KUCHING: Public Bank Bhd’s (Public Bank) first half of financial year 2017 (1HFY17) earnings were within analysts’ expectations, with some maintaining a moderate outlook on the bank for this year.
The bank’s 1HFY17 earnings were within expectations of the research arm of MIDF Amanah Investment Bank Bhd (MIDF Research),coming in at 48.5 per cent and 47.2 per cent of its and consensus’ estimates respectively.
The research arm of Kenanga Investment Bank Bhd (Kenanga Research) also noted that there were no surprises with the group’s first six months of 2017 (6M17) core earnings of RM2.58 billion which came in within expectations, accounting for 49 per cent of both its and consensus estimates.
A dividend per share (DPS) of 27 sen was declared as expected by Kenanga Research.
With Public Bank’s gross loans growth steady at 5.3 per cent year on year (y-o-y) to RM298.5 billion, MIDF Research noted that the main contributor for the loans growth was from housing loans and corporate loans.
“We understand that main contributor to mortgage growth was from affordable housing where we believe demand will continue.
“We also understand that mortgage approval growth came from both in terms of volume and value,” the research arm said.
MIDF Research opined that this will give a steady pipeline for loans growth in 2HFY17.
“Conversely, hire purchase loans fell two per cent y-o-y to RM51.3 billion,” it said. “However, this was within our expectations given the previous lower demand and more cautious approach to lending for thissegment by the group.”
That said, with demand and approvals improving, the research arm expected some recovery in 2HFY17. In MIDF Research’s opinion, a key appeal of Public Bank lies in its good asset quality.
The research arm noted that this has not changed given gross impaired loan (GIL) ratio remaining stable at 0.5 per cent.
“It was also stable for all major loans segment,” the research arm said.
MIDF Research highlighted that Public Bank appears to be on track to achieve the group’s FY17 target.
“Only exception is loans growth, where the annualised growth was 3.1 per cent y-o-y in 1HFY17. This was due to weakness in its overseas market and hire purchase loans segment. As such, management is revising its loans growth target to four to five per cent,” the research arm said.
Nevertheless, the research arm was optimistic of the prospect of Public Bank sustaining the group’s earnings growth for this year.