Public Bank Berhad’s earnings outlook remains positive heading into the financial year 2026, supported by steady profit growth, improving capital ratios, and attractive dividend yields, according to Maybank IBG’s research report.
The bank is scheduled to release its FY2025 results on 25 February, with analysts maintaining a “Buy” recommendation and raising the target price to RM5.45 from RM5.10 previously. The higher valuation reflects stronger return on equity expectations of 12.5%, improved capital strength, and stable long-term growth prospects.
Earnings growth expected to accelerate in FY2026
The house noted that the bank’s core net profit is projected to grow by 4.5% in FY2025, with momentum expected to improve further to 5.3% in FY2026, supported by stable margins and low credit costs.
While net interest margins are expected to compress slightly in the near term, analysts noted that benign credit costs and substantial management overlays exceeding RM900 million would help support earnings stability.
The bank’s consistent earnings profile reflects its conservative risk management approach and strong asset quality, which continue to underpin investor confidence.
Capital ratios set to strengthen under Basel III reforms
Public Bank’s capital position is expected to improve further, with its Common Equity Tier 1 (CET1) ratio potentially rising by up to 100 basis points following credit risk weight adjustments under Basel III reforms implemented in July 2025.
As of end-September 2025, the group’s CET1 ratio stood at 13.8%, while the bank-level ratio was 11.9%.
The stronger capital base provides room for higher shareholder returns, with dividend payout ratios projected to increase to 60% in FY2025 from 57% in FY2024.
Dividend yields are expected to remain attractive at 4.4% for FY2025 and 4.8% for FY2026, offering continued support to the bank’s share price.
Share overhang concerns expected to ease gradually
Part of the share overhang issue is expected to be resolved as LPI Capital Berhad prepares to dispose of its remaining 1.1% stake in Public Bank by 3 June 2026, following an extended regulatory deadline.
Further clarity is also anticipated regarding the planned distribution of the Teh family’s 12.28% stake via a restricted offer for sale over five years, which could help improve market liquidity and investor sentiment.
Meanwhile, foreign shareholding in Public Bank has declined to an all-time low of 23.09% as of end-December 2025, suggesting potential upside if foreign investors return to the stock.
Analysts at Maybank said key catalysts for Public Bank in FY2026 include faster earnings growth, capital optimisation initiatives, and the gradual resolution of share overhang concerns, which could strengthen its appeal to both domestic and international investors.
