KUALA LUMPUR: PUBLIC BANK BHD [ registerQuotes("PBBANK", "PBBANK_span"); ]'s decision for the early and full redemption of US$350 million subordinated notes, together with accrued interest on Sept 22, 2009 will enable it to reduce the interest expense estimated at about RM68 million per annum.

The subordinated notes are due 2014 callable with step-up in 2009 at coupon rate of 5.625% per annum. The debt notes are listed on the Singapore Stock Exchange and will be delisted on Sept 23.

ECM Libra Investment Research said it viewed this move positively especially in the current low interest rate environment where net interest margins continue to be compressed. It had a Buy at RM10.24 and target price of RM12.80.

It added Public Bank's management had opted to utilise its current cash horde of RM41.2 billion to reduce the interest expense estimated at about RM68 million per annum.

"We continue to like Public Bank for its above-average growth prospects, superior returns on equity and asset quality. Our BUY call is reaffirmed, with an unchanged target price," it said.

Public Bank shares rose two sen to RM10.26 at 11.38am.