Hong Leong Bank will see its net interest margin trend up in financial year 2012 with the full consolidation of EON Bank's higher yielding loans, says HwangDBS Vickers Research.
Subsequently, the NIM would trend down due to competitive pressure along with an estimated 20 per cent discount for the rights issue, implying post-rights Return On Equity to hover at 16 per cent, it said.
"HLB, a defensive stock with strong post-merger growth will reap good synergies from the EON merger, via improves efficiencies, higher NIMs, and a larger presence in hire purchasing and small and medium enterprises.
"One of the key levers is the business banking unit that focuses on SMEs, which is now more scalable with EON's base," the research house added.
HwangDBS remained positive on HLB and maintained a "buy" call, reports Bernama.
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