It  was  reported  in  Starbiz  that  Public  Bank  Berhad  (PBB)  has  signed  an MOU  with  Japan’s  Saitama  Resona  Bank  and  Kinki  Osaka  Bank  to promote  and  strengthen  cooperation  among  the  respective  banks.  The MOU will also facilitate the joint development of business opportunities and is expected to benefit PBB’s customers around the region where PBB has a presence. (Source: Starbiz)

Comments:  A  similar  collaboration  was  established  before  back  in  2013 with  Resona  Bank  and  we  believe  that  the  above-mentioned  MOU  is  a further extension of the alliance, of which helps to strengthen PBB’s crossborder  transactions.  Amidst  a  more  cautious  economic  outlook,  we  still favour  Public  Bank,  as it  remains  defensive in  nature  owing to  its  sound asset  quality,  established  retail-banking  franchise  (No.  1  position)  and  a well-capitalised balance sheet, of which are its key competitive edges visà-vis  other  peers.  We  maintain  our  BUY  rating,  with  TP  unchanged  at RM21.80  based  on  a  2.6x  P/BV  multiple  on  2016E  ROE  of  15%.

Source: Affin Hwang Capital Research - 8 Jul 2015