KUALA LUMPUR: CIMB Equities Research said Malayan Banking Bhd’s 25 basis points hike in its base lending rate (BLR) was broadly within its and market expectations.

However, it said on Tuesday, March 9 the the 23bp average rise in fixed deposit (FD) rates was higher than its expected 12-15bp increase.

“Due to the higher-than-expected increase in FD rates, every 25bp hike will only enhance Maybank's net profit by 0.8% compared to 4.4% estimated previously based on a lower 12.5bp rise in FD rates,” it said.

Factoring in a hike of 50bp in BLR and 46bp in FD rates, CIMB Research raised its FY10-12 net earnings forecasts by 0.7-2.2%, lifting the target price from RM8.10 to RM8.35 (pegged to unchanged 5% premium to DDM value).

Without any significant uplift from the rate hikes, the stock remains a NEUTRAL.

Earnings-wise, it projects strong core EPS growth of 15-46% in FY10-12, but it believes that the positive earnings trends have largely been priced in, reflected by above-average CY11 P/E of 11.8x.

“We prefer Public Bank for exposure to big-cap Malaysian banks,” it said.