Bank Negara Indonesia

Transcription

1 1 Mar 213 INDONESIA EQUITY Investment Research Daily Rocky Indrawan Buy Target Previous Price Banks IDR IDR4,7 IDR4,7 IDR4,6 Bank Negara Indonesia is Indonesia's 4th largest commercial bank by asset size. It is predominantly owned by the Indonesian Government Stock Statistics Bloomberg Ticker Market Cap BBNI IJ IDR85,783,816m USD8,872m 52 wk H/L price (IDR) 4,6 3, 3m ADT IDR96,787m YTD Returns 24.3% Beta (x) Major Shareholders Indonesian Government 6. Share Performance Month Absolute Relative 1m m m m month Share Price Performance 4,8 4,6 4,4 4,2 4, 3,8 3,6 3,4 3,2 3, 2,8 1-M M -12 Source: Bloomberg Price Close 3-Jul-12 Relative to Jakarta Composite Index (RHS) 3-S N J QFY12 Results Review Bank Negara Indonesia Strong Across The Board Bank Negara Indonesia (BBNI) dished out solid 4Q12 results. We are looking to raise our earnings estimates and expect consensus to do so too. Healthy net interest income growth coupled with robust non-interest income offset the q-o-q spike in costs. Credit cost was mild as well while credit growth perked up, gross NPL improved and CASA mix hit a new high. We view the results positively. Operating costs offset by strong revenue and low impairment. BBNI s 4Q12 net earnings grew 14.7% q-o-q and 13.7% y-o-y to IDR2.trn, lifting FY12 net earnings to IDR7.5trn (2.9% y-o-y), 6% and 9% above consensus and our estimates respectively. Net interest income growth of 7.% q-o-q and 12.5% y-o-y, coupled with the 33.4% q-o-q and 43.% y-o-y surge in non-interest income owing to fee income and recoveries, offset the expanding costs (27.1% q-o-q; 4.5% y-o-y), resulting in 4Q12 pre-provision operating profit (PPOP) growth of 3.1% q-o-q and 62.7% y-o-y. Pre-tax profit was further boosted by the benign IDR254bn in credit costs (-63.4% q-o-q; 4Q11: net DR68bn reversal). Robust balance sheet. Credit growth was robust at 8.7% q-o-q and 22.8% y-o-y, with consumer loans posting the strongest growth at 4% y-o-y on mortgage credit. Customer deposit grew 7.8% q-o-q and 11.4% y-o-y, driven by savings (14.6% q-o-q; 23.4%). Current Account, Savings Account (CASA) mix reached a new high of 67%. As a result, cost of funds fell by ~54bp y-o-y, offsetting the 4bp drop in asset yields to anchor net interest margin (NIM) at ~5.7% in FY12. Loan to deposit ratio (LDR) rose to 78% from 71% last year. Gross non-performing loan (NPL) fell to 2.8%, with improvements seen in all segments, save the small category, while NPL coverage ratio stayed comfortable at 123%. Takeaways from management briefing. Management does not expect costs to escalate in 213 as the spike in 4Q12 was only due to a one-time adjustment to health insurance premium and long-term employee benefits. Standard operating procedure for a NPL haircut will be proposed to shareholders in the next AGM. Meanwhile, the acquisition for Bahana Group is underway. Management s targets for 213 are within reach, in our view. Expect street earnings upgrade; excitement likely to continue. We will likely raise our earnings estimates soon and expect consensus to do so as well. BBNI has performed well YTD and we expect the excitement to sustain. Key risks would be its asset quality, while settlement of its NPL haircut and potential partnerships at subsidiary BNI Life are catalysts. Forecasts and Valuations Dec-1 Dec-11 Dec-12 Dec-13F Dec-14F Net interest income (IDRb) 11,738 13,196 15,459 16,694 18,573 Net income to ord equity (IDRb) 4,12 5,826 7,48 7,424 8,562 Net profit growth 65.1% 42.% 21.% 5.3% 15.3% Recurrent net profit (IDRb) 4,12 5,826 7,48 7,424 8,562 EPS (IDR) DPS (IDR) Dividend Yield 1.8% 1.4% 1.6% 1.7% 2.% Return on average equity 15.7% 16.4% 17.3% 16.1% 16.4% Return on average assets 1.7% 2.1% 2.2% 2.2% 2.3% P/E (x) P/B (x) Source: Company data, OSK Research estimates OSK Research See important disclosures at the end of this report 1 Powered by Enhanced Datasystems EFA Platform

2 FINANCIAL Profit & Loss (IDRb) Dec-1 Dec-11 Dec-12F Dec-13F Dec-14F Interest income 18,837 2,692 22,47 24,516 27,275 Interest expense (7,1) (7,496) (7,586) (8,461) (9,428) Net interest income 11,738 13,196 14,46 16,55 17,847 Non interest income 7,61 7,61 7,261 7,292 7,55 Total other income 7,61 7,61 7,261 7,292 7,55 Total operating income 18,799 2,797 21,722 23,347 25,352 Total costs x depn & amortn (9,66) (11,134) (11,17) (11,738) (12,446) Operating EBITDA 9,138 9,663 1,614 11,68 12,95 Total costs (9,66) (11,134) (11,17) (11,738) (12,446) Operating profit 9,138 9,663 1,614 11,68 12,95 Total provision charges (3,629) (2,421) (2,817) (3,4) (2,963) Post-provision operating profit 5,59 7,243 7,797 8,64 9,942 Other recurring income (24) Pre-tax profit 5,485 7,461 8,13 8,818 1,156 Taxation (1,382) (1,653) (1,621) (1,764) (2,31) Profit after tax 4,13 5,88 6,482 7,54 8,125 Minority interests (1) 18 (6) (7) (8) Profit after tax & minorities 4,12 5,826 6,476 7,47 8,117 Net income to ord equity 4,12 5,826 6,476 7,47 8,117 Recurring net profit 4,12 5,826 6,476 7,47 8,117 Balance Sheet Employment Dec-1 Dec-11 Dec-12F Dec-13F Dec-14F Net cust loans/assets 52.1% 52.3% 56.1% 6.7% 65.1% Net earning assets / assets 86.4% 84.4% 85.5% 86.3% 87.% Non-earning assets/assets 13.6% 15.6% 14.5% 13.7% 13.% Net cust loans/cust deposits 66.6% 67.7% 73.8% 79.9% 85.7% Equity / assets 13.3% 12.6% 13.1% 13.7% 14.2% Equity / gross cust loans 24.3% 23.1% 22.5% 21.8% 21.1% Equity & provns / gross cust loans 29.4% 27.4% 26.3% 25.5% 24.9% Asset risk weighting 63.7% 57.9% 68.9% 71.3% 73.1% Liquid funds / cust deposits 46.8% 44.2% 41.1% 35.7% 3.5% Provision charge / avg cust loans 2.8% 1.6% 1.6% 1.5% 1.2% Provision charge / avg assets 1.5%.9%.9%.9%.8% Total write-off / avg cust loans 3.5% 2.% 1.6% 1.%.7% Total write offs / average assets 1.9% 1.1%.9%.6%.5% Reported NPLs / net cust loans 4.% 3.8% 3.6% 3.6% 3.7% GP charge / average cust loans -3.% -1.6% -1.6% -1.5% -1.2% Total provn chg / avg cust loans -3.% -1.6% -1.6% -1.5% -1.2% Reported NPLs / gross cust loans 3.8% 3.6% 3.5% 3.5% 3.6% Total provisions / gross cust loans 5.1% 4.3% 3.8% 3.8% 3.8% Total provisions / reported NPLs 134.5% 119.2% 11.% 17.8% 15.5% Source : OSK, Bloomberg OSK Research See important disclosures at the end of this report 2

3 BANK NEGARA INDONESIA 4Q12 RESULTS HIGHLIGHTS Figure 1 BBNI 4Q12 P&L quarterly highlights 4Q11 3Q12 4Q12 q-o-q % y-o-y % Interest income 5,4 5,66 5, Interest expense (1,221) (1,684) (1,725) Net interest income 3,784 3,976 4, Non-interest income (NII) 1,884 2,19 2, Operating income 5,668 5,995 6, Operating expenses (3,93) (3,28) (4,79) Pre-provisions profit 1,765 2,788 2, Provisions and allowances 68 (694) (254) (63.4) nm Operating profits 1,833 2,94 2, Non-operating income (96.4) (98.5) Pretax profit 2,23 2,172 2, Tax (263) (422) (613) Minorities (47.7) Net profit 1,767 1,751 2, Credit growth was strong for 4Q12 on consumer and corporate loans growth, driving interest income growth. Interest cost was mild q-o-q as CASA ratio improved further The strong non-interest income was on the back of IDR95bn in fee income (21.1% q-o-q; 13.5% y-o-y), IDR397bn in insurance income (39.9% q-o-q; 61.5% y-o-y) and IDR65bn in cash recovery NIM was firm at 5.7% in FY12 as falling cost of funds helped offset compression in earning asset yields The spike in costs in 4Q12 was on the back of a one time adjustment in health insurance and long-term employee benefits In 213, management expects LDR to inch up to 78%-8% which is conservative in our view We are likely to raise our earnings estimates and fair value and we expect consensus to do the same Figure 2 BBNI FY12 P&L highlights y-o-y % As % of OSK forecast Interest income 2,692 22, Interest expense (7,496) (7,246) (3.3) 95.5 Net interest income 13,196 15, Non-interest income (NII) 7,61 8, Operating income 2,797 23, Operating expenses (11,134) (12,741) Pre-provisions profit 9,663 11, Provisions and allowances (2,421) (2,525) Operating profits 7,243 8, Non-operating income Pretax profit 7,461 8, Tax (1,653) (1,851) Net profit 5,826 7, OSK Research See important disclosures at the end of this report 3

4 Figure 3 BBNI credit growth perked up on strong consumer and corporate credit (IDRtrn) (YoY %) 4Q9 4Q1 4Q11 4Q Figure 4 BBNI's CASA is now at a fresh high of 67% on strong savings account growth (IDRt) Q9 4Q1 4Q11 4Q Gross loans (LHS) Growth (RHS) Customer deposit (LHS) CASA mix (RHS) Figure 5 Cost of funds have offset falling asset yields to support NIM (IDRtrn) Q9 4Q1 4Q11 4Q Figure 6 Asset quality improved further (IDRt) Q9 4Q1 4Q11 4Q12 Net interest income (LHS) NIM (RHS) NPL (LHS) Gross NPL ratio (RHS) Figure 7 Healthy net profit and ROAE trend Figure 8 Steady improvement in ROAE over the years (IDRbn) 2,2 2 (IDRtrn) 8 3 2, 1, , ,4 1, , 4Q1 2Q11 4Q11 2Q12 4Q Net profit (LHS) ROAE (RHS) Net profit (LHS) ROAE (RHS) OSK Research See important disclosures at the end of this report 4

5 RECOMMENDATION CHART 5, 4,5 4, 3,5 3, 2,5 2, 1,5 1, 5 N R Recommendations & Target Price Price Close Buy Neutral Sell Trading Buy Mar-8 Jun-9 Sep-1 Dec-11 Source : OSK, Bloomberg 4,4 Take Profit 4,7 4,7 Unrated Date Recommendation Target Price Price Buy 4,7 3, Buy 4,7 3, Buy 4,7 3, Buy 4,7 3, Buy 4,4 3, Buy 4,4 3, Buy 4,4 3, Buy 4,4 3,65 OSK Research See important disclosures at the end of this report 5

6 OSK Guide to Investment Ratings Buy: Share price may exceed 1% over the next 12 months Trading Buy: Share price may exceed 15% over the next 3 months, however longer-term outlook remains uncertain Neutral: Share price may fall within the range of +/- 1% over the next 12 months Take Profit: Target price has been attained. Look to accumulate at lower levels Sell: Share price may fall by more than 1% over the next 12 months Not Rated: Stock is not within regular research coverage Disclosure & Disclaimer All research is based on material compiled from data considered to be reliable at the time of writing, but OSK does not make any representation or warranty, express or implied, as to its accuracy, completeness or correctness. However, information and opinions expressed will be subject to change at short notice, and no part of this report is to be construed as an offer or solicitation of an offer to transact any securities or financial instruments whether referred to herein or otherwise. 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