
10/1/2023 12:00:00 AM	0.255	62,000
11/1/2023 12:00:00 AM	0.25	312,100
12/1/2023 12:00:00 AM	0.255	666,500
13/1/2023 12:00:00 AM	0.26	421,600
16/1/2023 12:00:00 AM	0.26	221,200
17/1/2023 12:00:00 AM	0.28	5,650,900
18/1/2023 12:00:00 AM	0.275	596,300
19/1/2023 12:00:00 AM	0.275	425,100
20/1/2023 12:00:00 AM	0.27	507,100
25/1/2023 12:00:00 AM	0.275	674,300
26/1/2023 12:00:00 AM	0.295	4,067,600
27/1/2023 12:00:00 AM	0.295	873,300
30/1/2023 12:00:00 AM	0.285	1,744,400
31/1/2023 12:00:00 AM	0.3	5,086,600
2/2/2023 12:00:00 AM	0.33	6,305,400
3/2/2023 12:00:00 AM	0.335	4,915,400
7/2/2023 12:00:00 AM	0.315	1,166,300
8/2/2023 12:00:00 AM	0.295	1,853,000
9/2/2023 12:00:00 AM	0.3	739,200
10/2/2023 12:00:00 AM	0.315	1,443,900
13/2/2023 12:00:00 AM	0.305	960,400
14/2/2023 12:00:00 AM	0.3	516,200
15/2/2023 12:00:00 AM	0.285	1,524,500
16/2/2023 12:00:00 AM	0.295	528,000
17/2/2023 12:00:00 AM	0.295	112,800
20/2/2023 12:00:00 AM	0.29	222,000
21/2/2023 12:00:00 AM	0.28	883,700
22/2/2023 12:00:00 AM	0.275	224,000
23/2/2023 12:00:00 AM	0.28	83,500
24/2/2023 12:00:00 AM	0.28	322,600
27/2/2023 12:00:00 AM	0.245	7,673,800
28/2/2023 12:00:00 AM	0.24	1,040,200
1/3/2023 12:00:00 AM	0.24	560,400
2/3/2023 12:00:00 AM	0.24	376,200
3/3/2023 12:00:00 AM	0.24	1,895,200
6/3/2023 12:00:00 AM	0.245	204,500
7/3/2023 12:00:00 AM	0.25	259,700
8/3/2023 12:00:00 AM	0.25	296,900
9/3/2023 12:00:00 AM	0.255	171,400
10/3/2023 12:00:00 AM	0.25	345,200
13/3/2023 12:00:00 AM	0.245	348,100
14/3/2023 12:00:00 AM	0.25	518,700
15/3/2023 12:00:00 AM	0.25	85,500
16/3/2023 12:00:00 AM	0.255	190,500
17/3/2023 12:00:00 AM	0.265	195,200
20/3/2023 12:00:00 AM	0.26	215,700
21/3/2023 12:00:00 AM	0.26	219,000
22/3/2023 12:00:00 AM	0.255	137,600
23/3/2023 12:00:00 AM	0.255	69,900
24/3/2023 12:00:00 AM	0.26	54,900
27/3/2023 12:00:00 AM	0.245	86,400
28/3/2023 12:00:00 AM	0.25	40,000
29/3/2023 12:00:00 AM	0.29	2,923,500
30/3/2023 12:00:00 AM	0.285	663,800
31/3/2023 12:00:00 AM	0.375	33,136,100
3/4/2023 12:00:00 AM	0.395	10,750,900
4/4/2023 12:00:00 AM	0.495	37,114,600
5/4/2023 12:00:00 AM	0.46	26,555,700
6/4/2023 12:00:00 AM	0.555	25,778,300
7/4/2023 12:00:00 AM	0.555	12,681,300
10/4/2023 12:00:00 AM	0.68	50,511,800
11/4/2023 12:00:00 AM	0.715	22,859,300
12/4/2023 12:00:00 AM	0.765	37,209,300
13/4/2023 12:00:00 AM	0.875	32,863,300
14/4/2023 12:00:00 AM	1.09	56,461,800
17/4/2023 12:00:00 AM	1.41	41,578,500#
18/4/2023 12:00:00 AM	1.65	60,618,300
19/4/2023 12:00:00 AM	1.16	65,105,300
20/4/2023 12:00:00 AM	0.815	100,220,300

# 17.4.2023 Salutica received UMA query

2023-04-17

Blog

Salutica Highlights Legal Dispute With Apple Malaysia in UMA Reply; Share Price Spikes 29%

2023-04-17

Blog

Salutica Gets UMA Query as Share Price Hits Highest in Over Five Years

Salutica's business has faced challenges over the recent years.  The company has been having losses for a few quarters.  Its revenues have contracted markedly.  Accordingly, its share price too has fallen over the last few years.

Its stocks had traded around 25 sen to 30 sen per share in recent past.  This counter had seen trading volume of less than 1 million shares on most days, with occasional infrequent spikes in its daily volumes of shares traded.

Short term traders would probably had been drawn to this stock on 31/3/2023 when the volume of shares traded was a high of 33,136,100.  

For the next 13 trading days, the traded volumes for this stock were high, between 10,750,900 to 60,618,300 on 18/4/2023 when its share price was the highest at RM 1.72 per share.  It closed on 18/4/2023 at RM 1.65 per share.

On 19/4/2023 and 20/4/2023, its share price dropped severely to close at RM 0.815 per share on 20/4/2023.  The volume traded on 20/4/2023 was the highest to date of 100,220,300 shares.

SALUTE Financial Information

20/4/2023 Price per share RM 0.815

Market Capital (RM)	: 347.60m	EPS (cent)	: -1.94
Number of Share	: 426.50m	P/E Ratio	: -

Additional related reading:

https://myinvestingnotes.blogspot.com/2011/04/penny-stocks-pump-and-dump-sell-to.html?m=1

SUNDAY, 3 APRIL 2011

Penny Stocks: Pump and Dump (SELL TO SUCKERS)

Trade-off of limited interest rate hikes by Bank Negara

 Bank Negara’s tempered OPR hikes limit interest rate risks for banking system …

… but there is a trade-off

As with everything in life, there is a trade-off. And as we have always said, there is no free lunch in economics. 

• First, savers could have obtained more had interest rates gone higher. With high inflation, savings are now earning negative real rates (that is, below inflation) (see Chart 5).
• Second, the trade-off is a weaker ringgit — and higher cost of living for all Malaysians. 

The interest rate is the price of money (or credit or time, if one is inclined to be argumentative) — and it certainly is one of the major drivers in foreign exchange movements (see Chart 6); although this relationship is by no means linear or perfect. 

• Can a country maintain a relatively low interest rate while also stabilising its exchange rate?  
• Is the weak ringgit a function of the interest rate differentials between the ringgit and other currencies or are there even more dominant factors? 

https://www.theedgemarkets.com/node/662043

How banks account for their bond holdings and treatments for unrealised gains and losses.

Banks have some discretion in terms of accounting for their bond holdings (which is part of financial assets and liabilities) and treatments for unrealised gains and losses. 

• Under IFRS 9 (known as MFRS 9 in Malaysia and SFRS 109 in Singapore), bond investments can be measured at cost (if they are intended to be held to maturity) or at fair values (if they may be sold before maturity). 
• And there are guidelines for treating changes in fair value measurements — they can be reflected through either the profit and loss (FVTPL) or other comprehensive income (FVOCI).

Under the first option, gains (losses) are recognised in the Income Statements, meaning reported net profit for the period is higher (lower). 

Under the second option, gains (losses) are disclosed below the net profit line in the Statements of Comprehensive Income. In this case, the gains (losses) have no impact on reported net profit. 

However, both the FVTPL and FVOCI options have balance sheet effects — unrealised gains (losses) will increase (decrease) retained earnings and shareholders’ equity (see Chart 4 for the different approaches in the accounting treatments for bond investments by Malaysian banks).

For instance, Affin Bank and, to a lesser extent, Hong Leong Bank have the highest proportions of bond investments measured at cost, which could indicate that, in the current environment, both their reported net profit and equity may be “overstated”. By comparison, the other seven local banks have, on average, mark-to-market some 63% of their bond holdings. In addition, Maybank, CIMB and Ambank would have adjusted their reported profit lower for a portion of these unrealised losses.

As mentioned above, bond holdings that are mark-to-market will affect balance sheets — unrealised losses or impairments will drag on the capital adequacy ratio of banks. 

Herein lies the importance of Bank Negara’s more tempered path for interest rate hikes. 

• The smaller interest rate hikes mean lower unrealised capital losses, thus limiting the negative impact on lending capacity and/or need to raise fresh capital.
• Smaller interest rate hikes also help keep a lid on the burden for debt servicing, for leveraged households, businesses as well as the government. Government debt and liabilities totalled RM1.5 trillion, or 83% of GDP.

In short, Bank Negara is protecting the lending capacity of the domestic banking system — and economic growth. Banks typically run into trouble because of deterioration in the quality of their assets, when bad debt provisions and write-offs increase. This could still happen if the expected global recession hits hard and affects the ability of businesses to service/repay their debts. At this point in time, however, interest rate risks — that are currently afflicting US and European banks — for Malaysia’s banking system appear low.

https://www.theedgemarkets.com/node/662043

Interest rate risks for the overall Malaysian banking system is low.

 

Is SVB a canary in the coal mine?

Clearly, the situation is quite different in Malaysia. For starters, pandemic cash handouts were far smaller and, while deposits also rose during the pandemic — owing to loan moratoriums and lower spending — it was nowhere near the scale of that in the US. Total deposits increased from RM1.968 trillion to RM2.186 trillion between March 2020 and March 2022, or equivalent to just about 11% growth (see Chart 2).

And while investments in government and corporate bonds also rose at the outset of the pandemic — as a result of excess deposits and lower loan demand — the increase was small, from 17.9% in January 2020 to a high of 19.7% of total assets in August 2021. Currently, the average bond holdings among Malaysian banks is 19.1% of total assets, or about RM645.2 billion, compared with 24% in the US banking system. Of note, 90% of the total are made up of local bonds — only 10% of which are foreign currency denominated bonds (see Chart 3).

Bank Negara’s tempered OPR hikes limit interest rate risks for banking system …

More importantly, Bank Negara Malaysia has raised the overnight policy rate (OPR) by only 1%, from 1.75% to 2.75% over the same period (compared with the 4.75% hike in the US FFR). Yields for the benchmark 10-year Malaysia Government Securities (MGS) have risen by even less — from 3.6% at the start of 2022 to 3.88% currently. The yield differential is less than 0.3%. This means the drop in value for 10-year MGS is only about 2.3%, based on our back-of-the-envelope calculations (see Table 2).

This is a huge difference compared to the 15.3% drop in value for the 10-year Treasury. Furthermore, unrealised losses for shorter duration bonds will be much lower. For instance, more than half of Maybank’s bond holdings have durations of less than five years.

In short, total unrealised losses for local banks should be much lower. (Incidentally, the majority of loans [79%] are based on floating interest rates, which are repriced immediately on Bank Negara’s policy rate changes.) Therefore, we think interest rate risks for the overall Malaysian banking system is low. Naturally, some banks will be affected more than others. For instance, Maybank, CIMB, Hong Leong Bank, Ambank, Affin Bank and RHB Bank have a higher percentage of bonds on their balance sheets compared with banks such as Public Bank, Bank Islam, Alliance Bank and MBSB. This could be due to a combination of factors, including deposit inflows, the ability to make loans and the target customer market.

https://www.theedgemarkets.com/node/662043

The fallout of Silicon Valley Bank reverberated around the world

 

The fallout reverberated around the world — turning into a crisis of confidence in the global financial system. 

In Europe, the Swiss government instructed UBS Group AG to mount an emergency rescue of compatriot Credit Suisse Group AG, which, incidentally, is already beset with its own set of problems. 

Since the SVB turmoil, banks have lost tens of billions in market value, some more than others. 

For instance, leading Japanese banks have been harder hit, as they had accumulated foreign bonds in recent years — in the search for yields on the back of more than two decades of a zero interest rate policy, crowding-out by the Bank of Japan as well as slow loans growth in the domestic market.

https://www.theedgemarkets.com/node/662043

Silicon Valley Bank became the second-largest bank to fail in US history

For a quick recap, Silicon Valley Bank (SVB) became the second-largest bank to fail in US history, the biggest being Washington Mutual Bank in 2008, following a run on the bank. 

What happened? 

SVB had an abnormally high percentage of bond holdings (56% of total assets) on its balance sheet and as unrealised losses mounted, worried depositors — mostly Silicon Valley start-ups and venture-capital firms with large, uninsured deposits (of more than US$250,000 per account) — rushed to withdraw their money. 

The sudden huge outflow of deposits forced SVB to liquidate its bonds at current market values (losses), which then tipped it into insolvency (where the values of liabilities exceeded assets). 

The bank had to be taken over by FDIC on March 10 to stem contagion fears. 

Another regional bank, Signature Bank, suffered the same fate and went into FDIC receivership just days later. 

Despite the quick actions, worries continued to spread to other smaller banks, all of which continue to suffer substantially higher-than-normal deposit withdrawals.

https://www.theedgemarkets.com/node/662043

The issues for SVB are, to a certain extent, idiosyncratic — 

• an exceptionally narrow customer base and 
• high uninsured deposits (according to various reports, they ranged from 88% to 96% of total deposits), 
• abnormally high long-dated bond holdings relative to traditional loans and, 
• critically, failure to hedge interest rate risks.

The overall US banking system is, no doubt, suffering from withdrawal symptoms — from excessive government stimulus, near-zero interest rates and massive quantitative easing over the past few years. At the outset of the pandemic, banks were inundated with large deposit inflows — excess savings surged from generous government handout, coupled with little avenue to spend during lockdowns.

Bank deposits increased by nearly US$5 trillion, or 35%, from about US$13.4 trillion in March 2020 to US$18.1 trillion in March 2022 (see Chart 1). Meanwhile, loans to businesses were limited during the pandemic. Banks had to put all these excess cash to work, and many ended up buying Treasuries and especially MBS (new mortgages and refinancing activities saw a huge jump as the housing sector boomed). Then the Fed started hiking interest rates aggressively.

Situation in Malaysia is quite different

Clearly, the situation is quite different in Malaysia. 

For starters, pandemic cash handouts were far smaller and, while deposits also rose during the pandemic — owing to loan moratoriums and lower spending — it was nowhere near the scale of that in the US. 

Total deposits increased from RM1.968 trillion to RM2.186 trillion between March 2020 and March 2022, or equivalent to just about 11% growth (see Chart 2).

https://www.theedgemarkets.com/node/662043

UK State pension age rise to 68 will not be brought forward yet

 By Kevin Peachey & Sam Francis

Cost of living correspondent and political reporter

A rise in the state pension age to 68 will not be brought forward yet, the government has announced.

Those born on or after 5 April 1977 will be the first cohort to work to 68, under current plans. A 2017 government review suggested expanding this to include those born in the late 1960s.

The work and pensions secretary said the pension age would not be changed until a further review was carried.

A decision is now expected in 2026, after the next general election.

By law the government is required to examine planned changes to the system every six years.

A recent report found life expectancy for retiring Britons is now two years lower than when the government last reviewed the state pension age in 2017.

Labour said increases in life expectancy were being "dragged down" by a "rising tide of poverty".

A separate review by Baroness Neville-Rolfe looking at what factors the government should take into account when setting the pension age was published on Thursday.

• When do you get the state pension?
• Chancellor announces state pension to rise by 10.1%

And on Thursday, a further review was commissioned by Work and Pensions Secretary Mel Stride to look into raising the state pension age.

A further study was needed as the previous reviews were "not able to take into account significant external challenges including impact of the Covid pandemic and global inflation caused by Putin's illegal wat in Ukraine", Mr Stride said.

The new review will report within two years of the new parliament, he added.

Labour supported the government's position, but shadow work and pensions secretary John Ashworth said the government had last year said bringing forward an increase in state pension age "was absolutely necessary for the long term sustainability of the public finances".

"Now it turns out with general election only a year away the and the government trailing so badly in the polls, not raising the state pension age is not so reckless after all," he added.

The state pension is a monthly payment currently made to 12.5 million people who have reached qualifying age and have paid enough in national insurance contributions.

Next week, the amount paid will increase by 10.1% in line with the rising cost of living.

That means it will be worth:

• £203.85 a week (up from £185.15) for the full, new flat-rate state pension (for those who reached state pension age after April 2016)
• £156.20 a week (up from £141.85) for the full, old basic state pension (for those who reached state pension age before April 2016)

Work and Pensions Secretary Mel Stride will make a statement in the House of Commons later to confirm the conclusions of the latest statutory review on the pension age.

The Daily Express newspaper, where the story first appeared, said Mr Stride would announce a new review to be carried out after the next election.

The qualifying age to receive the pension has been a matter of intense speculation, with two reviews having been considering the appropriate age and how that should be calculated.

The main argument for accelerating a rise in the state pension age has always been that people are living for longer.

The state pension bill is estimated to grow by 35% to around £148bn by 2027-28 according to the Office for Budget Responsibility.

The Institute for Fiscal Studies, a leading economic research group, said that it was a "reasonable estimate" that increasing the state pension age by one year in the late 2030s would save the Government £8bn to £9bn a year in today's terms.

But experts point out that, although the cost of the state pension has been rising, life expectation has stalled recently.

There is also a wide difference in life expectancy across different parts of the country, with people generally likely to live longer in more affluent areas. That creates an added complication when setting a state pension age which is uniform across the UK.

At the moment, the age limit is based on ensuring no-one spends more than one third of their adult life in retirement.

State pension increases currently set out in legislation are:

• A gradual rise to 67 for those born on or after April 5, 1960
• A gradual rise to 68 between 2044 and 2046 for those born on or after April 5, 1977

Proposals to raise the state pension age are often controversial. Riots broke out on the streets of France after the French government decided to force through pension reforms without a vote in parliament.

https://www.bbc.com/news/business-65120317