Public Bank Berhad - 4QFY24 results: Hire Purchase Loans to Drive Growth
Thu, 27-Feb-2025 07:25 am
by Samuel Woo • Apex Research

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PBBANK (1295)

Target Price (RM)

5.430

Recommendation

Buy

Summary

  • PBK’s 4QFY24 core net profit jumped +11% yoy and fell -6% qoq to RM1.80bn, bringing FY24 core net profit at RM7.15bn, which was deemed within expectations, accounting for 101% and 101% of our and consensus expectations, respectively.

  • Management’s tone: Neutral.

  • Re-iterate our BUY recommendation with a higher target price of RM5.43, based on FY25F GGM-PBV of 1.71x.

 

Results within expectations. FY24 core net profit at RM7.15bn (+7% yoy) came within expectations, accounting for 101% of our core net profit forecast at RM7.11bn and was at 101% of consensus forecasted net profit of RM7.06bn.

 

YoY. 4QFY24 core net profit jumped +11% yoy to RM1.80bn, driven by improved NII and NOII performance, as well as better provisioning. This offset heavier OPEX, tax and provisioning expenses. FY24 core net profit jumped +7% to RM7.15bn, largely driven by improved NII, NOII and Associate incomes offsetting higher OPEX and provisioning.

 

QoQ. 4QFY24 core net profit fell by -6% qoq primarily due to higher “other” provisions.

 

Outlook. Some notes on loan outlook: Management expects to see weaker growth in the residential property segment (which has been steadily weakening in the last two years). It expects better SME and hire purchase loan segments to offset this weakness. Management expects a 7 -8% loan growth for the hire purchase loan segment. Also, the Group is expecting stable to low-single-digit compression in NIM for FY25.

 

Earnings Revision. We increase FY25F and FY26F earnings forecasts by +1.7% and +7.6% respectively, to account for higher loan growth and additional contributions by LPI.

 

Valuation. Re-iterate our BUY recommendation on PBK with a higher target price of RM5.43, based on an FY25F P/BV of 1.71 GGM-PBV valuation and +1% ESG factored premium based on 4 star ESG rating. The increased target price incorporates higher earnings forecasts as well as our newly added ESG premium.

 

Risks. (1) NIM compression, (2) Weaker-than-expected loan growth, (3) Poor NOII performance.

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