PETALING JAYA: Public Bank Bhd
’s results for the third quarter of this year (3Q25) came in within analysts’ expectations but several research houses trimmed their earnings targets for the bank marginally.
Kenanga Research said it was trimming its forecasts for the bank for this year and next year by 1% after the results announcement.
RHB Research said it trimmed its forecasts for profit after tax and minority interests for this year through to 2027 by 2%, 1% and 1% respectively, on some fine-tuning after PBB’s results release.
In 3Q25, Public Bank posted a net profit of RM1.84bil, or 9.54 sen per share, compared with RM1.91bil, or 9.85 sen, in the same quarter a year ago.
Kenanga Research said Public Bank is maintaining its targets for this year, the key ones being loan growth at 5% to 6% and net interest margin (NIM) compression at mid-to- high single digits.
Meanwhile, its return on equity (ROE) target had been refined to 12.5% to 13% from 13%, possibly weighed by pressures from NIMs while the group’s strong loans growth momentum above the industry average of 5.5% is expected to be supported by commercial mortgages and vehicle financing products, the research house said.
The group does not anticipate meaningful impact from the abolishment of the Rule of 78 interest calculation method in Malaysia for new hire-purchase loans starting year, the research house added.
Kenanga Research said, with regards to NIMs, Public Bank anticipates seasonal year-end competition for deposits to continue pressuring funding costs.
According to the research house, Public Bank said that NIMs should only improve towards 2Q26 following the maturity of most of its fixed deposits, with 85% of its fixed and money market deposits due within six months as of 3Q25.
“Based on our model assumptions, we anticipate a further five basis point NIM compression to occur next year, attributed to comparatively lower asset yields in a softer interest rate environment,” Kenanga Research said.
RHB Research said that the bank revealed in a management briefing that in 3Q25, the group wrote back another RM68mil of management overlays, bringing the year-to-date total to about RM300mil, leaving a remainder of about RM1bil.
“While the ROE target was revised downwards, all other targets for this year were unchanged, namely loan growth of 5% to 6% and single-digit credit costs.”
It also kept its dividend payout ratio target of about 60%, which implies a higher payout from the second half of this year’s profits, RHB Research said.
“On NIM, management does not expect medium-term NIM (12 months from the overnight policy rate cut) to exceed the pre-reduction level of 2.18%, citing continued competitive pressure on asset yields and deposit costs,” the research house added.
“In mitigation, the bank will continue emphasising loan growth in more profitable segments such as small and medium enterprises over mortgages, while stepping up cross-selling initiatives between lending and non-interest income products such as unit trusts, bancassurance, general insurance,” the research house said.
For the first nine months of this year, Public Bank posted a flat net profit of RM5.35bil, while revenue rose 9.62% to RM22bil from RM20bil a year earlier.
