PETALING JAYA: Public Bank Bhd
’s earnings are expected to be cushioned by the bank’s strong non-interest income (NOII) business despite heightened competition among banks as well as funding cost pressures.
Kenanga Research expects the bank to see a lower loan growth target of 4% to 5% for the financial year ending Dec 31, 2026 (FY26), citing persistent competition in financing markets. It noted continued funding cost pressures to potentially compress net interest margin (NIM) by up to mid-to-single-digit basis points (bps).
Mitigating this, the research house said the bank targeted a larger small and medium enterprise profile within its acceptable risk tolerance.
The research house said the bank’s NOII trajectory appears to be positive, with its unit trust and treasury businesses hoping to benefit from healthier market activities and with LPI Capital Bhd delivering sustainable returns from its general insurance business.
Conservatively, the bank eyes a return on equity for FY26 of 12% to 13%, it said.
Kenanga Research said the bank has guided for dividend payouts to remain at least at 60%. It has maintained an “outperform” call on the bank with a target price (TP) of RM5.75 per share.
CIMB Securities Research has increased FY26 and FY27 earnings forecasts by 1.2% and 2.2%, respectively, as it trims its NIM assumptions from 2.15% to 2.19% to 2.08 bps to 2.10 bps.
It has also raised NOII assumptions by 15% to 20%.
The research house has reiterated a “buy” call on the bank, while lifting its TP to RM5.50 from RM5.05 previously.
