Friday, 19 October 2012

Maybank IB keeps 'buy' on Public Bank on 'solid fundamentals'

Maybank IB keeps 'buy' on Public Bank on 'solid fundamentals'

Written by Ho Ching-Ling
Friday, 19 October 2012 11:48

KUALA LUMPUR (Oct 19): Maybank Investment Bank (IB) has maintained its “buy” call for PUBLIC BANK BHD [] and raised its target price by 70 sen to RM16.70 based on the group’s stable growth and
solid fundamentals.

Public Bank's net profit for the third quarter ended Sept 30, 2012 rose to RM983.29 million versus RM931.95 million a year ago.

Revenue for the quarter rose to RM3.58 billion from RM3.27 billion a year earlier. Earnings per share was 28.08 sen while net asset per share was RM4.83.

In a research report on Friday, Maybank IB said Public Bank continues to perform within guidance with a domestic loan growth of 13% in line with management’s 12% to 13% target for the year.

“At the heart of the loan growth domestically is residential and commercial property lending, which rose at an annualised rate of 17% and 22% respectively. Hire purchase growth trailed at 9%,” it said.

According to Maybank IB, the banking group still maintains a dominant position with market shares of 18.8%, 33.4% and 26.3% in residential property, commercial property and passenger vehicle financing

However, the research house highlighted that the group’s overall loan growth lagged at 11%, mainly due to a contraction in its Hong Kong loan book.

“Competition remains stiff for Public Bank (Hong Kong), which has 32 branches in Hong Kong, three in China and is involved primarily in commercial loan disbursements, as well as Public Finance (42 branches), which mainly provides personal financing to maids,” said Maybank IB.

Having said that, Maybank IB does not expect a large earnings impact from Public Bank’s Hong Kong operations since its overseas operations only accounts for just 6% of its profit before tax.

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