Public Bank's return on equity has peaked and is on a declining trend going forward, according to Alliance Research.
This is due to the decelerating earnings momentum and restrictions on the ability to engage in active capital management to enhance its ROE.
Thus the bank will witness an increasingly challenging operating environment in its quest to sustain earnings momentum in future, says Alliance Research.
The research house also said that Public Bank will have to deal with the maturing property segment coupled with it being not well positioned to fully capitalise on the Economic Transformation Programme related loans and investment banking deals, the research house said.
It also said the ongoing net interest margin compression due to intense competition in the retail loan segment and deposit would impact it.
The Public Bank's pre-tax profit for the first half year ended June 30, 2012 rose by 2.1 per cent to RM2.49 billion from RM2.43 billion in the same period of 2011. Its revenue increased to RM6.83 billion from RM6.16 billion previously.
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