Thursday 28 Mar 2024
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KUALA LUMPUR (Aug 15): CGS-CIMB Research has maintained its “Hold” rating on Public Bank Bhd (PBB) at RM20.80 with a lower target price of RM22.30 (from RM23.60) and said PBB’s 1H19 net profit at 48% of house full-year forecast was below expectations as the research house anticipates weaker 2H19 due to margin contraction.

In a note Aug 14, the research house said PBB’s 1H19 net profit slid 2.1% year-on-year (y-o-y) due to a 1.2% y-o-y decline in net interest income, arising from a 13 basis points y-o-y contraction in net interest margin.

“Despite the reasonable valuation, PBB remains a Hold due to concerns over margin erosion, partly due to the OPR cut.

“Also, we are projecting a 1.2% drop in its FY19F net profit, impacted by margin contraction. However, we think that it is fairly valued at a CY20F P/E of 14x, below the 5-year historical average of 14.3x,” it said.

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