Quick take: Public Bank falls 1.4% amid weak market sentiment

KUALA LUMPUR: Shares in PUBLIC BANK BHD fell 1.4% in early trade Thursday after the group reported a lower net profit in the second quarter ended June 30, amid weakness in the market.

The banking group fell 1.44%, or 30 sen to RM20.50 with 3.14 million shares traded. PBBank-C30 declined 50% to 0.5 sen to 0.5 sen.

Public Bank posted a lower net profit of RM1.33bil in the second quarter ended June 30, 2019 due to the 25 basis points cut in the Overnight Policy Rate (OPR) in May despite stronger loan growth.

Its net profit declined by 4.5% from RM1.396bil a year ago. Its pre-tax profit fell by 1.5% to RM1.730bil from RM1.757bil.

Public Bank has also declared an interim dividend of 33 sen a share totalling RM1.28bil.

In the second quarter, the bank’s revenue rose by 2.9% to RM5.598bil from RM5.436bil.

For the first six months ended June 30, 2019 (1HFY19), Public Bank recorded pre-tax profit of RM3.55bil similar to the previous corresponding period.

Net profit attributable to shareholders stood at RM2.74bil versus RM2.80bil a year ago. Its revenue rose by 3.5% to RM11.166bil from RM10.785bil.

MIDF Research said Public Bank’s Earnings in 1HFY19 earnings in the first half was within its expectations.

“The group saw its 1HFY19 net profit slightly down by -2.1% year-on-year due to lower net interest income.

“However, this was still within ours and consensus’ expectations coming in at 48.1% and 47.9% of respective full year estimates,” MIDF said.

The research house said for 1HFY19, NII fell 1.2% year-on-year as it was impacted by the OPR cut in May’19 resulting in a 13 basis points NIM compression.

Evidently, MIDF said 2QFY19 NII fell 1.5% year-on-year and 1.5% quarter-on-quarter due to higher interest expense as the group could not reprice its fixed deposits until maturity.

“We are tweaking slightly our FY19 and FY20 earnings forecast downwards by 1.0% and 1.2% respectively.

“However, we have to clarify that this is due to housekeeping rather than anything else,” MIDF said.

The research house has maintained its “buy” call for the stock with a lower target price of RM24 from RM27.20 previously.

Source: TheStar