KUALA LUMPUR: CIMB Research has raised its earnings and target price for Malayan Banking Bhd after it staged a turnaround in its financial results.

The research house said on Monday, Aug 23 that net profit for the financial year ended June 30, 2010 beat consensus by 5% and met its forecast.

“One nice surprise was the final DPS of 44 sen which took FY10 DPS to 55 sen, significantly higher than our forecast of 35.8 sen,” it said.

CIMB Research raised its FY11-12 EPS by 3%-7% for (1) loan growth of 11-12% instead of 9%, and (2) a 5-11% increase in non-interest income. FY11-12

“DPS projections is raised about 16.7% as we increase our dividend payout assumption from 60% to 70% given the higher-than-expected payout of 76.5% in FY10.This lifts our target price from RM8.92 to RM9.50 (cost of equity of 13.2% and a dividend growth rate of 10.8% in the interim growth phase),” it said.