Stock Name: PBBANK
Company Name: PUBLIC BANK BHD
Research House: AMMB
Public Bank Bhd
(March 24, RM11.66)
Maintain buy at RM11.64, with fair value of RM13: Public Bank remains on track to achieve an expansion in loans of 14%-15% for the financial year ending Dec 31, 2010 (FY10), we gathered from our recent meeting. Internally, it expects industry loan growth to pick up 8%-10% for 2010, from 7.8% in 2009.
Growth areas are still mortgages and small and medium enterprises, with targeted loan growth of 15% for both as well as auto loans (targeted 10%-12% growth).
In terms of fixed deposit rates, last week it adjusted upwards its one-year fixed deposit rates to 2.75%, from 2.6% it set on March 10 (previously 2.5%).
Public Bank clarified that there is no minimum requirement set by the regulators in terms of fixed deposits this time around. The main reason for its adjustment upwards in terms of pricing its one-year fixed deposit rates was due to its strategy to grow its deposit base.
As for net interest margin (NIM), Public Bank hinted that NIM is likely to expand on back of its latest rate increase. The guidance is now more positive then previously - the company indicated that it expects NIM to remain stable.
Loan loss provisioning is expected to have peaked in FY09, given that of RM397milliom in specific loan loss recorded in FY09, RM265 million was related to overseas operations, stemming mainly from its Hong Kong (HK) and Cambodia side. Cambodia was affected by more stringent regulation, while HK is expected to have stabilised.
Public Bank remains confident of achieving an ROE (return on equity) of 30% in three years' time. In addition, it remains committed to a dividend payout of 50% to 55%.
From our latest company visit, we expect to tweak upwards our forecasts to take into account higher loan growth outlook. We remain positive on Public Bank and maintain our buy recommendation with an unchanged fair value of RM13 a share.
Catalysts for the stock are; consistent dividend payout, better-than-expected loan growth; and higher-than-expected ROE. - AmResearch, March 24
This article appeared in The Edge Financial Daily, March 25, 2010.
Company Name: PUBLIC BANK BHD
Research House: AMMB
Public Bank Bhd
(March 24, RM11.66)
Maintain buy at RM11.64, with fair value of RM13: Public Bank remains on track to achieve an expansion in loans of 14%-15% for the financial year ending Dec 31, 2010 (FY10), we gathered from our recent meeting. Internally, it expects industry loan growth to pick up 8%-10% for 2010, from 7.8% in 2009.
Growth areas are still mortgages and small and medium enterprises, with targeted loan growth of 15% for both as well as auto loans (targeted 10%-12% growth).
In terms of fixed deposit rates, last week it adjusted upwards its one-year fixed deposit rates to 2.75%, from 2.6% it set on March 10 (previously 2.5%).
Public Bank clarified that there is no minimum requirement set by the regulators in terms of fixed deposits this time around. The main reason for its adjustment upwards in terms of pricing its one-year fixed deposit rates was due to its strategy to grow its deposit base.
As for net interest margin (NIM), Public Bank hinted that NIM is likely to expand on back of its latest rate increase. The guidance is now more positive then previously - the company indicated that it expects NIM to remain stable.
Loan loss provisioning is expected to have peaked in FY09, given that of RM397milliom in specific loan loss recorded in FY09, RM265 million was related to overseas operations, stemming mainly from its Hong Kong (HK) and Cambodia side. Cambodia was affected by more stringent regulation, while HK is expected to have stabilised.
Public Bank remains confident of achieving an ROE (return on equity) of 30% in three years' time. In addition, it remains committed to a dividend payout of 50% to 55%.
From our latest company visit, we expect to tweak upwards our forecasts to take into account higher loan growth outlook. We remain positive on Public Bank and maintain our buy recommendation with an unchanged fair value of RM13 a share.
Catalysts for the stock are; consistent dividend payout, better-than-expected loan growth; and higher-than-expected ROE. - AmResearch, March 24
This article appeared in The Edge Financial Daily, March 25, 2010.
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