Please consider the rating criteria & important disclaimer
interest income of IDR8.4 trillion (+3.8% y
-
y).
The decline in loan yield and
the stable cost of deposit
were the potent drivers for the lagging growth
BBNI experienced since 3Q17. It also posted the decline of 4.5% y
-
y into
IDR3.5 trillion in net profit mainly attributable to the hike of 32% in
provision cost.
SOEs Corporation Segment Posting Sluggish Growth in Credit
In 2017, BBNI posted
the growth of 12.2%
into IDR441.3 trillion in credit.
The growth was higher than the growth posted by the banking industry,
yet
it was lower than the growth of 20.6% in 2016
. The sluggish growth was
mainly experienced by
the state
-
owned enterprises (SOEs) corporation
segment capable of only growing by 7.7% in 2017
as SOE’s focused on
targeting the non
-
banking funding.
Margin Pressure
BBNI faced the headwind for maintaining a stable net interest margin.
It
respectively posted NIM of 5.6% and 5.4% in 3Q17 and 4Q17
lower than
NIM topping 6.0% posted in the prior periods. The decline in NIM was
caused by the hike in deposit amid the lagging growth in credit; accordingly
the loan
-
to
-
deposit (LDR) ratio lowered into 83,5%
below the average
level of of 87.6% in 2014
-
2016.
Target Price of IDR10,825
We use an estimate of forward P/B of 1.6x (2SD higher than the last 4
-
year
BBNI at A Glance
BBNI constitutes as
the fourth biggest bank in Indonesia
after BBRI, BMRI, and BBCA and
dominates 9.2% of credit market shares in Indonesia. Its credit distribution focuses on
the corporation division contributing 50% from the total credit.
BBNI as a state
-
owned banking enterprise has a significant credit exposure of 20% from
the total credit to
the debtors in SOEs
. The aggressive infrastructure development under
Joko Widodo’s administration has given a significant impact to the credit distribution in
the SOEs’ corporation segment respectively growing by 23.1% and 35.8% in 2015 and
headwind of decline in reference rate. The higher NIM is capable of being translated into
a higher ROE.
A number of banks in Malaysia and Singapore such as OCBC, CIMB, and Malayan Banking
can outpace
the growth of 10%
-
20% in net profit
posted by the Indonesia’s banks.
However, those three banks have bigger assets than does the Indonesia’s bank have.
ASEAN Banks
Malayan Banking
27,891
164,020
28.4%
1.9%
11.2%
13.3x
1.5x
5.4%
Hong Leong
5,382
50,939
16.0%
1.6%
9.6%
13.2x
1.2x
2.1%
Thailand
Bangkok Bank
12,505
94,446
3.8%
2.4%
8.5%
11.9x
1.0x
3.2%
Siam Commercial
16,089
92,841
-
9.4%
3.0%
12.4%
11.7x
1.4x
3.7%
Bank of Ayudhya
10,644
64,128
8.4%
3.8%
10.7%
14.4x
1.5x
1.9%
Philippine
BDO Unibank
12,839
46,868
1.6%
3.9%
10.8%
23.1x
2.3x
0.8%
Metropolitan Bank
5,924
37,818
4.2%
3.9%
9.1%
16.5x
1.5x
1.0%
Interest Income (IDR bn)
|
1Q15
-
4Q17
Source: Company, NHKS research
Performance Highlights
Net Profit (IDR bn)
|
1Q15
-
4Q17
Source: Company, NHKS research
Loan Yield, Cost of Deposit, NIM
|
1Q15
-
4Q17
Source: Company, NHKS research
Loan Composition
Source: Company, NHKS research
Deposit (IDR bn)
| 1Q15
-
2Q17
Source: Company, NHKS research
Gross Loan (IDR bn)
|
1Q15
-
4Q17
Multiple Valuation
Forward P/B band
| Last 4 years
Source: NHKS research
Dynamic Forward P/B band
| Last 4 years
Source: NHKS research
Rating and target price update
Target Price Revision
Date
Rating
Target Price
Last Price
Consensus
vs Last Price
vs Consensus
11/17/2017
Buy
9,550 (Dec 2018)
7,675
8,169
+24.4%
+16.9%
02/14/2018
Hold
10,825 (Dec 2018)
9,525
9,765
+13.6%
+10.9%
Source: NHKS research, Bloomberg
Closing and Target Price
Source: NHKS research
Analyst Coverage Rating
Source: Bloomberg
NH Korindo Sekuritas Indonesia (NHKS) stock ratings
1.
Period: End of year target price
2.
Rating system based on a stock’s absolute return from the date of publication
Buy
: Greater than +15%
Hold
:
-
15% to +15%
Summary of Financials
DISCLAIMER
This report and any electronic access hereto are restricted and intended only for the clients and related entity of PT NH Korindo Sekuritas Indonesia. This report is only for information and recipient use. It is not reproduced, copied, or made available for others. Under no circumstances is it considered as a selling offer or solicitation of securities buying. Any recommendation contained herein may not suitable for all investors. Although the information here is obtained from reliable sources, it accuracy and completeness cannot be guaranteed. PT NH Korindo Sekuritas Indonesia, its affiliated companies, respective employees, and agents disclaim any responsibility and liability for claims, proceedings, action, losses, expenses, damages, or costs filed against or suffered by any person as a result of acting pursuant to the contents hereof. Neither is PT NH Korindo Sekuritas Indonesia, its affiliated companies, employees, nor agents liable for errors, omissions, misstatements, negligence, inaccuracy arising herefrom.
in IDR bn 2016/12A 2017/12A 2018/12E 2019/12E Pre-Provi s i on ROA 4.0% 3.7% 3.7% 3.7%
Interest Income 43,768 48,178 54,186 59,594 Non-Interes t Income/Op. Rev 27.4% 29.4% 29.7% 30.0%
Growth (% y/y) 18.6% 10.1% 12.5% 10.0% Cos t/Income 46.5% 46.1% 46.1% 46.1%
