• 3Q24 results are in line with expectations

• NIM continues to expand sequentially on FD rate revisions and optimization of LCR

• Maintain BUY rating with GGM-derived target price of RM5.10

In line with expectations

3Q24 core PATAMI of RM1.9bn (+7% QoQ, +12% YoY) brings 9M24 PATAMI to RM5.3bn (+6%), representing 77% of our full-year estimates and 76% of street’s expectations. Overall, the results are broadly in line with our estimates, with PIOP at 74% of our expectations. The positive variance comes from the higher associate contributions of RM167m in 9M24 (against our previous 2024 forecast of RM100m). While previous guidance indicated that the non-recurring accounting adjustments in associates was a one-off in 2Q24, management now expects the full impact to materialize in 2024E, with normalization expected in 2025E. Reported ROE stood at 13.2%, with a strong CET1 ratio of 14.3%. Management has raised its 2024 ROE target to 13% (from >12.5%), marking its third increase this year.

Grow from strength to strength

9M24 NIM remained stable at 2.21bps (-1bps YoY), in line with PBB’s guidance of stable to low single-digit compression. This was underpinned by four rounds of FD rate revisions, coupled with the optimization of its LCR. Loan growth is expected to fall to 5–6% (YTD annualized: 5.2%), driven by a steady pipeline of SME financing (+>20% YoY) and sustained demand for vehicle financing (YTD annualized: +14%). On the deposit front, market share continues to grow, reaching 16.7% (vs. 16.3% in 2023), fueled by strong FD momentum. Asset quality remains resilient, with GIL at 0.6% and a healthy delinquency profile. Credit costs are expected to remain in the low single digits, aided by RM1.5bn in management overlay writebacks, including RM260m in YTD writebacks.

Maintain BUY; unchanged GGM-derived RM5.10 TP

We tweak our earnings by +1% to account for the better-than-expected associate earnings contributions. Our key assumptions include 2024–26E ROE of 12%, LTG of 3.5%, and COE of 8.9%. Our TP implies a P/BV of 1.6x (-0.5SD of its 10-year mean) against a 3-year average forward ROE of 12%. We believe this valuation is justifiable by PBB’s solid underlying operations and sector-high ROE. We continue to favor PBB as a defensive pick to navigate the market volatility. Key risks to our BUY call include continued NIM compression, rising cost base, deteriorating asset quality, and intense deposit competition driving up funding costs.

Source: Philip Capital Research - 2 Dec 2024