April 19, 2011

PBBANK - Analysts bullish on Public Bank

Stock Name: PBBANK
Company Name: PUBLIC BANK BHD
Research House: KENANGA

Public Bank Bhd remains well-positioned to meet the challenges of rising interest rates, backed by a low duration bond portfolio and lower asset risks, says Kenanga Research.

In fact, a rate hike will increase the bank's net interest income given the higher growth rates of loans and low-cost deposits, it said in a research note today.

"Moreover, management has started managing its interest rate risk with the aim of growing the fee-based income by 30 per cent year-on-year for financial year 2011, via stronger contributions from bancassurance and fund management," it added.

Kenanga Research has rated Public Bank an "outperform" with a target price of RM14.80.

Another research firm, HwangDBS Vickers Research expects Public Bank to continue to steer towards growing non-interest income, particularly bancassurance, supported by forex income.

The research firm believed the bank's unit trusts sales would remain the main driver of non-interest income for now.

HwangDBS Vickers has maintained its "hold" recommendation on the bank with target price of RM13.10.

AmResearch also maintained its "hold" recommendation on Public Bank with an unchanged fair value of RM14.30 per share.

For the first quarter ended March 31, 2011, Public Bank Bhd's pre-tax profit rose 19 per cent to RM1.097 billion from RM922.57 million in the same quarter 2010.

Its revenue jumped to RM2.99 billion from RM2.507 billion previously. -- Bernama

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