Public Bank's share price continues record run

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KUALA LUMPUR (Feb 23): Shares in Public Bank Bhd jumped 32 sen this morning to scale another record high of RM22.60, as its margin expansion impressed investors.

At 11.27am, the counter was trading at RM22.56, still up 28 sen or 1.26%, claiming the fourth spot on Bursa Malaysia's top gainers list. A total of 2.83 million shares were done, bringing it a market capitalisation of RM87.50 billion.

Yesterday, the banking group announced a net profit of RM1.49 billion for the fourth quarter ended Dec 31, 2017 (4QFY17), up marginally from RM1.48 billion a year ago. Revenue grew 5.2% to RM5.35 billion, from RM5.08 billion previously.

It declared a second interim dividend of 34 sen per share for the financial year ended Dec 31, 2017 (FY17), payable on March 23, bringing total dividends for the year to 61 sen per share or a total of RM2.36 billion, which represents 43.1% of the group's net profit for 2017.

For the full FY17, the group's net profit increased 5.1% to RM5.47 billion from RM5.21 billion a year ago, while revenue rose 3.8% to RM20.86 billion from RM20.1 billion.

"Despite the weaker loan growth, Public Bank's net interest income expanded by a healthy 7.2% in FY17, underpinned by the 8 basis points expansion in net interest margin (NIM) to 2.28% in FY17." said CIMB research analyst Winson Ng in a note this morning.

Analysts have raised Public Bank's earnings forecasts and target price to factor in the recent interest rate hikes.

TA Securities raised Public Bank's target price to RM27.30 from RM25.10 as it revised upwards profit forecast on the group, reiterating its "buy" recommendation on the stock.

Affin Hwang too reaffirmed its "buy" rating on Public Bank, raising its target price to RM24.50, from RM24 previously. Similarly, MIDF Research revised its target price to RM25.70, up from RM23.50 previously, as it maintained its "buy" call on the stock.

"For 2018, we expect a fund-based income growth of 10% year-on-year, coupled with a five to six basis points NIM improvement year-on-year to 2.33%," said Affin Hwang analysts Tan Ei Leen and Syazwan Sobri.

Meanwhile, Kenanga Research revised Public Bank's FY18 estimated earnings by 4% to RM5.64 billion, and its target price upwards to RM22.35, from RM21.45 previously. It maintained its "market perform" call on the counter.