PBBANK (1295) - PBBANK – Fundamental Analysis (2 Aug 2016)

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Financial Report – Quarterly Report FY16 Q2 (1 Aug 2016)
FY16 Q2 Results Highlight:
  • PBBANK reported a 2QFY16 net profit of RM1,256.2m (+5.0% yoy) with the annualised net profit largely within our and market expectations. Its net profit was mainly supported by strong growth in net interest income (9.3%yoy) which was in turn underpinned by a better net interest margin (NIM) and higher average loan balance. This was, however, mitigated by weaker non-interest income (-9.7% yoy) and higher operating expenses (+11.2% yoy). Cost-to-income ratio (CIR) saw an uptick to 31.1% in the quarter (2QFY15: 31.2%), but remained the lowest in the industry.
  • Group loans growth was 9.5% yoy, 2.3% qoq. Deposit base grew 5.5% yoy and 1.6% qoq.
  • Despite an increase in absolute amount for impairment allowance, credit cost remained largely flat on yoy and qoq basis.
Going Forward:
Despite unexpected good results of PBBANK in FY15, moving forward, I believe that PBBANK result will be stable or a bit slow down. This is because loan applications will continue to be slow marginally and NIM compression will be higher in the future. PBBANK believes that its asset quality position will remain robust, in line with continued employment and income growth notwithstanding the rising cost of living and a moderated economic environment.
PBBANK announced its FY16 KPI targets which were slightly lower than FY15:
  • ROE>15
  • RWCR of >13%
  • GIL ratio < 1%
  • CI ratio < 33.0%
  • Group loan growth of 8-9%
  • Group deposit growth of 7-8%.
In my opinion, fair value of PBBANK is from 19.5 to 20.2 (Uncertainty Risk is HIGH).
I will continue to hold this share, and will not accumulate it for the time being.
At the time of writing, I owned shares of PBBANK.

PBBANK (1295) - PBBANK – Fundamental Analysis (2 Aug 2016)