Contact our analyst Lingga
28% upside, BUY.
29th April, 2021
Target price Rp40,510
Net Profit up
BBCA net profit was up 7% YoY, with Net Interest Income increasing by 3.3% YoY due to a significant decrease in interest expenses by -22.2% YoY as BBCA has the lowest amount ofTime Deposits at only 12.2%, BBCA also has a target IDR1.6 trillion of deferred interest income by the end of 2021.
Lower Loan Growth
Loan growth was lower in 1Q21 at 1.9%. This lower growth was affected by commercial & SME -6.4% YoY and consumer -10%. The corporate segment is the only segment that posted positive growth of 0.9% YoY, with loans to CPO, manufacturing, and mining. BBCA will focus on the corporate segment, especially those that are not directly affected by the pandemic.In 2Q21. The growth in consumer credit is expected to increase because of the government luxury tax cut for the purchase of vehicles and property. At the end of March 2021, demand for credit at ‘BCA Expoversary’ increased significantly with applications for Rp 15 trillion in mortgages and Rp. 4.8 trillion for KPR. In 2Q21, most loans can be processed with an approval rate of around 75-80%. We estimate credit growth will be about 4-6% in 2021F
As of 31 December 2020, the amount of restructured loans was IDR 88.0 trillion, or 17% of total loans. Most of the restructured loans, 38%, are from the corporate segment, 26,6% from the commercial segment, 24.3% from the consumer segment, and 10.7% from the SME segment. BBCA says that 35% of the total restructured loans can return to normal and 4-6% will become non-performing loans. The restructured loans cover the tourism, construction, and textile sectors. In 1Q21 the NPL ratio was 1.8%, but in 2Q21 there will be an increase in NPLs due to restructuring. We still estimate that the NPL ratio will be about 2.4% in 2021F.
Valuation: 28% Upside, Buy.
Based on our DDM Valuation, we have a target price within one year of IDR 40,510, or trading at 4.8x PBV which gives 28% potential upside, Buy.