Public Mutual, a unit of Public Bank, is Malaysia
KUALA LUMPUR: AmInvestment Research is maintaining its Buy call on Public Bank with an unchanged fair value of RM22.20 a share.
It said on Friday this is based on a target price-to-book value (P/BV) ratio of 2.1 times, implying anFY18 return on equity (ROE) of 14.0%.
“Public Bank reported a core net profit of RM1.41bil (+5.5% -on-quarter; +13.5% -on-year) in 3QFY17.
“9MFY17 earnings of RM3.99bil (+7.0% -on-year) were within expectations, accounting for 75.7% and 75.6% of our and consensus estimates respectively. 9MFY17 annualised ROE was 15.1% against our expectation of 14.6% for FY17,” it said.
AmInvestment Research said loan growth moderated in 3QFY17. The group’s loans (domestic and overseas) grew 4.5% -on-year, slower than the first two quarters of FY17.
Domestic loan growth continued to slip for the fifth consecutive quarter to 4.8% on-year. Annualised year-to-date growth of its loans in Malaysia remained ahead of the domestic industry's growth rate.
Overseas loan growth continued to trend lower to 1.8% on-year, underpinned by a slowdown in Hong Kong, China and Cambodia's loans.
In 3QFY17, there were smaller upticks in impaired loans by 0.8% on-quarter compared to 2.3% on-quarter in the preceding quarter.
New impaired loans formation in 3QFY17 was lower than in 2QFY17. The group's loan loss cover stabilised at 98.2% after falling below 100.0% in 2QFY17.
“We continue to be comforted by the group's large regulatory reserves of more than RM2bil. Including regulatory reserves, loan loss cover would be above 200.0%.
“The group's overall gross impaired loans ratio remained steady at 0.5% vs. the domestic industry's 1.7%. Common equity tier one ratio was 11.7% at group level. No dividend has been proposed in 3QFY17,” it said.
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