Company Name: MALAYAN BANKING BHD
Research House: CIMB
KUALA LUMPUR: CIMB Equities Research said MALAYAN BANKING BHD  surprised the market for the third straight quarter with a spectacular 3QFY6/10 net profit of RM1.03bn. It said on Friday, May 14 this pushed up 9MFY10 net profit to RM2.91bn or 80% of our full-year forecast and 86% of consensus. The variance came mainly from stronger-than-expected non-interest income. Loan growth moderated from 7.2% on-year in December 2009 to 5.9% on-year in March 2010 but net NPL ratio improved from 1.43% in December 2009 to 1.23% in March 2010. "Factoring in higher non-interest income, we up our EPS forecasts by 2-6% and our target price from RM8.35 to RM8.50, still pegged to a 5% premium over its DDM value. "Despite the strong results and favourable earnings outlook, we remain NEUTRAL due to its CY11 P/E of 11.9x vs. 10.7x for the sector and its ROE of 14.7%, which is still below the industry's 16.1%," it said. "We are also concerned about the slowdown in loan growth in Singapore. For exposure to big-cap Malaysian banks, we prefer Public Bank," it said.