KUALA LUMPUR (April 2): Hong Leong Investment Bank (HLIB) Research has turned bullish on Malayan Banking Bhd (Maybank) after the banking stock lost some 3% of its share price following Bank Negara Malaysia indicating a more dovish stance on March 20, with the research house believing the market has adequately priced in risks.

This includes the potential impact from a cut in the overnight policy rate (OPR), which HLIB Research estimates could reduce Maybank's earnings by 2% to 3%.

"Since group figures were used in our sensitivity analysis, actual impact is likely to be lower. This makes Maybank one of the least impacted lenders in the event of an OPR cut," HLIB Research analyst Chan Jit Hoong wrote in a note today.

Meanwhile, the risk of more provisions for Hylux Ltd, for which there is an outstanding unprovisioned amount of S$552 million, is not seen as a major concern and the newsflow has been less eventful, he said.

The research house has maintained its target price of RM10.50 for the stock, upgrading it to a 'buy' from 'hold' today.

At 10am, shares in Maybank were up 4 sen or 0.43% at RM9.24.

HLIB Research raised its 2019 and 2020 financial year forecasts for Maybank by 2% after incorporating higher Islamic banking contribution.

"We initially factored in a low growth assumption of 3% but have revised it up to 11% as we see preferential push for more Islamic banking services," Chan wrote.

On top of that, Maybank is seen as a better candidate for a dividend pay, as it offers a superior dividend yield of 6%, some 2 percentage points higher than its peers, HLIB Research said. The research house views the group as being less susceptible to a foreign equity sell-off as it is relatively under-owned compared to its peers.