Bank Rakyat Indonesia(BBRI IJ)

Transcription

1 Equity Research Company Update Monday,27 August 2018 BUY Maintain Last price (IDR) 3,270 Target Price (IDR) 4,350 Upside/Downside +33.0% Previous Target Price (IDR) 4,350 Stock Statistics Sector Bloomberg Ticker Banking BBRI IJ No of Shrs (mn) 123,346 Mkt. Cap (IDRbn/USDmn) 403,341/27,554 Avg. daily T/O (IDRbn/USDmn) 440.7/30.1 Major shareholders (%) Government of Indonesia 56.8 Estimated free float 43.2 EPS Consensus (IDR) 2018F 2019F 2020F Danareksa Consensus Danareksa/Cons BBRI relative to JCI Index Bank Rakyat Indonesia(BBRI IJ) A further boost from the KUR program We maintain our BUY call on BBRI with an unchanged TP of IDR4,350, noting the bank s strong foothold in micro lending and the higher budget allocation for interest rate subsidies of IDR16.6tn in the proposed 2019 state budget. Assuming 70% of the budget is directed toward the KUR program, then the subsidies would reach around IDR13.2tn. This translates into an 11% interest rate subsidy if the disbursement target is flattish at IDR120tn. All in, BBRI still has the flexibility to cater micro segment either through KUR program or Kupedes product. BBRI remains as one of top picks in our banking universe. KUR realization was on-track in 1H18. The KUR committee revealed KUR realization of IDR64.6tn in 1H18 from the total full year target of IDR120tn. BBRI alone disbursed a total of IDR44.5tn with 87.4% of this in the form of KUR micro (maximum loan size of IDR25mn), inline with its micro lending business model. BBNI and BMRI trailed far behind, disbursing IDR8.7tn and IDR8.3tn, respectively. The KUR disbursement of these two banks was dominated by KUR retail (loan size of IDR25-500mn) commensurate with their core businesses which are skewed more towards corporate banking. Higher allocation for interest rate subsidies in the proposed 2019 state budget. The IDR16.6tn of interest rate subsidies for the government s loan programs (KUR and subsidized mortgages) in the proposed 2019 state budget should mean limited downside for BBRI. We view that such amount can either be used to provide higher interest rate subsidies following a 125bps BI rate hikes YtD or to increase next year s disbursement target - the former being a more reasonable option, in our view, given the current macro environment. The most likely scenario for 2019: higher subsidies with a flat disbursement target. Historically, interest rate subsidies for the KUR program are a substantial proportion (c.70% of the allocation). If we assume this is the case in 2019, then the allocation will reach IDR13.2tn. Assuming the KUR lending rate remains at 7%, then the government will provide a higher interest rate subsidy of 11% translating to a flat disbursement target of IDR120tn. Regardless of which scenario transpires, we believe there is limited downside for BBRI given its stronger bargaining position in the micro lending business. Maintain BUY with a TP of IDR4,350. We maintain our GGM-derived TP of IDR4,350 (implying 2.8x 2018F P/BV) assuming a 19.5% ROAE, a 8.8% CoE assumption and a 3% long-term growth assumption. Source : Bloomberg Eka Savitri (62-21) ext 3506 eka.savitri@danareksa.co.id Key Financials Year to 31 Dec 2016A 2017A 2018F 2019F 2020F PPOP (IDRbn) 47,755 54,040 59,910 66,172 75,167 Net profit (IDRbn) 26,196 28,997 32,924 38,684 45,767 EPS (IDR) EPS growth (%) BVPS (IDR) 1, , , , ,989.0 PER (x) PBV (x) Dividend yield (%) ROAE (%) Source : BBRI, Danareksa Estimates See important disclosure at the back of this report 1

2 Jan-08 Aug-08 Mar-09 Oct-09 May-10 Dec-10 Jul-11 Feb-12 Sep-12 Apr-13 Nov-13 Jun-14 Jan-15 Aug-15 Mar-16 Oct-16 May-17 Dec-17 Jul-18 Exhibit 1. Loans and Growth Exhibit 2. Net Interest Income and Growth Exhibit 3. NIM and LDR Exhibit 4. NPLs Exhibit 5. PE BAND CHART 18.0 x Exhibit 6. PBV ROAE BAND CHART x % Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 Jul 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 Exhibit 7. KUR program in F F 2019F* Target (IDRtn) Realization (IDRtn) ** N/A Budget allocation (IDRtn) Lending rate (%) Interest rate subsidy (%) figures from LKPP data *Danareksa estimates ** 1H18 Source : KUR Committee official website, 2019 RAPBN financial notes Exhibit 8. KUR disbursement in 1H18 KUR realization BBRI BMRI BBNI BRIS Others Total Amount (IDRtn) Number of borrowers (thousands) 2, ,455 avg ticket size (IDRmn) Source : KUR Committee official website Exhibit F PBV ROAE matrix 35.0 % 30.0 BTPS 25.0 BBRI BBCA BJBR BJTM BBNI BBTN PNBN BNGA BTPN BDMN BMRI x Source : Bloomberg as of August 24th 2018, Danareksa estimates See important disclosure at the back of this report 3

4 Exhibit 10. Income Statement Interest Income 93, , , , ,346 Interest Expense (28,577) (29,894) (31,690) (32,875) (35,071) Net Interest Income 65,418 73,005 79,704 86,429 96,275 Non-Interest Income (NII) 16,799 18,641 22,520 26,241 30,891 Oper. Income 82,217 91, , , ,167 Oper. Expenses (34,941) (38,442) (42,313) (46,498) (51,999) Pre-provisions profit 47,755 54,040 59,910 66,172 75,167 Provisions & Allowances (13,791) (17,234) (16,987) (17,336) (18,080) Operating Profits 33,965 36,806 42,923 48,836 57,087 Non-Operating Income Exceptionals Pre-tax Profit 33,974 37,022 43,107 49,041 57,289 Income Tax (7,746) (7,978) (10,130) (10,299) (11,458) Minorities (32) (48) (53) (58) (64) Net Profit 26,196 28,997 32,924 38,684 45,767 Exhibit 11. Balance Sheet Gross Loans 643, , , ,018 1,016,975 Provisions (22,184) (29,423) (32,233) (35,988) (39,191) Net Loans 621, , , , ,785 Govt. Bonds 3,318 3,318 2,189 2,189 2,189 Securities 131, , , , ,142 Other Earnings Assets 19,327 19,673 18,426 19,716 22,443 Total Earnings Assets 903,452 1,019,398 1,097,275 1,236,008 1,378,649 Fixed Assets 32,262 33,972 36,809 39,723 42,759 Non-Earnings Assets 14,491 25,230 19,861 22,546 21,203 Total Assets 1,003,644 1,126,248 1,206,607 1,353,052 1,508,154 Customer Deposits 732, , ,939 1,016,045 1,140,283 Banks Deposits 2,230 5,593 4,879 4,975 5,073 Int. Bearing Liab. - Others 836, , ,286 1,114,830 1,238,775 Total Liabilities 856, ,901 1,017,799 1,139,033 1,262,025 Share capital & Reserves 20,446 22,215 22,215 22,215 22,215 Retained Earnings 125, , , , ,117 Shareholders' Funds 146, , , , ,332 Minority interests Total Equity & Liabilities 1,003,644 1,126,248 1,206,607 1,353,052 1,508,154 See important disclosure at the back of this report 4

5 Exhibit 12. Ratios 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 13.Dupont and growth Year to 31 Dec 2016A 2017A 2018F 2019F 2020F Dupont Pre-Tax ROAA Tax Retention rate Post-Tax ROAA Goodwil, Assoc& Min Leverage ROAE Growth (%) Interest income Net Interest Income Other Oper. Expenses Fee Based Income Pre-Provision Oper. Profit Net Profit Shareholders Equity Loan Earnings Asset Deposit Int. Bearing Liab CASA Total Asset Source : BBRI, Danareksa Estimates