Public Bank's Q1 below forecast, but dividend impact likely marginal
KUALA LUMPUR: Public Bank Bhd's core net profit for the first quarter ended March 31, 2025 (Q1) came in below expectations at RM1.75 billion due to the decline in non-interest income and a more normalised loan loss provision.
CIMB securities Research said Public Bank Bhd's annualised Q1 net earnings came in 3.8 per cent and 6.8 per cent below the firm's and consensus forecasts, respectively, mainly owing to softer-than-expected net interest income.
However, the firm said this is not unusual as Q1 is typically a shorter quarter.
"Q1 earnings accounted for 24.1 per cent and 23.3 per cent of our and consensus full-year forecasts, respectively," it said in a note.
At its results briefing, CIMB Securities said Public Bank indicated that its exposure to trade-related loans, including the exports and imports and logistics segments, stands at 2.0 per cent of domestic loans, and 3.0 per cent of total group loans.
"The company hinted that it is still too early to provide an estimate on the impact from the US tariffs, but confirmed that most of its customers are primarily focused on domestic operations and are expected to remain quite resilient.
"Consequently, it is maintaining its credit cost guidance at a low single- digit level," it said.
CIMB Securities said that even if Public Bank's credit costs were to rise to the Covid-19 pandemic peak of 33 basis points and the central bank were to implement two policy rate cuts of 25 basis points each, the impact on its dividend would be minimal.
Under such a scenario, the forecast for dividend per share may be downgraded by only one sen from 21.5 sen currently to 20.5 sen.
However, the firm noted that the bank's dividend yield remains quite decent at 4.6 per cent for financial year 2025 even under this scenario.
"We maintain 'Buy' on Public Bank with an unchanged target price of RM5.10. Dividend yield is expected to remain decent, even in a more stressed scenario," it added.
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