MIDF Research raised Public Bank Bhd to "buy" from "neutral," citing a strong growth in retail loans after the country's third largest lender reported its second-quarter earnings on Monday.

"The group has a resilient customer base and its exposure to high-end properties lending which is experiencing a slowdown in demand is relatively small," the broker said in a research note.

Public Bank's net profit for the second quarter rose 1.3 percent quarter-on-quarter to RM952.7 million, while its first-half net profit increased 3 percent year-on-year to RM1.89 billion.

MIDF said Public Bank's prudence in credit underwriting has improved its overall gross impaired loan ratio for key loans sectors of small and medium enterprises, housing loans, and hire purchase financing.

The research house also increased its target price on the stock to RM16.10 from RM14.50.

As of 10.03am, Public Bank's shares dropped 0.28 percent on the Malaysian benchmark stock index which fell 0.31 percent. -- Reuters