BBCA
Contact our analyst Achmadi
14% upside, Buy
2nd August, 2024
Price Rp10,200
Target price Rp11,625
Double-Digit Net Profit Growth Continues
In Q2 2024, BBCA achieved double-digit growth in net income attributable to the parent company, increasing by 11.10% to IDR 26.88 trillion. The highest growth came from net income from transactions at FVTPL, which surged by 57.36% YoY. Additionally, net interest income grew by 7.88% YoY, leading to a 30-bps YoY increase in the NIM ratio to 5.80%. We forecast that in 2024, BBCA will continue to generate higher profit attributable to the parent company, with an expected increase of 14.75% YoY, reaching IDR 55.82 trillion. The NIM ratio is projected to rise to 6.20%.
Strong Loan Portfolio Matches with ESG Commitment
As of June 2024, BBCA's consolidated loan portfolio reached IDR 849.31 trillion, reflecting solid growth of 15.41% YoY and exceeding its 9%-10% growth target for 2024. The highest growth came from the corporate loan segment, which increased by 19.20% YoY, while the consumer, commercial, and SME loan segments grew by 14.32% YoY and 10.50% YoY, respectively. Additionally, BBCA's strong commitment to ESG is evident in its Sustainable Financing, which grew by 9.39% YoY, with Natural Resources & Sustainable Land Use loans being the top contributor, accounting for 74% of Total Green Financing. For Electric Vehicle (EV) Financing, outstanding loans reached IDR 1.47 trillion, nearly doubling with a 95.47% YoY increase. We forecast BBCA will continue to expand its credit portfolio by 10.61% YoY, surpassing its target, by December 2024.
Asset Quality Declined but Remained at a Healthy Level
BBCA’s bank-only NPL ratio rose by 30 basis points YoY, reaching 2.20%, although it remains at a healthy level. This rise was driven by increases in NPLs in the commercial, SME, and consumer segments, which rose by 54 basis points and 38 basis points from a year ago, respectively, to 1.73% and 1.83%. We forecast that by the end of 2024, BBCA’s bank-only NPL ratio will improve to 2.03%, although that is still higher than in 2023.
Robust Transaction Volume Driven by Two Powerful Mobile Apps
BBCA has two powerful mobile apps: BCAmobile (since 2011) and myBCA (since 2021). Both applications have significantly impacted BBCA's business, with transactions showing a 21% YoY growth, reaching IDR 17 billion in the first semester of 2024. Specifically, Mobile & Internet Banking grew by 24% YoY, reaching IDR 14.8 billion, with value growing by 12% YoY to a level of IDR 13,265 trillion, and the number of users reaching 31 million.
Valuation: 14% Upside, Buy
Based on our DDM valuation, we revise our one-year target price to IDR 11,625, implying a valuation of 5.43x PBV and a potential upside of 14%. Consequently, we maintain our recommendation to Buy.
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