Please consider the rating criteria & important disclaimer
profit. The 2Q18’s growth in net profit beat the 1Q18’s net profit of 13.0%.
The highest growth since 4Q16 in interest income and net interest income
respectively buoyant of 16.3% and 17.1% were potent drivers for the
acceleration in net profit.
NIM Recovery
Thanks to the 2Q18’s net interest margin (NIM) of 5.6% so that BBNI
enjoyed rosier net internet income.
The 2Q18’s NIM was more buoyant
than the 4Q17 and the 1Q18’s NIM of 5.4% and 5.5%, respectively
. BBNI
succeeded to whittle away the cost of deposit from 3.0% to 2.8% despite
the slight decline of loan yield from 10.3% to 10.2%.
Improvement in Credit Quality
The 2Q18’s non
-
performing loan (NPL) ratio settling at 2.16% marked the
further decline in NPL figures snapping at its highest level of 3.12% in 3Q16.
The current NPL figures were the lowest since the 2Q15 of 2.15%
. On the
other hand, the trend of lagging credit growth ceased as it enjoyed the
growth of 11.1% in the 2Q18’s credit (vs. the 1Q18’s credit of 10.8%). The
low NPL and the recovery in credit are the logical takeaway for the profit
growth in 2018
-
2019.
Target Price of IDR9,675
We use the assumption of forward P/B of 1.4x (1 SD higher than the last 4
-year average of 1.2x) as the basis of valuation method. The target price
implies a 2018E P/B of 1.6x (vs. the current P/E of 1.3x)
ASEAN Banks
A Glance at BBNI
BBNI is
the fourth
-
biggest bank in Indonesia
after BBRI, BMRI, and BBCA and dominates
9.2% the credit market share in Indonesia. Its credit distribution focuses on the corporate
segment contributing 50% to its overall credit. As the state
-
owned bank, it has a
significant exposure to the credit distribution. Of note, 20% of its overall credit is given to
the debtors coming from the stated
-
owned enterprises inextricably linked to the public
sector
.
Indonesian’s Bank Competitiveness in ASEAN
The banking industry in Indonesia 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 the banking industry in Indonesia has.
Although facing the challenge of decline in reference rate, Indonesia’s banks
are still
capable of maintaining NIM topping 5% higher than the NIM achieved by its peers in
ASEAN
. 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 Indonesia’s banks. However,
those three banks have bigger assets than does Indonesia’s bank have.
Company
Market Cap
Malayan Banking
26,392
188,433
9.5%
1.8%
10.7%
13.5x
1.5x
5.6%
Hong Leong
5,019
50,939
4.3%
1.6%
10.0%
12.0x
1.2x
2.2%
Thailand
Bangkok Bank
11,816
94,446
6.7%
2.4%
8.9%
11.3x
1.0x
3.2%
Siam Commercial
14,539
92,841
-
13.0%
3.2%
11.7%
11.6x
1.3x
3.9%
Bank of Ayudhya
8,896
64,128
7.5%
3.7%
10.7%
12.3x
1.3x
2.1%
Philippine
BDO Unibank
11,171
53,371
6.4%
4.1%
9.5%
21.5x
2.0x
0.9%
Metropolitan Bank
5,836
41,612
6.5%
3.8%
8.3%
13.1x
1.1x
1.2%
Interest Income (IDR bn)
|
2Q15
-
2Q18
Source: Company, NHKS research
Performance Highlights
Net Profit (IDR bn)
|
2Q15
-
2Q18
Source: Company, NHKS research
Loan Yield, Cost of Deposit, NIM
|
1Q15
-
1Q18
Source: Company, NHKS research
Loan Composition
Source: Company, NHKS research
Deposit (IDR bn)
| 2Q15
-
2Q18
Source: Company, NHKS research
Gross Loan (IDR bn)
|
2Q15
-
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
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%
05/04/2018
Hold
8,125 (Dec 2018)
7,475
9,941
+8.7%
-
18.3%
08/06/2018
Buy
9,675 (Dec 2018)
7,900
9,029
+7.2%
+22.5%
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%
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% 3.6% 3.7%
Interest Income 43,768 48,178 55,837 64,525 Non-Interes t Income/Op. Rev 27.4% 29.4% 26.5% 26.9%
Growth (% y/y) 18.6% 10.1% 15.9% 15.6% Cos t/Income 46.5% 46.1% 46.0% 46.0%
Interes t Expens es (13,773) (16,240) (19,046) (21,716) Ca s h Di vi dend (IDR bn) 3,969 4,766 5,553 6,910
in IDR bn 2016/12A 2017/12A 2018/12E 2019/12E 2016/12A 2017/12A 2018/12E 2019/12E
Ca s h 11,168 11,578 14,793 14,958 Pri ce /Ea rni ngs 9.1x 13.6x 9.3x 7.5x
in IDR bn 2016/12A 2017/12A 2018/12E 2019/12E 2016/12A 2017/12A 2018/12E 2019/12E
