PETALING JAYA: Public Bank Bhd
’s (PBB) dividend payout is likely to be largely intact despite the impact of a goodwill impairment on its upcoming fourth-quarter results for the period ended Dec 31, 2024 (4Q24).
Maybank Investment Bank (Maybank IB) Research noted that PBB’s 4Q24 results, due to be released on Feb 26, will be affected by the goodwill impairment at its 73.2%-owned Public Financial Holdings (PFH).
However, the net impact is likely to be manageable, buffered in part by ongoing write-backs in management overlays.
“Moreover, we expect the group’s dividend payout to be largely intact,” the research house told clients in a report yesterday.
Maybank IB Research has a “buy” call on the bank with an unchanged target price of RM5.20 per share on a 2025 price-to-book value of 1.7 times.
PBB shares closed 0.23% higher to RM4.32 yesterday, giving it a market value of almost RM84bil.
Maybank IB Research noted that PFH recently reported a loss of RM581mil for financial year 2024 (FY24).
Baked into the accounts was a goodwill impairment of RM471mil; without this, PFH would have made a loss of RM110mil, it said.
“The impairment takes the carrying value of the goodwill at PFH down to RM1.12bil, from RM1.58bil, and was derived after evaluating the cashflow generating capabilities of the subsidiaries,” it added.
Maybank IB Research stated that PBB’s share of the RM581mil loss amounted to RM425mil, which represented a 6% impact on its FY24 earnings.
“Excluding the one-off goodwill impairment, PFH’s loss would impact our PBB group forecast by just 1.1%.
“PBB group still has management overlays of RM1.5bil and ongoing credit writebacks could serve to partially buffer the loss from PFH, in our view,” it said.
Maybank IB Research said PBB maintains a progressively higher dividend policy, which is not likely to be impacted for FY24, given the adequacy of its capital base.
The bank’s group Common Equity Tier 1 ratio was estimated at about 14% post-LPI Capital Bhd acquisition.
“We forecast a dividend per share (DPS) of 21 sen for FY24 against 19 sen in FY23, on a dividend payout ratio of 58% against 56% in FY23. If it were to maintain its FY23 DPS of 19 sen, the yield on the stock would be 4.4%,” it said.
