KUCHING: Public Bank Bhd (Public Bank) has pegged its domestic loan growth of 12 per cent as sustainable for 2013 while the group loan base is expected to expand at around 10 per cent to 11 per cent due to slower growth from overseas operations.
According to RHB Research Institute Sdn Bhd (RHB Research), Public Bank’s net interest margin (NIM) would remain under pressure as higher yielding loans were rolled-off the loan book as the bank was sticking to its NIM guidance compression of around 15 basis points (bps) this year and 10 bps for 2013.
In terms of capital requirments, the bank continued to have a more conservative stance given the lack of clarity in terms of the quantum of counter-cyclical capital buffer that Bank Negara Malaysia (BNM) might require banks to hold.
The research firm noted that there was no plan for Public Bank to adopt a dividend reinvestment plan (DRP) at this juncture as the group had a more diverse shareholding structure.
“Should there be a shortfall in capital requirments, the preferred option is still to raise fresh equity. Thus, we suspect management is likely to keep the dividend payout conservative,” added the analyst.
On the potential reduction in car prices resulting from a possible review of the tariff and tax structures for the automotive industry, the group opined that chances were low and did not expect this to have a significant impact on the group.
RHB Research said that Public Bank’s hire purchase portfolio stood at RM40.5 billion or 21.7 per cent as at the end of June 2012. The analyst pegged Public Bank’s stock price at a fair value of RM17 per share based on 14 times financial year 2013 earnings.