KUALA LUMPUR: Public Bank Bhd saw its share price run up to an all-time high of RM11.86 on Jan 18 in anticipation of its FY09 results, which are due to be announced over the next couple of days.

It closed at RM11.84, up 20 sen from last Friday’s close and 3.7% higher week-on-week. A total of 1.56 million shares changed hands.

According to analysts, Public Bank’s FY09 results are expected to either be within expectations or slightly above.

“Public Bank has so far not disappointed in terms of its earnings results, and its fourth-quarter performance is not expected to be any different. It is unlikely that FY09 will overly surpass consensus numbers, at most just above,” said a banking analyst.

In a report, HwangDBS Vickers Research said it expected Public Bank’s FY09’s net profit to come in 2% to 3% above its and the market’s expectations. The research house has forecast full-year’s net profit at RM2.4 billion, on the back of RM4 billion in turnover.

“We believe Public Bank will meet its loan growth target. Up to 3QFY09, loans grew 11% versus our full-year forecast of 14%. Net interest margin is expected to remain flat while non-interest income will remain robust and asset quality stable.

“Hong Kong operations should pick up as provisions have tapered off,” said HwangDBS Vickers Research.

The research house has a buy call on Public Bank with a 12-month price target of RM12.20. According to Bloomberg, the majority of research houses peg Public Bank with a buy, with target prices ranging between RM11.80 and RM13.50.

Most analysts agreed that investors could be betting on a good dividend payout by Public Bank.

“The company has committed to pay out a minimum of 55 sen per share, but there are also those 80 million treasury shares that Public Bank still owns. There is a high possibility that it could be distributed along with the dividends that would result in around 80 sen payout, which represents a 7% gross yield,” said an analyst.

In FY08, the bank announced a one-for-35 share dividend, which resulted in gross dividend per share of 88.7 sen, according to reports.

HwangDBS Vickers Research is projecting a final gross dividend per share of 46 sen.

“Assuming the treasury shares are distributed as dividends, it would work out to one-for-44 distribution, translating into 26 sen. This would help to preserve capital,” it said.

The main reason for banks looking to preserve capital is in anticipation of the implementation of the revised Basel proposals that resulted in a change in definition for Tier 1 equity for banks. The tighter guidelines will result in banks having to strengthen their core equity.

However, while remaining a concern, analysts point out that the implementation will only come in 2012, which would give the banks time to get their affairs in order.

“Thus, we will continue to see banks conserving cash in anticipation of the Basel proposals as they look to boost their core equity levels,” said an analyst.

Hwang-DBS said: “Assuming all the proposals recommended for the revised Basel rules are adopted, without any adjustments made to risk weighted assets, Public Bank’s Tier 1 capital adequacy requirement would be reduced to 6.5% from 8.6% (Sept 09) at the group level and to 9.4% from 11% (Sept 2009) at the bank level.

“In a worst case scenario, this may imply that Public Bank may have to pump up equity capital or lower dividend payout to preserve capital. However, we believe that with Public Bank’s stable profit growth and superior asset quality, the overall impact should be well managed.”