6. Search for some current external information regarding your chosen entity? 6.

1 What are the economic factors that might have some influence on the performance of your entity? Explain. Change in economic factors might bring impact to a business and company. Asian economies continued to play a key role in global growth owing to stronger domestic economies. The Asian economies remained resilient despite several barriers such as the global supply chain disruptions caused by the Japanese earthquake and tsunami and flooding in Thailand. The fall out of a prolonged unresolved crisis in the western economies could dampen Asian economic growth. Public Bank also would influence by Transformation policy under The Economic Transformation Programme ( ETP ) and the New Economic Model ( NEM ) of the 10th Malaysia Plan. In Malaysian domestic market, the Public Bank Group continued to operate in a healthy business environment owing to strong economic fundamentals and robust domestic demand, reinforced and generated by this policy. The Malaysian banking system remained stable, underpinned by strong capitalization, healthy liquidity conditions and strong asset quality. On the other hand, under the 10th Malaysia Plan and the Economic Transformation Programme, Malaysia is targeted to achieve an annual GDP of 6% per annum, while annual household income is expected to increase to USD12,140 by 2015 and USD15,000 by 2020 because with a growing population and higher income levels, the demand for residential properties will be robust. Besides that, Public Bank also would be influence by fiscal policy and monetary policy that had been specified by government. For the monetary policy, BNM had
1

increased its policy rate from 2% in February 2010 to 3% in May 2011, key lending rates remained low, and deposit rates remained stable. Meanwhile, the Statutory Reserve Requirement, which was held at 1% since March 2009, was raised three times to 4% between April 2011 and July 2011. While, the fiscal policy is expected to remain prudent and supportive of economic growth. The Government committed to reduce its fiscal deficit from 5.6% of GDP in 2010 to 5.4% in 2011 and in the third quarter of 2011, Federal Governments external debt remained low at 2.1% of GDP. As economic outlook is expected to remain favourable and inflation is likely to moderate in 2012, monetary policy is expected to remain accommodative with interest rates to be kept low and stable. The monetary aggregates also continued to expand and growth in broad money supply also accelerated that reflecting higher credit to private sector and portfolio inflows. Then, Public Bank also would influence by the condition of global economic that would causes of slow credit growth. Private consumption in the US will continue to be hampered by the sluggish labour market and anaemic housing prices, while firms will remain cautious in their investments. While, the EU economy will be constrained by fiscal austerity and tight credit conditions. Then, the global financial market volatility could intensify funding pressure on banks and lead to slow credit growth. (page 67,68,letter to stakeholders) (page 24,financial statement, directors report)

6.2

Is there any development on current local rules, regulations, acts which your entity should be concerned about? Development on current local rules, regulations, and acts can bring impact to business and company. There are some new guidelines issued by Bank Negara Malaysia (BNM) that should concern by Public Bank Berhad. The new guideline is about responsible financing by financial institutions. This guideline requires financial institutions to conduct more stringent checks and customer education to ensure that customers can afford to service the loans they take up and not burdened by the loans. If Public Banks existing procedures have met or exceeded the requirements of the new guideline, the new guideline will not have an adverse effect on the Banks loan growth prospects. Besides that, Bank Negara Malaysia ( BNM ) has introduced measures such as prudential policies applied on the residential property sector, new credit card guideline and strengthening requirements for banks to adopt prudent and responsible lending practices to ensure that household indebtedness remain prudent. BNM has issued a new regulatory guidelines which limited card members who earn RM36,000 or less per annum to hold credit cards not more than two credit card issuers. Besides that, BNM also provided guidelines for bank to prepare the required disclosures and information in its annual report to comply with the Pillar 3 disclosures under BNMs Risk Weighted Capital Adequacy Framework ( RWCAF ). The disclosures under the Pillar 3 is to provide a consistent and comprehensive disclosure framework that enhances the comparability of the requisite information among banking institutions and

further promote improvements in their risk management practices. In addition, BNM also issued the guidelines on Pillar 2 relating to Internal Capital Adequacy Assessment Process ( ICAAP ). The guidelines require banking institutions to assess their internal capital requirements in relation to risk appetite and strategic business directions. BNM also issued the Guidelines on Responsible Finance to promote sustainable retail financing market that will contribute towards economic and financial stability in the long term. Under this guideline, a more stringent definition is prescribed in the computation of the Debt Service Ratio, being the key ratio used in the assessment of the repayment capacity of a potential or existing customer. BNM also has issued pre-emptive regulatory measures such as loan to value ratio cap on financing of the third residential property, higher real property gains tax and the more stringent lending guidelines to avoiding over-gearing of borrowers and curbing speculative property purchases. The Public Bank also should concern about changes of the Hire Purchase Act, 1967 because it will affected vehicle sales. Hire Purchase Act, 1967 is act that will impose more stringent procedural requirements on the sale of vehicles. The passenger vehicle hire purchase financing packages are amongst the most competitive in the market. In addition, Public Bank should concern about the changes to the regulatory capital regime that focus on high quality of capital, particular equity capital and higher minimum capital requirements. This regulatory important for banks or financial institutions to maintain a higher level of shareholders capital that required to support their businesses. Public Bank also should follow the Financial Institutions Act, 1989
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which said to maintain a consistent and regular dividend payment policy that promotes a stable return to shareholders. Besides that, Public Bank needs to follow the certification under the ISO 9001:2008 standards for the Provision of Customer Service in Loan Delivery and Provision of Customer Service at the Front Office include 2 minutes standard waiting time for customers at branch counters. This standard enables us to achieve consistently high customer service delivery standards. In addition, the Customer Service Charter sets out the guiding principles for delivering a high standard of customer service to Public Banks customers that include the accountability, fairness, privacy, reliability and transparency. Their also provides for standards of service which guide in providing customer service effectively and efficiently. Public Bank also should concern about the Companies Act, 1965. Pursuant to section 129 (2) of the Companies Act, 1965, directors who are over the age of 70 years shall retire at every annual general meeting (AGM) and may offer themselves for reappointment to hold office until the next AGM.
ANNUAL

(page 162,163,business operation review) p.20-customer service charter p.66-pre-emptive regulatory,hire purchase act 1967 p.69,70-regulatory
capital regime reforms, Bank Negara Malaysia as required by the Banking and

Financial Institutions Act, 1989. (paying consistent dividend)

p.72- iso,p.90- companies act 1965,p.100-BNM(p.108)(110)

6.3

Name and explain at least two (2) social factors that your chosen entity should pay attention to? As a custodian of public funds and a mobiliser of savings to finance economic activities, banks should conduct their business in a manner which wills benefits society. If the activities of the bank are considered as socially useful and contribute well to all stakeholders, then the bank must conducts its business in accountability, transparency and integrity. When the business of a bank is conducted responsibly, the reputation of the bank will be good and enhanced. The social factors that Public Bank should pay attention are enhancement of the market place, promotion of the workplace, building the future through education and support of the community. Public Bank had focused in 2011 its corporate responsibility to fulfilling their corporate responsibility to society and community by focused on education, healthcare, and youth and community activities. In education, Public Bank continues with its support of the education of the nations youth. They believe the importance of quality education and until now had contributed RM500,000 to the Tan Sri Dato Sri Dr. The Hong Piow Chair in banking and finance. This was part of the RM1.25 million contribution over a 5 year period that enabled Universiti Tunku Abdul Rahman ( UNITAR ) to appoint an excellent professor to hold the chair and carry out research of banking and finance in that university in Kampar. For the healthcare, Public Bank donated RM100,000 to the IJN Foundation to fund the operating and management cost of Dormitori Yayasan IJN-Public Bank, which is a halfway house that provides free accommodation to families of needy patients undergoing treatment in Institut Jantung Negara. Then, for the youth and community activities, Public Bank participated in the Skim Latihan 1Malaysia
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Programme in support of the Governments call to increase the skills level of the countrys graduate in order to enhance their marketability in the employment market. Besides that, Public Bank also should pay attention to the corporate responsibility in the workplace. To fulfill this responsibility, Public Bank should care of their employee. Public Bank must ensuring that employees well-being are well taken care by providing a safe, secure, healthy and conducive work environment, enhancing the quality of its employees and providing fair and competitive reward to all employees. The employer also should training employees to enhance their skills and continuously promote employee engagement to build an engaged workplace that stay loyal and grow with the group.