BANK MANDIRI BMRI IJ / BMRI.JK

Transcription

1 Equity Research BANK MANDIRI BMRI IJ / BMRI.JK Results Flash Financials Sector 3Q16: debunking RGM-led proposition One-time repayment led to 9M16 beat vs our forecast BMRI posted IDR12tn of net profit (+18% YoY) on one-time interest income repayment from large borrower Raja Garuda Mas (RGM). This 9M16 accounts for 83%/7% of ours /street s 216F, which is respectively ahead/slightly off expectations. The 3Q16 net profit of IDR4.9tn was solid (+51% QoQ), spurred by better NIM on RGM (+91bp QoQ) and controlled opex (-5% QoQ). Please note our 216F have yet to include the RGM as emphasized in our initiation. Excluding the one-off item, 9M16 would be in-line at 71% of our 216F. PRICE PERFORMANCE BUY 26 Oct 216 Igor Nyoman Putra igor.putra@bcasekuritas.co.id ext 178 Target Price: IDR13,45/share Current Price: IDR11,175/share Upside potensial: 2.4% Retail loan as key driver; Stabilizing asset-quality with rising coverage Loan growth of 11.5% YoY in 3Q16 was driven by micro (+17% YoY; 7% of shares), corporate (+14% YoY; 33.8%), and consumer (+13% YoY; 12.6%). A 5.5% YoY of deposit growth allows 3Q16 LDR to rise 2% QoQ to 9%, the lowest vs large SOE banks 91-92%, implying ample liquidity. 3Q16 NPL ratio improved 5bp QoQ to 3.8%, largely on falling commercial NPL to 6.3% vs 2Q16 s 6.7%. SML ratio was flattish QoQ at 4.6%. While there was IDR5.2tn of additional restructured loan in 3Q16, with possibly another IDR3.1tn in 4Q16F premised on the pipeline outlined in 2Q16 meeting, this is within expectations. 3Q16 coverage ratio improved 16% QoQ to 125%. We note NPL risk remains, yet, it is getting less risky now with the recent recovery trend. Our calculation reveals 3Q16 still going strong even with RGM absence We believe BMRI would still perform strongly even with RGM absence. Exhibit 4 demonstrates 3Q16/9M16 without RGM participation and we find the followings: 1) still solid 9M16 net interest income growth at double-digit rate with NIM tracking higher our 216F while 3Q16 NIM QoQ flattish, 2) 9M16 cost-income ratio stayed respectable at 43.9% (lower vs 216F) with 3Q16 trend improving QoQ, and 3) better 9M16 PPOP than our estimates. This highlights BMRI s remarkable ability on pricing power and cost control. Expecting 3Q16 NPL ratio as the peak-out Management said the peak of NPL is past already while now is left with one large borrower s restructuring process, anticipating no negative surprise in NPL onwards. All of the significant slippage potentials have been identified with restructuring being carried out. Asset quality (AQ) will only improve from here, albeit at a moderate speed, which validates our expectation of a gradual recovery. We think stabilizing AQ would allow future credit cost (CoC) trend to be more predictable. We expect BMRI s CoC to improve by 6bp YoY in 217F and in turn to drive earnings. We maintain our forecast and may review in the short term to reflect higher CoC, asset revaluation, and RGM receipts. Maintain BUY with BMRI as our top pick for its potential swift recovery. Exhibit 1. Financials and valuations Year-end 31 Dec (IDR bn) Net interest income 39,132 45,363 46,875 48,846 53,246 Pre-prov. op. profit 31,648 38,36 37,671 4,67 44,983 Net profit 19,872 2,335 14,51 17,976 22,2 EPS (IDR) EPS growth (28.6) P/E (x) BVPS (IDR) 4,4 5,17 5,453 5,992 6,652 P/B (x) DPS (IDR) Yield ROE , Bank Mandiri, BCA Sekuritas estimates * Closing prices as of 25 October ,5 12, 11,5 11, 1,5 1, 9,5 9, 8,5 8, 7,5 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 BMRI IJ JCI Rebase as of 25-Oct-16 STOCK PERFORMANCE 52-week price range (IDR) : 7,8-11,95 Market cap (IDRbn)/(USDmn) : 26, ,5. Avg Daily Turnover (IDRbn/USDmn) : MARKET DATA YTD 1M 3M 12M Absolute 2.8% -4.1% 12.6% 16.7% JCI Return 17.5%.9% 3.4% 15.1% Relative 3.3% -4.9% 9.2% 1.7% SHAREHOLDERS Government : 6.% Public : 4.%

2 Exhibit 2. Bank Mandiri - Financials Summary Income Statement Interest income 62,638 71,57 7,984 73,32 79,375 Interest expense (23,56) (26,27) (24,19) (24,474) (26,129) Net interest income 39,132 45,363 46,875 48,846 53,246 Non-interest income 17,749 21,791 22,299 25,313 28,789 Total operating income 56,882 67,154 69,174 74,159 82,35 Operating expenses (25,233) (28,795) (31,53) (34,91) (37,52) Pre-prov. op. profit 31,648 38,36 37,671 4,67 44,983 Provisions expense (5,67) (12,21) (18,166) (16,61) (15,755) Operating profit 25,978 26,339 19,55 24,7 29,228 Non-op. inc./(exp.) Pre-tax profit 26,8 26,369 19,55 24,7 29,228 Corporate tax (5,353) (5,217) (4,96) (5,41) (6,138) Minorities (783) (817) (899) (989) (1,88) Net profit 19,872 2,335 14,51 17,976 22,2 EPS (IDR) Balance Sheet Placement with other banks 27,463 2,45 22,446 24,69 27,159 Loans 523,12 586, , , ,548 Government bonds 86,154 13,869 14,98 15,957 17,16 Other int-earning assets 122,99 91,45 11, , ,532 Financial assets impairment (2,58) (24,783) (34,979) (43,482) (51,512) Net earning assets 739, ,617 84, ,621 1,27,744 Cash 71,33 81,423 78,2 87,49 97,845 Fixed assets 8,929 9,762 1,25 1,762 11,3 Other assets 35,237 41,261 42,35 62,57 71,58 Total assets 855,4 91,63 971,336 1,87,38 1,28,469 Customer deposits 636, , ,26 84, ,639 Deposits from other banks 17,772 12,952 14,247 15,672 17,239 Borrowing and sub-debts 36,173 44,993 49,492 54,441 57,34 Other liabilities 59,868 56,24 33,899 34,238 34,58 Total liabilities 75,195 79, , ,1 1,5,762 Minorities 2,187 2,422 2,446 2,47 2,495 Equity 12, ,7 127, ,81 155,212 Total liabilities and equity 855,4 91,63 971,336 1,87,38 1,28,469 BVPS (IDR) 4,4 5,17 5,453 5,992 6,652 Breakdown As % of earning assets Gross loan Government bonds Other earnings assets As % of loan book Corporate SME/Commercial Consumer Micro Others As % of deposit Core deposit Time deposit Ratios & assumptions NIM Loan-to-deposit ratio Cost-to-income ratio Credit cost Gross NPL NPL coverage Tier-1 CAR ROA ROE Average asset yield Average funding cost Average loan yield Average deposit cost Loan growth Deposit growth EPS growth (28.6) Source: Bank Mandiri, BCA Sekuritas estimates A recovery in net interest income growth to 3%/4%/9% YoY is driven by improved loan growth We have similar assumptions of loan mix tilted towards retail mix Declining credit cost is in-lien with our expectation of lower gross NPL ratio ahead 2

3 Exhibit 3. BMRI s results summary (9M16) Incorporating one-off RGM BMRI (IDRbn) 3Q15 2Q16 3Q16 Chg 9M/16F 9M15 9M16 216F (QoQ) (YoY) (YoY) BCAS Cons. Int income 18,66 18,6 2, ,637 56, ,984 8 Int expense (6,814) (6,148) (6,14) (.7) (1.4) (2,185) (18,228) (9.7) (24,19) 76 Net int income 11,252 11,912 14, ,452 38, , Non-int income 6,136 5,827 5,79 (.6) (5.6) 15,792 16, , Total income 17,388 17,739 2, ,244 55, , Total opex (7,92) (8,66) (7,665) (5.) 8.1 (2,868) (23,315) 11.7 (31,53) 74 PPOP 1,296 9,674 12, ,376 31, , Provisions (4,497) (5,284) (6,37) (8,493) (15,95) 87.3 (18,166) Opt profit 5,799 4,39 6, ,884 15,962 (15.5) 19, Non-opt income 5 (3) (15) 378 nm 7 (23) nm - nm Net profit 4,657 3,263 4, ,582 12,13 (17.6) 14, Balance sheet Gross loans 552,66 599, , ,66 614, , Deposits 654, ,359 69,57 654,595 69,57 742, Growth Loan (QoQ) Loan (YoY) Loan (ytd) Deposit (QoQ) (.) 5.5 (.1) (.) (.1) Deposit (YoY) Deposit (ytd) Ratios NIM Cost-to-income (7.5) (2.8) (1.) 45.5 Credit cost (bp) ROE (.9) (4.8) 11.9 LDR Coverage ratio NPL (.5) Tier-1 CAR Source: Bank Mandiri, Bloomberg Consensus, BCA Sekuritas estimates Exhibit 4. BMRI s results summary (9M16) Excluding one-off RGM (our calculation) BMRI (IDRbn) 3Q15 2Q16 3Q16 Chg 9M/16F 9M15 9M16 216F (QoQ) (YoY) (YoY) BCAS Cons. Int income 18,66 18,6 18, ,637 54, , Int expense (6,814) (6,148) (6,14) (.7) (1.4) (2,185) (18,228) (9.7) (24,19) 76 Net int income 11,252 11,912 12, ,452 36, , Non-int income 6,136 5,827 5,79 (.6) (5.6) 15,792 16, , Total income 17,388 17,739 18, ,244 53, , Total opex (7,92) (8,66) (7,665) (5.) 8.1 (2,868) (23,315) 11.7 (31,53) 74 PPOP 1,296 9,674 1, ,376 29, , Provisions (4,497) (5,284) (6,37) (8,493) (15,95) 87.3 (18,166) Opt profit 5,799 4,39 4,41.3 (24.1) 18,884 13,862 (26.6) 19, Non-opt income 5 (3) (15) 378 nm 7 (23) nm - nm Net profit 4,657 3,263 3,283.6 (29.5) 14,582 1,363 (28.9) 14, Balance sheet Gross loans 552,66 599, , ,66 614, , Deposits 654, ,359 69,57 654,595 69,57 742, Growth Loan (QoQ) Loan (YoY) Loan (ytd) Deposit (QoQ) (.) 5.5 (.1) (.) (.1) Deposit (YoY) Deposit (ytd) Ratios NIM (.) Cost-to-income (3.1) Credit cost (bp) ROE (.2) (6.2) (6.6) 11.9 LDR Coverage ratio NPL (.5) Tier-1 CAR Source: Bank Mandiri, Bloomberg Consensus, BCA Sekuritas estimates 3

4 Jun-6 Oct-6 Feb-7 Jun-7 Oct-7 Feb-8 Jun-8 Oct-8 Feb-9 Jun-9 Oct-9 Feb-1 Jun-1 Oct-1 Feb-11 Jun-11 Oct-11 Feb-12 Jun-12 Oct-12 Feb-13 Jun-13 Oct-13 Feb-14 Jun-14 Oct-14 Feb-15 Jun-15 Oct-15 Feb-16 Jun-16 Oct-16 Exhibit 5. Loan breakdown by segment (3Q15-3Q16) Corporate (LHS) Subsidiaries (LHS) Micro (LHS) Loan growth (RHS) Commercial (LHS) Smal (LHS) Consumer (LHS) (% YoY) 2 1 (1) (2) Below loan segment grew above total 3Q16 loan growth: - Micro (+17% YoY; 7% of shares) - Corporate (+14% YoY; 33.8%) - Consumer (+13% YoY; 12.6%) Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 (3) (4) Source: Bank Mandiri, BCA Sekuritas Exhibit 6. Third-party fundings breakdown (3Q15-3Q16) Demand deposits (LHS) Savings (LHS) (% YoY) Time deposits (LHS) Deposit growth (RHS) (5) (1) CASA ratio is maintained at 64% Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 (15) (2) Source: Bank Mandiri, BCA Sekuritas Exhibit 7. 12M forward P/B (x) 3. Forward P/B appears attractive at around mean and still off earlier peak Std +2 = 2.4x Std +1 = 2.2x Mean = 1.9x Std -1 = 1.7x Std -2 = 1.5x 1., Bank Mandiri, BCA Sekuritas estimates 4

5 Teguh Hartanto Director of Equity, ext: 129 RESEARCH DIVISION Darmawan Halim Head of Research, ext: 168 Strategy, Automotive, Heavy Equipment Jennifer Frederika Yapply Equity Analyst, ext: 179 Cigarettes, Consumers, Health Care Michael Ramba Equity Analyst, ext: 21 Construction, Property Residential Arga Samudro FI Analyst, ext: 181 FI Strategies & Macroeconomist Aditya Eka Prakarsa Equity Analyst, ext: 182 Telco, Coal, Metal Mining Nyoman Widita Prabawa Equity Analyst, ext: 18 Cement, Plantation, Oil & Gas Igor Nyoman Putra Equity Analyst, ext: 178 Banking, Industrial Estate Johanes Prasetia Equity Analyst, ext: 21 Retail, Poultry Achmad Yaki Yamani Technical Analyst, ext: 21 Technical Analyst Yuni Pratiwi Research Assistant, ext: 21 EQUITY CAPITAL MARKET DIVISION Amelia Husada Head of Institutional Sales Santoso Jodikin Sales Trader, ext: 164 Arief Iskandar Institutional Dealer, ext: 136 Haslienda Equity Capital Market, ext: 137 Amru Fernando Institutional Dealer, ext: 137 Menara BCA - Grand Indonesia, 41st Floor Jl. 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