BFT106 - Principles of Accounting & Income Statement For Service Industry (Public Bank Berhad) - Accounting Assignment Help

Assignment Task -                 
 

1.0 Introduction

Public Bank Berhad was operating as a banking and finance business which include Islamic banking and the provision of related financial services. Public Bank Berhad was founded in 1966 by Chairman Tan Sri Dato’ Sri Dr. Teh Hong Piow with the vision of growing up the Public Bank to be ‘’ a bank for the people’’. Public Bank also is one of two banks in Malaysia owned by ethnic China. This bank has opened the door for business at its first branch located in Jalan Gereja, Kuala Lumpur on 6 August 1966 with have 62 pioneer staff.

The strength of the public banks is in retail banking. It becomes a leader in real estate and vehicle lending as well as in the management of unit trust funds. Due to this, it has helped a lot this bank to continues to be profitable for almost half a century.

The bank is also headed by senior Chairman Tay Ah Lek, who has worked with the bank since its establishment. The nature business of a public bank is engaged in all aspects of commercial banking and the provision of related financial services.

Public Bank Berhad is the largest bank in Malaysia with shareholder’s funds, the second largest with market capitalization, and the third-largest by total assets overall. This banking strategy focuses on the growth of the retail banking business especially on retail users in small and medium enterprises. Public Bank Berhad's mission is to maintain its position as an efficient and profitable major financial institution in Malaysia.

Pensonic Holding Berhad is an investment holding company. Pensonic Holding Berhad were founded in 1994 by Chairman Dato Chew Weng Khak . These company has opened the door for business at its first branch located in Suite 16-1 (Penthouse Upper) , Menara Penang Garden , 42A Jalan Sultan Ahmad Shah , Penang . In 1974, Dato Chew Weng Khak was started business as a small shop in Penang selling electrical under the name of Keat Radio Co as a sole proprietor.  Keat Radio Co was incorporated into a private company in 1997. He started the Pensonic brand name to produce locally made electrical appliances to ensure the long-term growth company and the name of  “PANASONIC” brand name was created by combining “PEN” and “SONIC” meaning “Sound Of Penang”. 

Pensonic Sales and Service Sdn. Bhd. came into existence with several branches throughout Malaysia to house the fast-expanding business under one umbrella group. It was for the first company, a locally conceived and produced range of electrical products that took its place among established bands from Japan, Europe, and the United States.

The nature business of the company is to research, development, and commercialization of technologies related to the electrical home appliances and consumer electronics industries including holding an investment in a company engaged in similar activities. Our vision of the company is to act as a supplier of first choice and quality products to consumers and to be active in all aspects of the business while offering competitive pricing and reliability. What more, the mission of Pensonic Holding is to always strive for continuous improvement, incorporate innovations and technology in our commitment to creating customer value.

2.0 Identification of income statement and balance sheet components of the company from the Public Bank Berhad (Service Industry)

2.1 Income Statement for Service Industry (Public Bank Berhad)

The Statement of Profit or Loss and The Statement of Comprehensive Income formerly known as income statement. The Statement of Profit or Loss and The Statement of Comprehensive Income present the revenues and expenses and it will result in the net profit or net loss of a business for a period of time. The diagrams below showed The Statement of Profit or Loss and The Statement of Comprehensive Income for the service industry which is Public Bank Berhad.

Diagram 2: The Statement of Comprehensive Income of Public Bank Berhad at the year ended 31 December 2019

Based on diagram 1, the gross profit in the year 2019 is RM5,579,443,000. It showed a decrease of as much RM85,469,000 based on the year 2018. It consisted of 7 revenues which are interest income, income from the Islamic banking business, fee and commission income, gains on financial instruments, other operating income, writeback of allowance for impairment on other assets, and share of profit after tax or equity-accounted associated companies. The total revenues are RM20,758,141,000. Besides, it consists 6 expenses which are interest expense, fee and commission expense, other operating expenses, allowance for impairment on loans, advances and financing, tax expense and zakat. The total expenses are RM15,178,698,000. The gross profit for the year is total revenues – total expenses, RM20,758,141,000 – RM15,178,698,000 = RM5,579,443,000.

Based on diagram 2, the net profit in a year is RM5,656,906,000. It showed a decrease as much as RM70,405,000 based on the year 2018. It included 6 revenues which are net change in revaluation of equity instruments, property and equipment, gain on disposal of equity instruments, translation differences in respect of net investment hedge, net change in revaluation of financial investments at fair value through other comprehensive income, and share of changes in associated companies’ reserves. The total revenues are RM516,634,000. Other than that, it included 4 expenses which are loss on remeasurements of defined benefit plans, translation differences in respect of foreign operations, net change in cash flow hedges, and income tax effect. The total expenses are RM439,171,000. The net profit is gross profit + total revenues – total expenses, which is RM5,579,443,000 + RM516,634,000 - RM439,171,000.

As a result, the service industry of Public Bank Berhad gained a net profit in the year 2019 which is RM5,656,906,000. 

Diagram 3: The Statement of Financial Position of Public Bank Berhad As At 31 December 2019

Diagram 3 shows that the total balance amount of the Statement of Financial Position for Public Bank in 2019 is RM432,830,675,000. There are total of 17 items in the assets of Public Bank. The first item in the assets is cash and balances with banks. The amount of this item is RM14,075,699,000. In addition, item reverse repurchase agreements with the amount RM8,208,000. Also, financial assets at fair value through profit or loss showed an increase from 2018 to 2019. The amount from RM2,380,134,000 increased to RM4,210,265,000. Furthermore, the amount of derivative financial assets in 2019 is RM152,330,000.

In the other hand, item financial investments at fair value through other comprehensive income with the amount RM40,153,493,000. Besides, the amount of RM27,638,168,000 is stated in the item financial investments at amortized cost. Loans, advances and financing increased by 4.2% from 2018 to 2019 which is from RM315,259,166,000 increased to RM328,476,494,000. Also, other assets in Public Bank occupied RM2,147,400,000 in the total assets. Then, there is the item statutory deposits with Central Banks with the amount of RM10,044,185,000.

Other than that, item deferred tax assets increased from 2018 to 2019 which is from RM81,374,000 increased to RM83,484,000. There are 2 items with no amount but it is still included in the assets of Public Bank which is Collective investments and investment in subsidiary companies. Also, item investment in associated companies with the amount of RM75,080,000. Amount RM753,095,000 stated in the item of investment properties.

Next, item right-of-use assets with the amount of RM1,427,160,000. Property and equipment decreased by 27.1% from 2018 to 2019 which is from RM1,567,199,000 decrease to RM1,142,575,000. Last but not least, item intangible assets occupied RM2,443,039,000 in the total assets in Public Bank.

There are 11 items available in liabilities in Public Bank. The total amount for liabilities in Pubic Bank is RM388,084,471,000. The first item is the deposits from customers and its amount is RM353,340,475,000. Furthermore, deposits from bank decreased from 2018 to 2019 which is from RM9,483,154,000 decrease to RM8,494,073,000. Next, item obligations on securities sold under repurchase agreements with the amount RM970,654,000. 

In the other hand, bills and acceptances payable occupied RM234,786,000 in the whole liabilities. Next, recourse obligations on loans sold to Cagamas with amount RM5,500,004,000. Derivative financial liabilities increased by 16.1% from 2018 to 2019 which is from RM297,664,000 increase to RM345,724,000. Besides, RM12,317,450,000 stated in the item of debt securities issued and other borrowed funds.

Lease liabilities occupied RM1,087,808,000 in the whole liabilities in Public Bank. Other liabilities increased from 2018 to 2019 which is from RM4,975,470 increase to RM5,196,397,000. Furthermore, item provision for tax expense and zakat with the amount of RM540,107,000. Lastly, Deferred tax liabilities decreased by 59.8% from 2018 to 2018 which is from RM141,948,000 decrease to RM56,993,000.

The last component in the statement of financial position is equity. The equity in the statement of financial position in Public Bank 2019 occupied the amount RM44,746,204,000. There are 6 items included in the equity. The first item is share capital with the amount of RM9,417,653,000. The amount RM2,017,353,000 stated in the item regulatory reserves.

Furthermore, item other reserves increased from 2018 to 2019 which is from RM1,413,367,000 increase to RM1,606,357,000. Next, item retained profits with the amount of RM30,552,967,000. Besides, equity attributable to equity holders of the bank occupied the amount RM43,594,330,000 in the whole equity. Last but not least, the non-controlling interest increased from RM1,123,407,000 to RM1,151,874,000 from 2018 to 2019. 

In conclusion, the equation for the statement of financial position at 2019 in Public Bank is RM432,830,675,000 = RM388,084,471,000 + RM44,746,204,000. So, the balance amount is RM432,830,675,000.

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