Public Bank faces limited impact from RM90mil NFC lawsuit
KUALA LUMPUR: Public Bank Bhd is expected to face limited impact from its ongoing lawsuit, despite recent weakness in its share price, according to CIMB Securities Sdn Bhd.
The decline in share price is likely linked to recent news of its legal liabilities, alongside prevailing macroeconomic uncertainties.
According to news reports, Malaysia's highest court has found Public Bank liable for RM90 million in damages to National Feedlot Corporation, its chairman Datuk Seri Mohamad Salleh Ismail, and three other entities.
The lawsuit involves allegations that Public Bank disclosed confidential information about the plaintiffs' accounts and a proposed property purchase at KL Eco City. A former bank clerk was implicated in the leak.
On June 18, the Federal Court awarded RM90 million in damages to the National Feedlot Corporation after dismissing Public Bank's appeal on May 26.
The three-member bench comprised Chief Judge of Malaya Tan Sri Hasnah Mohammed Hashim, Chief Judge of Sabah and Sarawak Tan Sri Abdul Rahman Sebli, and Federal Court judge Datuk Abu Bakar Jais.
The panel ordered Public Bank to pay RM30 million each in equitable, exemplary, and aggravated damages.
"We anticipate limited impact from the lawsuit. We maintain a Buy rating on PBB, as its dividend yield is expected to remain decent," the firm said in a note.
CIMB Securities has also maintained an unchanged target price of RM5.10 on the stock.
The firm pointed to the bank's resilient asset quality and the potential for a decent dividend yield, supported by the release of capital under Basel III changes set to take effect in 2026.
However, it flagged several downside risks, including the possibility of higher-than-expected credit costs, weaker loan growth, and persistently elevated funding costs.
It said Public Bank's credit costs could rise to 33 basis points under a more stressed scenario, similar to the peak during the Covid-19 pandemic.
"If we also factor in two additional policy rate cuts of 25 basis points each, our dividend per share forecast may be revised slightly lower. The dividend per share would drop by only 1.0 sen, from 21.5 sen currently to 20.5 sen, based on a dividend payout ratio of 59.4 per cent.
"However, dividend yield remains quite decent at more than 4.8 per cent for financial year 2025 forecast even under this scenario," it added.
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KUALA LUMPUR: Public Bank Bhd is expected to face limited impact from its ongoing lawsuit, despite recent weakness in its share price, according to CIMB Securities Sdn Bhd. The decline in share price is likely linked to recent news of its legal liabilities, alongside prevailing macroeconomic uncertainties. According to news reports, Malaysia's highest court has found Public Bank liable for RM90 million in damages to National Feedlot Corporation, its chairman Datuk Seri Mohamad Salleh Ismail, and three other entities. The lawsuit involves allegations that Public Bank disclosed confidential information about the plaintiffs' accounts and a proposed property purchase at KL Eco City. A former bank clerk was implicated in the leak. On June 18, the Federal Court awarded RM90 million in damages to the National Feedlot Corporation after dismissing Public Bank's appeal on May 26. The three-member bench comprised Chief Judge of Malaya Tan Sri Hasnah Mohammed Hashim, Chief Judge of Sabah and Sarawak Tan Sri Abdul Rahman Sebli, and Federal Court judge Datuk Abu Bakar Jais. The panel ordered Public Bank to pay RM30 million each in equitable, exemplary, and aggravated damages. "We anticipate limited impact from the lawsuit. We maintain a Buy rating on PBB, as its dividend yield is expected to remain decent," the firm said in a note. CIMB Securities has also maintained an unchanged target price of RM5.10 on the stock. The firm pointed to the bank's resilient asset quality and the potential for a decent dividend yield, supported by the release of capital under Basel III changes set to take effect in 2026. However, it flagged several downside risks, including the possibility of higher-than-expected credit costs, weaker loan growth, and persistently elevated funding costs. It said Public Bank's credit costs could rise to 33 basis points under a more stressed scenario, similar to the peak during the Covid-19 pandemic. "If we also factor in two additional policy rate cuts of 25 basis points each, our dividend per share forecast may be revised slightly lower. The dividend per share would drop by only 1.0 sen, from 21.5 sen currently to 20.5 sen, based on a dividend payout ratio of 59.4 per cent. "However, dividend yield remains quite decent at more than 4.8 per cent for financial year 2025 forecast even under this scenario," it added.
