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Investing.com - Public Bank Bhd (KLSE:PBK) stock rating was downgraded from Buy to Neutral by Nomura/Instinet on Wednesday, with its price target lowered to MYR5.00 from MYR5.20.
Nomura analyst Tushar Mohata cited expectations of lower net interest margins (NIM) as the primary reason for the downgrade, particularly noting potential NIM weakness in the second half of 2025.
The investment firm reduced its earnings forecasts for Public Bank by 6% for fiscal year 2025 and by 3% for both fiscal years 2026 and 2027, while slightly raising gross impaired loan and credit cost estimates for FY2025 due to continued weakness in overseas markets.
Nomura maintained its estimates for FY2026 and FY2027, basing its new price target on an average return on equity of 12.0% for FY2026-27, down from 12.3% previously, while keeping its cost of equity at 8.5% and long-term growth rate at 3%.
The analyst also highlighted potential share price limitations due to the overhang of share sales from LPI and the Teh family, noting that Public Bank currently trades at 1.4 times its FY2025 price-to-book value.
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