Bank Rakyat Indonesia(BBRI IJ)

Transcription

1 Equity Research Company Update Tuesday,12 December 2017 BUY Maintain Last price (IDR) 3,440 Target Price (IDR) 3,900 Upside/Downside +13.4% Previous Target Price (IDR) 3,600 Stock Statistics Sector Bloomberg Ticker Banking BBRI IJ No of Shrs (mn) 123,346 Mkt. Cap (IDRbn/USDmn) 424,310/31,310 Avg. daily T/O (IDRbn/USDmn) 297.9/22.0 Major shareholders Government of Indonesia 56.7% Estimated free float (%) 43.3 EPSConsensus(IDR) 2017F 2018F 2019F Danareksa Consensus Danareksa/Cons (2.7) (2.4) 6.2 BBRI relative to JCI Index Bank Rakyat Indonesia(BBRI IJ) More KUR, No Problem We reiterate our BUY call on BBRI with a higher TP of IDR3,900 as we believe that the government s KUR program will continue to support micro lending growth, especially following the recent decision by the government to provide a higher interest rate subsidy at 10.55%. This is despite a lower KUR lending rate of 7% (previously 9%). We assume BBRI s KUR loans will grow by 32% leading to a higher contribution of 11% in the bank s loans book by the end of The bank s NIM, meanwhile, is expected to edge down by c.6bps to 7.8% driven by 8bps lower asset yields with a stable blended CoF of 3.6%. BBRI is one of our top picks in our banking universe. Biggest micro lender. We view that the higher government target for the KUR program of a total IDR120trn next year should benefit BBRI over the long term. This is because the KUR program will provide the bank with good quality borrowers for its commercial micro loans product called Kupedes. Note that the ticket size of KUR micro is limited to only IDR25mn with a maximum of four cycles. Thus, if a borrower needs a larger loan, BBRI can offer its Kupedes product. With expected growth in KUR loans of 32%, they will account for 32% of the bank s micro loans by the end of next year (September 2017: 26.1%). Slight decline in the NIM. The government s recent unofficial announcement of a higher interest rate subsidy for the KUR program should benefit BBRI despite a lower KUR lending rate of 7%. Nonetheless, in an environment of low rates, we already assume that asset yields will fall by c.8bps to 11.1% in FY18F. On the funding side, meanwhile, we conservatively project a stable blended CoF at 3.6% due to a 60.4% CASA deposits contribution to total customer deposits by the end of next year. All in all, we expect the NIM to slip 6bps to 7.8% in FY18F. BUY maintained, new TP of IDR3,900. We upgrade our GGMderived TP to IDR3,900 (implying 2.6x 2018F P/BV multiple) as we raise our ROAE assumption from 19% to 19.4%, while maintaining our assumptions of 9.25% CoE and 3% longterm growth. Source : Bloomberg The risks to our call are: 1) higherthanexpected exposure to the KUR program, 2) higherthanexpected credit costs that might dampen earnings growth, and 3) government intervention risk on potential policy changes. Eka Savitri (6221) ext 3506 eka.savitri@danareksa.co.id Key Financials Year to 31 Dec 2015A 2016A 2017F 2018F 2019F PPOP, (IDRbn) 39,413 47,755 53,245 59,107 67,654 Net profit (IDRbn) 25,398 26,196 27,521 31,563 38,343 EPS (IDR) EPS growth (%) BVPS, (IDR) , , , ,689.3 PER (x) PBV (x) Dividend yield (%) ROAE (%) See important disclosure at the back of this report 1 Source : BBRI, Danareksa Estimates

2 Jan08 Jul08 Jan09 Jul09 Jan10 Jul10 Jan11 Jul11 Jan12 Jul12 Jan13 Jul13 Jan14 Jul14 Jan15 Jul15 Jan16 Jul16 Jan17 Jul17 Jan08 Jul08 Jan09 Jul09 Jan10 Jul10 Jan11 Jul11 Jan12 Jul12 Jan13 Jul13 Jan14 Jul14 Jan15 Jul15 Jan16 Jul16 Jan17 Jul17 Exhibit 1. LOAN AND GROWTH Exhibit 2. NET INTEREST INCOME AND GROWTH Exhibit 3. NIM AND LDR Exhibit 4. NPL Exhibit 5. PE BAND CHART 18.0 x Exhibit 6. PBV BAND CHART 4.5 x % Fwd P/E Mean +1SD 1SD fwd P/BV Mean +1SD 1SD ROAE (RHS) See important disclosure at the back of this report 2

3 Dec 12 Dec 13 Dec 14 Dec 15 Sep 16 Dec 16 Sep 17 Dec 17F Dec 18F Dec 12 Dec 13 Dec 14 Dec 15 Dec 16 Dec 17F Dec 18F Dec 19F Exhibit 7. BBRI s LOANS PORTFOLIO Exhibit 8. BBRI s MICRO LOANS PORTFOLIO IDR trn % IDR trn Micro (LHS) Consumer (LHS) SME (LHS) Corporate (LHS) YoY growth (RHS) Kupedes Kupedes rakyat KUR New KUR Exhibit 9. KUR PROGRAM SCHEME Maximum amount/borrower 2018 Scheme (%) 2017 Scheme (%) KUR loans type (IDR mn) Lending rate Interest rate subsidy Lending rate Interest rate subsidy Micro Retail Migrant worker Source : Committee of KUR Policy Exhibit 10. KUR REALIZATION IN 9M17 Bank participant Total realization (IDR bn) Total borrowers (person) Avg ticket size (IDR mn) Bank Rakyat Indonesia 52,946 2,858, Bank Mandiri 9, , Bank Negara Indonesia 5,422 29, Bank Central Asia Bank Bukopin Bank Maybank Indonesia Source : Committee of KUR Policy See important disclosure at the back of this report 3

4 Exhibit 11. Income Statement Year to 31 Dec (IDRbn) 2015A 2016A 2017F 2018F 2019F Interest Income 85,434 94, , , ,126 Interest Expense (27,154) (27,212) (31,710) (34,455) (36,686) Net Interest Income 58,280 67,576 74,035 80,618 89,440 NonInterest Income (NII) 12,323 16,799 20,312 24,053 28,447 Oper. Income 70,602 84,375 94, , ,887 Oper. Expenses (31,265) (37,098) (41,103) (45,564) (50,234) Preprovisions profit 39,413 47,755 53,245 59,107 67,654 Provisions & Allowances (8,900) (13,791) (17,533) (17,969) (19,192) Operating Profits 30,513 33,965 35,712 41,138 48,462 NonOperating Income 1, Exceptionals Pretax Profit 32,494 33,974 35,787 41,310 48,590 Income Tax (7,083) (7,746) (8,231) (9,708) (10,204) Minorities (13) (32) (35) (39) (43) Net Profit 25,398 26,196 27,521 31,563 38,343 Exhibit 12. Balance Sheet Year to 31 Dec (IDRbn) 2015A 2016A 2017F 2018F 2019F Gross Loans 564, , , , ,684 Provisions (17,162) (22,184) (28,431) (31,431) (35,093) Net Loans 547, , , , ,591 Govt. Bonds 3,816 3,318 3,314 2,189 2,189 Securities 124, , , , ,319 Other Earnings Assets 16,262 19,327 22,258 25,176 28,511 Total Earnings Assets 781, , ,077 1,085,737 1,196,685 Fixed Assets 14,687 32,262 35,838 39,626 43,848 NonEarnings Assets 13,515 14,491 14,003 14,247 14,125 Total Assets 878,426 1,003,644 1,096,959 1,211,732 1,367,744 Customer Deposits 649, , , ,549 1,004,443 Banks Deposits 11,165 2,230 11,380 11,604 11,832 Int. Bearing Liab. Others 748, , ,346 1,009,272 1,140,635 Total Liabilities 765, , ,595 1,027,809 1,158,851 Share capital & Reserves 5,558 20,446 20,446 20,446 20,446 Retained Earnings 107, , , , ,927 Shareholders' Funds 112, , , , ,373 Minority interests Total Equity & Liabilities 113, , , , ,894 See important disclosure at the back of this report 4

5 Exhibit 13. Ratios Year to 31 Dec (%) 2015A 2016A 2017F 2018F 2019F Yield on Earning Assets Cost of funds Interest Spread Net Interest Margin Cost/Income Ratio Oper. Exp./Oper. Gross Inc Gross NPL Ratio LLP/Gross NPL Cost of Credit Loan to Deposit Ratio Loan to Funding Ratio CASA Mix ROAE ROAA CAR Exhibit 14.Dupont and growth Year to 31 Dec 2015A 2016A 2017F 2018F 2019F Dupont PreTax ROAA Tax Retention rate PostTax ROAA Goodwil, Assoc& Min Leverage ROAE Growth (%) Interest income Net Interest Income Other Oper. Expenses Fee Based Income PreProvision Oper. Profit Net Profit Shareholders Equity Loan Earnings Asset Deposit Int. Bearing Liab CASA Total Asset Source : BBRI, Danareksa Estimates