KUALA LUMPUR: AmBank Research has upgraded Public Bank Bhd (PBB) from a “hold” call to a “buy” with a higher fair value of RM22.30/share based on PBB's encouraging 1Q2017 financial performance, announced yesterday.
"For FY18, we expect the group to achieve a return-on-equity (ROE) of 14.3 per cent, which is still higher than the sector average ROE of 10 to 11 per cent. PBB reported a marginally higher core net profit of RM1.25 billion (up 1.5 per cent YoY) in 1QFY17.
"The rise in earnings was mainly driven by higher net interest income (NII) and Islamic banking income, partially offset by higher overhead expenses and lower non-interest income from a drop in investment income and FX profit.
"Earnings in 1QFY17 were within expectations, making up 23.2 per cent and 23.8 per cent of our, and consensus estimates, respectively, for FY17 net profit," AmBank Research said in its report today.
The research house said the bank continues to stay ahead of the domestic industry's growth rate.