KUALA LUMPUR (Feb 27): Hong Leong Investment Bank Research (HLIB Research) has raised its target price for shares of Malayan Banking Bhd (Maybank) to RM10.50, from RM10.20 previously, but maintained its hold call on the stock.

In a note today, HLIB Research analyst Chan Jit Hoong said the premium given to the stock is reasonable, considering its regional exposure and leadership in Malaysia's banking scene as well as being a major player in the global Islamic banking space. He also pointed to Maybank's superior dividend yield of about 6%.

After Maybank announced record high net profit for financial year ended Dec 31, 2018 (FY18) yesterday, HLIB Research revised up its 2019-2020 net profit forecasts by 2% to reflect a lower net credit charge (NCC).

"We see the need to further build up liquidity buffers as loan-to-deposit ratio (LDR) is elevated at 93%. In turn, net interest margin (NIM) pressure is expected to persist," Chan said.

"While for loans, we predict growth to be at a slower clip of 3-4% in 2019-2020 given challenging economic climate. That said, asset quality is not anticipated to wane but we incorporated a higher 2019-2020 NCC of 40-42 basis points into our estimates (2018: 32 bp) as a more normalised run-rate," he added.

Meanwhile, CIMB IB Research analyst Winson Ng opined that the stock is fairly valued and hence maintained his hold call with an unchanged target price of RM9.85.

"On a positive note, the share price is supported by an attractive projected dividend yield of 5.8% for FY19F. We prefer RHB Bank for exposure to Malaysian banks," he said.

At 12.10pm, Maybank was trading up 5 sen or 0.52% at RM9.60 after 5.19 million shares traded so far.