PETALING JAYA: Public Bank Bhd
’s overall results are in line with expectations, with year-to-date (y-t-d) earnings representing around 23% of analysts’ full-year forecast.
TA Research said in a report that, on a sequential basis, net profit slipped 6.6%, underpinned by a softer top-line growth and loan loss allowances amounting to RM52.1mil, versus a writeback in the fourth quarter of of financial year 2025 (4Q25).
The annualised return on equity (ROE) stood at 12%, compared with 12.5% in financial year ended Dec 31, 2025 (FY25), it noted.
Public Bank’s net profit for the 1Q26 ended March 31, 2026, was RM1.75bil, unchanged from the same quarter a year earlier.
TA Research maintained its “buy” call on the lender and said, as anticipated, net interest margin (NIM) declined by four basis points (bps) y-t-d to 2.11%, amid intense market competition.
On a quarterly basis, NIM slipped by a marginal one bps, it noted, adding that on the funding side, the bank’s total deposits grew at a stronger pace of 5.3%.
While demand deposits declined by 0.2%, savings deposits climbed 5.9%, and money market deposits surged 22%, it said, adding that fixed deposits also rose by about 2.2%.
Public Bank’s market share in customer deposits expanded to 16.5%, from 16.4% in FY25, it added.
Moving forward, NIM is expected to see modest sequential compression in the coming quarters, reflecting competitive pressures and softer lending yields.
“However, full-year compression should remain within management’s mid-single-digit guidance, supported by active balance sheet management, including optimisation of the loan and deposit mix and diversification of funding sources,” it said.
On earnings drivers, TA Research said non-interest income is expected to be the key growth lever, with management targeting double-digit expansion.
While 1Q performance was weighed down by treasury volatility, foreign-exchange movements and geopolitical tensions in the Middle East, a recovery is anticipated in subsequent quarters, led by stronger contributions from unit trusts and bancassurance.
The research house added management remains confident of achieving its FY26 ROE target of 13%.
RHB Research, which also maintained its “buy” call, said Public Bank’s 1Q26 results were broadly within expectations.
It noted that Public Bank had unveiled its plan to return the 1%-point capital uplift (circa RM3.5bil) from the upcoming Basel III reforms to shareholders over a three-year period.
This will be in addition to its ordinary dividend payout, which was retained at 60%, the brokerage said.
The research house also noted that management plans to adopt a balanced approach in returning the excess capital over this period, and it expects the first special dividend could be declared in the 4Q26 results.
The lender also guided for a 70-bps impact to ROE from this initiative, it said.
As for the share buyback programme, this forms part of the lender’s long-term capital management plan and should be viewed separately from the RM3.5bil capital return.
Lastly, Public Bank estimates that its exposure to sectors potentially vulnerable to the Middle East situation is about 1% of total loans, and it believes customers in these segments remain resilient, with no issues noted so far, RHB Research added.
Hong Leong Investment Bank, meanwhile, said that factoring in FY25 audited earnings, it has recalibrated its FY26 and FY27 earnings projections lower by 2.2% and 1.2%, respectively.
The research house also introduced its FY28 earnings estimates, implying 5.9% year-on-year earnings growth.
