Stock Name: PBBANK
Company Name: PUBLIC BANK BHD
Research House: KENANGA
Company Name: PUBLIC BANK BHD
Research House: KENANGA
Kenanga Research expects Public Bank Bhd's outlook for 2011 to remain positive as the bank is well positioned to meet the challenges of a rising interest rate, low duration bond book and least asset risks.
The research firm said the bank's management has started managing its interest rate risk with the aim of growing fees income by 30 per cent year-on-year in financial year 2011.
"We believe the driver of earnings growth has shifted to fee incomes, instead of interest incomes previously," Kenanga Research said in a research note today.
"We believe non-interest income will focus on retail-driven fee growth and product expansion, with perhaps a better year for bancassurance and fund management," it added.
Kenanga Research has upgraded its rating for Public Bank to "buy" from "hold" previously and raised the target price to RM14.80.
"We believe this is justified due to its track record on earnings growth and high return on equity (RoE) target," it said.
Research firms, ECM Libra and AmResearch, have maintained their "hold" recommendation on Public Bank.
"We maintain our hold call but raise our target price to RM14.20 from RM13.30, as we rollover our valuations, to end current financial year 2011.
"Going forward, we are cautious on earnings and loans growth prospects which may be dampened by the rising loan-deposit ratio, as well as the need to preserve capital under new Basel III rules," ECM Libra said.
AmResearch is maintaining its "hold" recommendation on Public Bank with an unchanged fair value of RM14.30 per share.
The research firm said, while Public Bank has turned in a good performance, it still believes the stock will likely be traded in accordance with its dividend.
"We think the stock will rerate only on a significantly stronger-than-expected dividend.
"We also expect the dividend to continue to rise, but by a marginal pace as seen in financial year 2010, as core equity ratios will likely limit the upside to dividends," it explained.
Another research firm, MIDF Research, has maintained its neutral recommendation on Public Bank considering the upside for the stock is less than 15 per cent.
The research firm also maintained the target price for the bank at RM13.90.
Public Bank has posted a record pre-tax profit of RM4.086 billion for the year-ended Dec 31, 2010, an increase of 23 per cent from the RM3.321 billion registered in 2009.
The profit was achieved over a bigger revenue of RM11.035 billion achieved last year against the RM9.715 billion chalked up previously.
Its stellar performance was driven by the strong growth in net interest and finance income and higher non-interest income coupled with lower loan impairment allowances.
-- BERNAMA
The research firm said the bank's management has started managing its interest rate risk with the aim of growing fees income by 30 per cent year-on-year in financial year 2011.
"We believe the driver of earnings growth has shifted to fee incomes, instead of interest incomes previously," Kenanga Research said in a research note today.
"We believe non-interest income will focus on retail-driven fee growth and product expansion, with perhaps a better year for bancassurance and fund management," it added.
Kenanga Research has upgraded its rating for Public Bank to "buy" from "hold" previously and raised the target price to RM14.80.
"We believe this is justified due to its track record on earnings growth and high return on equity (RoE) target," it said.
Research firms, ECM Libra and AmResearch, have maintained their "hold" recommendation on Public Bank.
"We maintain our hold call but raise our target price to RM14.20 from RM13.30, as we rollover our valuations, to end current financial year 2011.
"Going forward, we are cautious on earnings and loans growth prospects which may be dampened by the rising loan-deposit ratio, as well as the need to preserve capital under new Basel III rules," ECM Libra said.
AmResearch is maintaining its "hold" recommendation on Public Bank with an unchanged fair value of RM14.30 per share.
The research firm said, while Public Bank has turned in a good performance, it still believes the stock will likely be traded in accordance with its dividend.
"We think the stock will rerate only on a significantly stronger-than-expected dividend.
"We also expect the dividend to continue to rise, but by a marginal pace as seen in financial year 2010, as core equity ratios will likely limit the upside to dividends," it explained.
Another research firm, MIDF Research, has maintained its neutral recommendation on Public Bank considering the upside for the stock is less than 15 per cent.
The research firm also maintained the target price for the bank at RM13.90.
Public Bank has posted a record pre-tax profit of RM4.086 billion for the year-ended Dec 31, 2010, an increase of 23 per cent from the RM3.321 billion registered in 2009.
The profit was achieved over a bigger revenue of RM11.035 billion achieved last year against the RM9.715 billion chalked up previously.
Its stellar performance was driven by the strong growth in net interest and finance income and higher non-interest income coupled with lower loan impairment allowances.
-- BERNAMA
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