Equity Research Monthly Result Wednesday,27 June 2018 BUY Maintain Last price (IDR) 7,150 Target Price (IDR) 10,400 Upside/Downside +45.5% Previous Target Price (IDR) 10,400 Stock Statistics Sector Bloomberg Ticker Banking BBNI IJ No of Shrs (mn) 18,649 Mkt. Cap (IDRbn/USDmn) 133,338/9,404 Avg. daily T/O (IDRbn/USDmn) 194.9/13.7 Major shareholders (%) Government of Indonesia 60.0 Estimated free float 40.9 EPSConsensus (IDR) 2018F 2019F 2020F Danareksa 834.0 965.7 1,148.1 Consensus 843.8 957.0 1,073.1 Danareksa/Cons (1.2) 0.9 7.0 BBNI relative to JCI Index Bank Negara Indonesia(BBNI IJ) Gradual pickup in loans We reiterate our BUY call on BBNI with a GGMderived TP of IDR10,400 (implying 1.74x 2018F P/BV) following the release of the 5M18 results that were broadly inline with our forecast. Loans grew at a faster pace of 12.4% yoy in May 2018 (vs March 2018: 10.8%) while customer deposits grew by 15.4% yoy driven mainly by CASA deposits. The credit cost remains manageable at 188bps due to more manageable assets quality in our view. We assume a 5.1% NIM given an estimated 37bps fall in the assets yield to 7.8%. 5M18 P&L highlights. The net profits of IDR5.3tn (bank only) are inline with our forecast and the seasonal pattern as the 5M results were 34.536.5% of the full year figure in the past two years. NIM expanded by c.40bps on a yoy basis to 5.9% due to higher asset yields at 8.6% (5M17: 8.3%). The credit cost declined to 188bps from 195bps in 5M17 as the pressure on assets quality eased. All in all, we maintain our forecast of a 156bps credit cost and 14.2% net profits growth in FY18F. 5M18 balance sheet highlights. In the bank s earning assets mix, gross loans grew at a higher rate of 12.4% yoy (vs Mar18 yoy: 10.8%). We expect loans to grow by 13.7% by the end of the year given stronger expected demand for loans in 2H. Marketable securities (as the excess liquidity instruments) jumped by 17.8% yoy to IDR91.0tn as of May 2018, while loans demand was soft during the month of Ramadhan. Customer deposits, meanwhile, expanded by 15.4% yoy driven by 24.3% yoy CASA deposits growth in May 2018. As such, the contribution from CASA deposits rose to 64.1% of total customer deposits as of May 2018 (vs May 2017: 59.5%). Expectation of a lower NIM. Given the bank s significant exposure to corporate lending, particularly for the development of infrastructure projects, we expect the assets yield to decline further by 37bps to 7.8% this year. The blended CoF, meanwhile, will improve to 2.9% on the back of a higher proportion of CASA deposits at 64.2% of total customer deposits by the end of the year. All in all, we expect the NIM to fall by c.30bps to 5.1% in 2018. Maintain BUY with a new TP of IDR10,400. We maintain our BUY call on BBNI with a GGMderived TP of IDR10,400 assuming 10% CoE, 15.3% sustainable ROAE and 3% longterm growth. Source : Bloomberg Eka Savitri (6221) 2955 5888 ext 3506 eka.savitri@danareksa.co.id Key Financials Year to 31 Dec 2016A 2017A 2018F 2019F 2020F PPOP (IDRbn) 22,082 24,349 27,018 30,751 35,026 Net profit (IDRbn) 11,339 13,616 15,553 18,009 21,411 EPS (IDR) 608.0 730.2 834.0 965.7 1,148.1 EPS growth (%) 25.1 20.1 14.2 15.8 18.9 BVPS (IDR) 4,673.7 5,286.8 5,954.0 6,726.6 7,645.1 PER (x) 11.8 9.8 8.6 7.4 6.2 PBV (x) 1.5 1.4 1.2 1.1 0.9 Dividend yield (%) 3.0 3.6 2.3 2.7 3.2 ROAE (%) 13.9 14.7 14.8 15.2 16.0 Source : BBNI, Danareksa Estimates www.danareksa.com See important disclosure at the back of this report 1
Jan08 Jul08 Jan09 Jul09 Jan10 Jul10 Jan11 Jul11 Jan12 Jul12 Jan13 Jul13 Jan14 Jul14 Jan15 Jul15 Jan16 Jul16 Jan17 Jul17 Jan18 Jan07 Jul07 Jan08 Jul08 Jan09 Jul09 Jan10 Jul10 Jan11 Jul11 Jan12 Jul12 Jan13 Jul13 Jan14 Jul14 Jan15 Jul15 Jan16 Jul16 Jan17 Jul17 Jan18 Exhibit 1. Loans and Growth Exhibit 2. Net Interest Income and Growth Exhibit 3. NIM and LDR Exhibit 4. NPLs Exhibit 5. PBV ROAE Band Chart 2.50 x % 2.00 1.50 1.00 0.50 25.0 20.0 15.0 10.0 5.0 Exhibit 6. PE Band Chart 35.0 30.0 25.0 20.0 15.0 10.0 5.0 Fwd P/BV Mean +1SD 1SD ROAE (RHS) Fwd P/E Mean +1SD 1SD www.danareksa.com See important disclosure at the back of this report 2
Exhibit 7. BBNI s 5M18 result (IDR bn unless stated) 5M18 5M17 yoy % FY18F A/F Interest income 20,035 17,898 11.9 53,055 37.8 Interest expenses 6,777 6,026 12.5 18,105 37.4 Net Interest Income 13,258 11,872 11.7 34,950 37.9 Other op. Income 4,613 4,501 2.5 15,171 30.4 Opex 8,011 7,024 14.1 23,103 34.7 PPOP 9,860 9,349 5.5 27,018 36.5 Provisions 3,379 3,121 8.3 7,348 46.0 PBT 6,717 6,108 10.0 19,694 34.1 Net Profit 5,374 4,913 9.4 15,553 34.6 NIM (%) 5.9 5.5 5.1 CoF (%) 3.1 2.8 2.9 CIR (%) 44.8 42.9 46.1 CoC (bps) 188.0 195.0 155.8 ROAE (%) 13.3 12.7 14.8 Assets 682,738 571,376 19.5 Securities 90,958 77,243 17.8 Loans 421,390 375,012 12.4 CASA 312,287 251,199 24.3 Customer deposits 487,049 421,950 15.4 Interbanks 13,737 13,098 4.9 Borrowings 48,481 33,282 45.7 Equity 93,095 85,269 9.2 Source : Company, Danareksa Sekuritas estimates www.danareksa.com See important disclosure at the back of this report 3
Exhibit 8. Income Statement Interest Income 43,768 48,178 53,055 59,348 65,713 Interest Expense (13,773) (16,240) (18,105) (19,886) (21,944) Net Interest Income 29,995 31,938 34,950 39,462 43,770 NonInterest Income (NII) 10,702 12,592 15,171 17,866 21,495 Oper. Income 40,697 44,530 50,121 57,328 65,265 Oper. Expenses (19,217) (20,863) (23,103) (26,577) (30,238) Preprovisions profit 22,082 24,349 27,018 30,751 35,026 Provisions & Allowances (7,853) (7,126) (7,348) (7,969) (7,940) Operating Profits 14,229 17,223 19,669 22,782 27,087 NonOperating Income 74 (57) 25 14 (6) Exceptionals 0 0 0 0 0 Pretax Profit 14,303 17,165 19,694 22,797 27,080 Income Tax (2,893) (3,395) (3,939) (4,559) (5,416) Minorities (71) (154) (202) (229) (253) Net Profit 11,339 13,616 15,553 18,009 21,411 Exhibit 9. Balance Sheet Gross Loans 393,275 441,314 501,765 571,643 651,881 Provisions (16,681) (14,524) (15,718) (16,580) (17,969) Net Loans 376,595 426,790 486,047 555,063 633,912 Govt. Bonds 63,006 79,849 64,182 51,602 41,500 Securities 23,765 36,050 54,075 69,224 89,991 Other Earnings Assets 0 0 0 0 0 Total Earnings Assets 545,213 641,844 726,721 819,115 943,386 Fixed Assets 28,426 30,205 31,921 33,031 34,684 NonEarnings Assets 9,824 13,322 10,995 11,550 10,709 Total Assets 603,032 709,330 808,597 906,415 1,040,593 Customer Deposits 415,453 492,748 569,636 645,927 729,288 Banks Deposits 9,735 11,683 12,163 12,810 13,578 Int. Bearing Liab. Others 497,772 588,358 678,526 778,231 895,027 Total Liabilities 513,778 608,427 695,049 778,231 895,027 Share capital & Reserves 36,359 38,279 38,279 38,279 38,279 Retained Earnings 50,798 60,314 72,756 87,163 104,291 Shareholders' Funds 87,157 98,592 111,035 125,442 142,570 Minority interests 2,097 2,311 2,513 2,742 2,995 Total Equity & Liabilities 603,032 709,330 808,597 906,415 1,040,593 www.danareksa.com See important disclosure at the back of this report 4
Exhibit 10. Ratios Yield on Earning Assets 8.8 8.1 7.8 7.7 7.5 Cost of funds 3.0 3.0 2.9 2.7 2.6 Interest Spread 5.8 5.1 4.9 4.9 4.8 Net Interest Margin 6.1 5.4 5.1 5.1 5.0 Cost/Income Ratio 46.5 46.1 46.1 46.4 46.3 Oper. Exp./Oper. Gross Inc. 74.2 72.0 71.2 70.5 68.9 Gross NPL Ratio 3.0 2.3 2.1 1.9 1.8 LLP/Gross NPL 143.3 143.8 146.3 152.5 155.6 Cost of Credit 2.2 1.7 1.6 1.5 1.3 Loan to Deposit Ratio 94.7 89.6 88.1 88.5 89.4 Loan to Funding Ratio 80.3 76.2 74.8 74.2 73.5 CASA Mix 64.4 62.7 62.9 62.4 63.4 ROAE 13.9 14.7 14.8 15.2 16.0 ROAA 2.0 2.1 2.0 2.1 2.2 CAR 18.6 18.1 17.9 17.6 17.5 Exhibit 11.Dupont and growth Year to 31 Dec 2016A 2017A 2018F 2019F 2020F Dupont PreTax ROAA 2.6 2.6 2.6 2.7 2.8 Tax Retention rate 79.8 80.2 80.0 80.0 80.0 PostTax ROAA 2.1 2.1 2.1 2.1 2.2 Goodwil, Assoc& Min 0.0 0.0 0.0 0.0 0.0 Leverage 6.8 7.1 7.2 7.3 7.3 ROAE 13.9 14.7 14.8 15.2 16.0 Growth (%) Interest income 18.6 10.1 10.1 11.9 10.7 Net Interest Income 17.4 6.5 9.4 12.9 10.9 Other Oper. Expenses 16.4 8.6 10.7 15.0 13.8 Fee Based Income 16.8 13.0 14.9 13.7 9.0 PreProvision Oper. Profit 17.8 10.3 11.0 13.8 13.9 Net Profit 25.1 20.1 14.2 15.8 18.9 Shareholders Equity 14.1 13.1 12.6 13.0 13.7 Loan 20.6 12.2 13.7 13.9 14.0 Earnings Asset 22.2 17.7 13.2 12.7 15.2 Deposit 18.7 18.6 15.3 13.2 12.8 Int. Bearing Liab. 19.3 18.2 15.3 14.7 15.0 CASA 24.4 15.5 15.6 12.4 14.6 Total Asset 18.6 17.6 14.0 12.1 14.8 Source : BBNI, Danareksa Estimates