Please consider the rating criteria & important disclaimer
BBTN enjoyed the 2Q18’s growth of 12.4% y
-
y to IDR5.1 trillion in interest
income coupled with the slightly lower growth of 8.5% y
-
y to IDR2.9 trillion
in net interest income. It also posted the surge of 9.3% y
-
y to IDR739 billion
in net profit
lower than the 1Q18’s jump of 15.1%
.
Reliance on Stable Growth of Mortgage Loan
BBTN managed to record the 2Q18’s growth of 19.1% y
-
y in credit. Its
mortgage loan (KPR) enjoyed the increment of 30.3% and dominated 39.4%
of its overall credit portfolios. We project that in the end of 2018 its credit
growth likely hits 18.1%, slightly lower than the 2017’s growth of 21.0%.
The estimated lagging growth of 18.1% is
capable of stimulating the
acceleration in the 2018’s growth of 19.7% in interest income
(vs. the
2017’s lower growth of 12.4%). Thanks to the downtrend of lower
benchmark rate accelerating the 2Q18’s growth; thus, it likely
enjoys the
loan yield estimated to stably stand at the minimum of 10%
.
We estimate that the 2018’s growth in net profit likely lags as in 2H18, the
higher cost of deposit cushioning the decline in current account saving
We use an assumption of forward P/B of 1.3x (1 SD higher than the last 4
ASEAN Banks
Malayan Banking
26,569
188,433
9.5%
1.8%
10.7%
13.5x
1.5x
5.6%
Hong Leong
5,134
50,939
4.3%
1.6%
10.0%
12.2x
1.2x
2.2%
Thailand
Bangkok Bank
11,964
94,446
6.7%
2.4%
8.9%
11.4x
1.0x
3.1%
Siam Commercial
14,989
92,841
-
13.0%
3.2%
11.7%
11.9x
1.4x
3.8%
Bank of Ayudhya
9,254
64,128
7.5%
3.7%
10.7%
12.7x
1.3x
2.0%
BBTN is a state
-
owned banking focusing on the distribution of KPR. In 2Q18, it distributed
KPR of IDR155.4 trillion or 74% from the total credit distribution. Its KPR service targets
the housing financing for the low to middle
-
income classes.
It becomes the government’s major partner in promoting the subsidized KPR program
aiming to the vision of providing 1 million houses. The program targets Indonesian having
income lower than IDR4 million per month.
Indonesian’s Bank Competitiveness in ASEAN
Indonesia
-
based banking industry is the investment priority in ASEAN as it offers
higher
credit rate
than do its peers in ASEAN. It is the takeaway factor to the excellent
characteristic of Indonesia
-
based banking industry.
Although facing the challenge of decline in reference rate, Indonesia
-
based banks
are still
capable of maintaining NIM topping the NIM achieved by its peers in ASEAN
. The
higher NIM is capable of being translated into a higher ROE.
A number of Malaysia and Singapore
-
based banks such as OCBC, CIMB, and Malayan
Banking can outpace
the growth of 10%
-
20% in net profit
posted by Indonesia
-
based
Interest Income (IDR bn) |
3Q15
-
2Q18
Source: Company, NHKS research
Performance Highlights
Net Profit (IDR bn) |
3Q15
-
2Q18
Source: Company, NHKS research
Loan Yield, Cost of Deposit, NIM
|
3Q15
-
2Q18
Source: Company, NHKS research
Loan Composition
|
2Q18
Source: Company, NHKS research
Deposit (IDR bn) |
3Q15
-
2Q18
Source: Company, NHKS research
Outstanding Loan (IDR bn) |
3Q15
-
2Q18
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
03/08/2018
Hold
3,790 (Dec 2018)
3,770
3,825
+0.5%
-
0.9%
08/09/2018
Buy
3,280 (Dec 2018)
2,620
3,311
+25.2%
-
0.9%
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 2.1% 2.0% 1.8% 1.9%
Interest Income 17,139 19,272 23,077 27,077 Non-Interes t Income/Op. Rev 13.6% 14.7% 15.2% 15.2%
Growth (% y/y) 14.5% 12.4% 19.7% 17.3% Cos t/Income 57.0% 56.4% 58.5% 58.5%
