KUALA LUMPUR: Public Bank Bhd's earnings in the second quarter ended June 30, 2024 (Q2 2024) came in two per cent above CIMB Securities' forecast and one per cent above consensus full-year forecast of RM6.94 billion.
The bank's first half of 2024 (1H24) earnings accounted for 50.2 per cent of the research firm's and 49.5 per cent of consensus forecasts for financial year 2024 (FY24).
"The company declared an interim net dividend per share of 10 sen for 1H24, better than 1H23's nine sen and above our forecast of an interim dividend of nine sen," it said.
The bank's loan growth of six per cent in Q2 2024 exceeded the research firm's forecast of 5.6 per cent and was at the upper end of the bank's targeted five per cent to six per cent range for FY24.
This was driven by stronger growth in auto and residential mortgages.
Net interest margin (NIM) declined 2 basis points (bps) to 2.19 per cent in Q2 2024, from 2.21 per cent in Q1 2024, which was due to increasing competition on lending yield, but the company indicated that it is now in the midst of repricing its deposit lower.
"We are now lowering our cost of funds projections, assuming fixed deposit promotion rates will come off by 40 bps from 2H24 onwards.
"This means there is a half-year impact in FY24, while the full-year impact will be reflected from FY25 onwards, given the company's December financial year-end," it said.
CIMB Securities lifted its NIM assumption by 5 bps FY24 and 9 bps FY25, while net earnings are upgraded by 2.0 per cent FY24 and 7.0 per cent FY25.
"Our ROEs are upgraded up by 0.3ppt to 12.5 per cent (from 12.2 per cent previously) FY24F, and 0.6ppt to 12.7 per cent from 12.0 per cent FY25F," it said.
CIMB Securities maintained 'buy' on the stock with a higher target price of RM5.50 from RM4.80 previously.