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Malaysia Top Analyst’s Call –MBSB
By:

Malaysia Building Society

Rating: Outperform Target Price: RM2.65
(15 Aug 2014)

Research Firm
Kenanga Research

Key Points

  • MBSB recorded a net profit of RM232.9m in 2Q14, lifting its 1H14 net profit by 29.7 percent to RM429.6m. Its net interest income increased 57.8 percent to RM125.5m, but Islamic banking income remained flat while non-interest income fell by 9.9 percent.
  • Loan-to-deposit ratio dropped by 3.8 percentage points to 109.4 percent as gross loans increased only by 0.7 percent while deposits grew by 4.2 percent.
  • As MBSB’s core retail segment of personal loans and mortgages have been hit by a slew of tightening measures, it is expected to grow its corporate lending business, which seems to be promising. Its corporate loan stock as at the end of June 2014 stood at RM3.3b.

Suggestions
Kenanga Research maintained its OUTPERFORM rating and the target price of RM2.65.


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