FOCUS Bank Rakyat Indonesia Company Update 11 January 2017

Transcription

1 FOCUS XXX Company Update XX XXXXX 213 FOCUS Bank Rakyat Indonesia Company Update 11 January 217 Mandiri Sekuritas Analyst Tjandra Lienandjaja Priscilla Thany Sector : Banking BUY Current Price Rp11,8 Price Target Rp13,8 (+16.9%) Prev. TP:Rp14, 52-wk range Rp12,975 - Rp9,525 Stock Data Bloomberg Code BBRI IJ Mkt.Cap (Rp bn/us$ mn) 29,985 / 21,828 Issued Shares (mn) 24,66 Avg. Daily T/O (Rp bn/us$ mn) 287.8/21.6 Major shareholder Government of Indonesia 56.8% Public 43.3% EPS consensus Mansek Cons Diff 216F 1,32.8 1, F 1, ,166.2 (1.8) 218F 1,4.1 1, Share price performance 3m 6m 12m Absolute (1.3) Relative to JCI.2 (.6) (15.) Balance Sheet Clean-up to Continue in 217 We lower our earnings forecast by 8% for 217 and 3% for 218 in view of lower loan growth (14% in 217 from 15% in 216) and higher provisioning charges for more write offs and rising coverage ratio. Despite our lower TP of Rp13,8 (previously Rp14,) we keep our Buy call on the counter. Loan growth lowered to 14% in 217. We lower loan growth target to 14% from 16% for the year with the projected growth rate of 15% for 216. BRI is one of the few banks which registered higher than industry loan growth so far. While the banking industry recorded around 8% y-y loan growth in November, BRI (bank only) posted 19% y-y loan growth, supported by the corporate and micro loans (in particular for KUR). We expect similar loan segments as the growth drivers for 217. KUR is for more productive industry with lower rates. BRI s micro loans accounted for 34% of total consolidated loans in Sep 16. Of this, the regular Kupedes and Kupedes Rakyat contributed 26% of total loans and KUR the remaining 8% (growth rate at 298% y-y in Sep 16). BRI was set to disburse Rp69.5tr of KUR during 216 and so far has managed to conduct Rp69.4tr or a 1% achievement. The government now requires KUR to be distributed to more productive sectors, such as agriculture, fisheries, maritime and tourism, instead of to trading sector. The plan to lower the interest rate charged for micro KUR to 7% from 9% (plus interest subsidy to banks of 12% or 1%) is yet to be finalized. If the interest subsidy is kept at 1%, we expect BRI s interest income to decline by Rp.5tr in 217. While we expect 14% loan growth for the year, we project KUR to grow 15-2%. More write offs expected with rising coverage ratio. NPL reached the recent peak at 2.3% in Jun 16 and is now at around 2.2% level. We project 2.3% NPL level by end of 216 with 1.5% of total loans written off every year in , the highest since the GFC. Aside from heavy write offs, coverage ratio is also expected to rise to 16% by 217 from 155% in 216. The combination of high write offs and rising coverage ratio should force BRI to put more provisioning charges in earnings cut by 8%. As a result of lower loan growth and higher provisioning, we cut our earnings forecast by 8% for 217 and by 3% for 218. We also lower our TP to Rp13,8 (from Rp14,) based on 2.x P/BV 217. We maintain our Buy call. Risks are rising interest rates and lower GDP growth. FINANCIAL SUMMARY YE Dec (Rp Bn) 214A 215A 216F 217F 218F Pre-Provision Profit 34,29 39,43 44,838 49,43 55,873 Net Profit 24,215 25,398 25,479 28,258 34,539 EPS 982 1,3 1,33 1,145 1,4 EPS Growth P/E Ratio (x) BVPS 3,954 4,574 5,945 6,886 8,3 P/BV Ratio (x) Dividend Yield ROAE CAR Source: Company ( ), Mandiri Sekuritas ( ) Please see important disclosure at the back of this report Page 1 of 5

2 Company Update 11 January 217 BBRI - At a Glance FIGURE 1. LOAN, DEPOSIT GROWTH, AND LDR FIGURE 2. NET INTEREST MARGIN (% YoY) Q9 3Q9 1Q1 3Q1 1Q9 3Q9 1Q1 3Q1 LDR Total Loan Growth (YoY) [RHS] Total Deposit Growth (YoY) [RHS] NIM Interest Yield Cost of Funds FIGURE 3. LOAN BREAKDOWN FIGURE 4. DEPOSIT BREAKDOWN 1% 9% 8% 7% 6% 5% 4% 3% 2% 1% % 1Q7 3Q7 1Q9 3Q9 1Q1 3Q1 1% 9% 8% 7% 6% 5% 4% 3% 2% 1% % 1Q9 3Q9 1Q1 3Q1 Non-SOE corporate SOE corporate Medium Small commercial Small consumer Micro Current Accounts Savings Time Deposits FIGURE 5. NPL & COVERAGE RATIO FIGURE 6. CAR & EQUITY Rp Bn 16, 14, 12, 1, 8, 6, 4, 2, Q9 3Q9 1Q1 3Q1 1Q9 3Q9 1Q1 3Q1 Loan Loss Coverage NPL [RHS] Capital Base Total CAR [RHS] Please see important disclosure at the back of this report Page 2 of 5

3 Company Update 11 January 217 FIGURE 7. FORECASTS CHANGES Year-end Dec 31 Old New Change (Rp bn) 216E 217E 218E 216E 217E 218E 216E 217E 218E Net interest income 67,2 73,61 84,179 67,62 72,74 82,526.1 (1.2) (2.) Net interest margin Total income 82,7 91,386 14,958 82,163 9,654 13,475.1 (.8) (1.4) PPOP 44,745 49,775 57,356 44,838 49,43 55,873.2 (1.5) (2.6) Operating profit 31,37 37,987 44,512 3,824 34,819 42,929 (1.7) (8.3) (3.6) Reported net profit 25,823 3,76 35,79 25,479 28,258 34,539 (1.3) (8.1) (3.5) Loan growth Deposit growth LDR NIM NPL Coverage ratio Write off/total loans Cost to income ROE CAR Source: Mandiri Sekuritas estimates FIGURE 8. LOAN BREAKDOWN AS OF SEPTEMBER 216 FIGURE 9. MICRO LOANS BREAKDOWN AS OF SEP 216 Micro 34% Non-SOE corporate 13% SOE corporate 15% Medium 3% Kupedes Rakyat 3% KUR 23% Kupedes 74% Consumer 16% Small commercial 19% FIGURE 1. NPL PER SEGMENT FIGURE 11. WRITE OFF/AVG LOANS AND NPL LEVEL Dec-1 Jun-11 Dec-11 Jun-12 Dec-12 Jun-13 Non-SOE corporate Small commercial Micro Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Medium Small consumer Jun Write off/avg. loans F 217F NPL level 218F Please see important disclosure at the back of this report Page 3 of 5

4 Company Update 11 January 217 BRI Profit & Loss YE Dec (Rp Bn) 214A 215A 216F 217F 218F Interest Income 75,17 85,435 94,14 1, ,98 Interest Expense (23,681) (27,156) (27,41) (28,18) (31,572) Net Interest Inc. 51,49 58,279 67,62 72,74 82,526 Other Oper. Inc. 9,299 12,49 15,11 17,914 2,949 Operating Exp. (26,76) (31,285) (37,325) (41,611) (47,62) Personnel Exp.. (13,484) (15,97) (19,67) (21,258) (24,21) G & A (13,276) (15,315) (17,718) (2,353) (23,58) Others Pre-Prov. Profit 34,29 39,43 44,838 49,43 55,873 Provision Exp. (5,719) (8,891) (14,14) (14,224) (12,944) Operating Inc. 28,39 3,511 3,824 34,819 42,929 Pre-tax Income 3,84 32,494 32,427 35,782 43,735 Tax Expenses (6,578) (7,83) (6,934) (7,514) (9,184) Minority Int. (12) (13) (14) (1) (12) Net Profit 24,215 25,398 25,479 28,258 34,539 Profit & Loss YE Dec (Rp Bn) 214A 215A 216F 217F 218F Assets Cash 22,469 28,772 31,758 36,347 42,781 Due to BI 51,185 61,718 51,775 59,256 69,745 Interbank Placement 22,28 2,911 2,34 24,514 29,49 Securities-Net 195,13 18,13 189,223 25, ,76 Gross Loan 51,428 58, , , ,48 Loan Loss Prov. (15,886) (17,162) (23,23) (26,154) (3,97) Fixed Assets 5,917 8,39 28,217 34,143 37,642 Other Assets 1,531 15,382 14,199 24,639 29,6 Total Assets 81, , ,999 1,119,339 1,36,311 Liabilities & Equity Liabilities Demand Deposits 89,43 113, ,63 136, ,662 Saving Deposits 232, ,59 285,64 326,29 382,741 Time Deposits 3, ,57 335, ,6 448,33 Total Third Party Funds 622, , , , ,733 Deposits fr. Oth. Banks 8,258 1,267 22,171 27,551 33,39 Securities Issued Borrowings 49,87 47,724 35,91 39,89 43,11 Subordinated Loan Other Liabilities 23,721 38,256 34,458 36,542 37,277 Total Liabilities 74, , ,16 949,94 1,18,481 Minority Interest Shareholder's Equity 97, , , , ,431 Total Liab. and Equity 81, , ,999 1,119,339 1,36,311 Balance Sheet YE Dec (Rp Bn) 214A 215A 216F 217F 218F Growth (% YoY) Assets Loans Earnings Assets Non-Performing Loans Deposits Shareholders' Equity Net interest income Non-interest income Operating expenses Pre-provision profit Net profit Common Ratios NIM LDR NPL Coverage ratio ROAE ROAA Total CAR Tier 1 CAR Other Ratios Yield on earning assets Avg. cost of funds Net Interest Spread CASA deposits Cost to income Equity to assets Dividend payout Effective tax rate Key Ratios YE Dec 214A 215A 216F 217F 218F EPS 982 1,3 1,33 1,145 1,4 BVPS 3,954 4,574 5,945 6,886 8,3 DPS Valuations P/BV (x) P/E (x) P/PPOP (x) Dividend yield Please see important disclosure at the back of this report Page 4 of 5

5 Mandiri Sekuritas A subsidiary of PT Bank Mandiri (Persero) Tbk Plaza Mandiri 28 th Floor, Jl. Jend. Gatot Subroto Kav , Jakarta 1219, Indonesia General: , Fax : (Equity Sales) RESEARCH Tjandra Lienandjaja Deputy Head of Equity Research, Banking tjandra.lienandjaja@mandirisek.co.id Liliana S Bambang Property, Building Material liliana.bambang@mandirisek.co.id Adrian Joezer Consumer, Strategy adrian.joezer@mandirisek.co.id Ariyanto Kurniawan Telecom, Coal, Metal, Automotive ariyanto.kurniawan@mandirisek.co.id Bob Setiadi Construction, Toll Road bob.setiadi@mandirisek.co.id Francis Lim Quant, Health Care, Hospital francis.lim@mandirisek.co.id Yudha Gautama Mining, Plantation yudha.gautama@mandirisek.co.id Laura Taslim Retail laura.taslim@mandirisek.co.id Priscilla Thany Banking priscilla.thany@mandirisek.co.id Ferdy Wan Building Material, Industrial Est., Media ferdy.wan@mandirisek.co.id Lakshmi Rowter Research Assistant lakshmi.rowter@mandirisek.co.id Gerry Harlan Research Assistant gerry.harlan@mandirisek.co.id Leo Putera Rinaldy Chief Economist leo.rinaldy@mandirisek.co.id Wisnu Trihatmojo Economist wisnu.trihatmojo@mandirisek.co.id Aziza Nabila Amani Research Assistant aziza.amani@mandirisek.co.id INSTITUTIONAL SALES Lokman Lie Co-Head Institutional Equities lokman.lie@mandirisek.co.id Silva Halim Co-Head Institutional Equities silva.halim@mandirisek.co.id Aditya Sastrawinata Institutional Sales aditya.sastrawinata@mandirisek.co.id Andrew Handaya Institutional Sales andrew.handaya@mandirisek.co.id Cindy Amelia P. Kalangie Institutional Sales cindy.amelia@mandirisek.co.id Feliciana Ramonda Institutional Sales feliciana.ramonda@mandirisek.co.id Kevin Halim Institutional Sales kevin.halim@mandirisek.co.id Mirna Santikara Salim Institutional Sales santikara.salim@mandirisek.co.id Oos Rosadi Institutional Sales oos.rosadi@mandirisek.co.id Zahra Aldila Niode Institutional Sales zahra.niode@mandirisek.co.id Kusnadi Widjaja Equity Dealing kusnadi.widjaja@mandirisek.co.id Edwin Pradana Setiadi Equity Dealing edwin.setiadi@mandirisek.co.id Jane Theodoven Sukardi Equity Dealing jane.sukardi@mandirisek.co.id Michael Taarea Equity Dealing michael.taarea@mandirisek.co.id RETAIL SALES Andreas M. Gunawidjaja Head Retail Equities andreas@mandirisek.co.id Boy Triyono Plaza Mandiri boy.triyono@mandirisek.co.id A. A. Damargumilang Pondok Indah Office Tower damar.gumilang@mandirisek.co.id Herianto Pondok Indah Prioritas herianto@mandirisek.co.id Hendra Riady Mangga Dua hendra.riady@mandirisek.co.id Indra Mas'ari Bandung indra.mas ari@mandirisek.co.id Yogiswara P. Yogyakarta yogiswara.perdana@mandirisek.co.id Widodo Solo widodo@mandirisek.co.id Linawati Surabaya Linawati@mandirisek.co.id Bambang Suwanto Malang bambang.suwanto@mandirisek.co.id Ruwie Medan ruwie@mandirisek.co.id Aidil Idham Palembang aidil.idham@mandirisek.co.id Yuri Ariadi Pontianak yuri.ariadi@mandirisek.co.id INVESTMENT RATINGS: Indicators of expected total return (price appreciation plus dividend yield) within the 12-month period from the date of the last published report, are: Buy (15% or higher), Neutral (-15% to15%) and Sell (-15% or lower). DISCLAIMER: This report is issued by PT. Mandiri Sekuritas, a member of the Indonesia Stock Exchanges (IDX) and Mandiri Sekuritas is registered and supervised by the Financial Services Authority (OJK). Although the contents of this document may represent the opinion of PT. Mandiri Sekuritas, deriving its judgement from materials and sources believed to be reliable, PT. Mandiri Sekuritas or any other company in the Mandiri Group cannot guarantee its accuracy and completeness. PT. Mandiri Sekuritas or any other company in the Mandiri Group may be involved in transactions contrary to any opinion herein to make markets, or have positions in the securities recommended herein. PT. Mandiri Sekuritas or any other company in the Mandiri Group may seek or will seek investment banking or other business relationships with the companies in this report. For further information please contact our number or fax ANALYSTS CERTIFICATION: Each contributor to this report hereby certifies that all the views expressed accurately reflect his or her views about the companies, securities and all pertinent variables. It is also certified that the views and recommendations contained in this report are not and will not be influenced by any part or all of his or her compensation.