Public Bank decreases rapidly in a period of 5 months

Malaysia’s biggest lender by market value, Public Bank Bhd decreases the most in 5 months since CLSA Asia-Pacific Markets quoting that the bank has weak capital ratios and therefore, cutting its stock recommendation.
According to CLSA analyst Chee Wei Loong, he has reduced his evaluation on Public Bank to “sell” from “outperform”. Hence, Chee lowered the target price to RM6.20 in a report today.


Chee also added, “Compared with regional peers, it will be perceived as more vulnerable to economic shocks.
“The Kuala Lumpur-based bank’s core capital adequacy ratio of 7.7 per cent, an indicator of financial strength, is among the lowest in the region.”

Chee said that Public Bank can boost its capital by adapting to the non-innovative tier-1 capital securities.
A fierce competitor, Maybank has sketched out its plan to increase RM6 billion (US$1.6 billion) from a rights issue to shore up its capital last month.

Public Bank has issued a statement stating its increment during the fourth quarter from RM654 million to RM616 million previous year.