https://www.thestar.com.my/business/business-news/2018/09/15/public-bank-among-the-most-expensive-in-the-region/
most expensive bank
Public Bank, along with Hong Leong Bank Bhd
(HLB), has always been known to be included in what is known as two Chinese-owned banks in Malaysia.
What’s different in HLB compared with Public Bank, though, is that there is a larger concentration of a single shareholder in HLB.
The bank is 65.66%-owned by Hong Leong Financial Group Bhd
, which is 77.62% controlled by Tan Sri Quek Leng Chan’s privately-held Hong Leong Co Malaysia.
According to fund managers, the attraction of Malaysian Chinese-owned banks is the valuable franchise that they have.
Premised on this, it is likely that these banks will remain in the local banking equation should there be another round of consolidation, some say.
Locally, after Public Bank, HLB is the second-most expensive bank with a 1.85 times P/BV.
In comparison, the country’s largest lender, Malayan Banking Bhd
(Maybank), is trading at 1.5 times based on its last traded share price of RM9.90.Read more at https://www.thestar.com.my/business/business-news/2018/09/15/public-bank-among-the-most-expensive-in-the-region/#fTx7v9VALqAzCVsx.99
Cheapest bank
At the other end of the spectrum is Affin Bank Bhd, which is trading at 0.355 times its book value, making it the cheapest local banking stock.
While the bank had acquired Hwang-DBS Investment Bhd to give it a platform to carve a niche in investment banking, some reckon that its return on equity (ROE) – a measure of a bank’s profitability – is still at the low-end, and therefore, can be run more efficiently.
CIMB Research in a report this week notes that Affin Bank’s recurring ROE for calender year 2018 stood at 5.4%, while smaller rival Alliance Bank (M) Bhd was at 10.7%.
Its cost-to-income ratio, which is a measure of efficiency, stood at 63.6% for the first half of the year versus the sector’s average of 47.2%.
Trailing behind all its peers, it makes sense for the bank, which is majority controlled by Armed Forces fund Lembaga Tabung Angkatan Tentera, to be taken over by a larger counterpart.
Interestingly, a major player in any corporate exercise involving Affin Bank is Quek.
Affin Bank’s second-largest shareholder is Bank of East Asia Ltd (BEA), where the tycoon has a strategic 14% stake.
Hong Kong-listed BEA, in turn, has a sizeable 23.5% stake in the government-linked bank.
From that point of view, a merger between HLB and Affin Bank will be easy to facilitate.
However, some reckon that a fit between Affin Bank and GLC banks like Maybank and CIMB Group Holdings Bhd
would be better,
Affin Bank does have a captive market in terms of the Armed Forces sector, which makes it a compelling proposition to any suitor.
ASIDE from Indonesia’s PT Bank Central Asia Tbk, which is trading at 4.32 times price-to-book value (P/BV), Public Bank Bhd
is easily one of the most expensive banks in this part of the world, and possibly beyond.
The bank, which is 22.8%-owned by tycoon Tan Sri Teh Hong Piow, is trading at 2.45 times its book value.
Except for Bank Central Asia, which ranks third in South-East Asia by market capitalisation, banks in the South-East region generally command valuations of between 0.7 times and 1.9 times their book value.
Across the Asian region, Public Bank’s valuation dwarfs even that of the Industrial and Commercial Bank of China Ltd’s, the world’s biggest bank by asset size, which has a P/BV of 0.91 times.
In the West, banks such as HSBC plc, Standard Chartered plc, Citigroup Inc and Bank of America are all trading between 0.52 times and 1.25 times their P/BV.
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