BBCA
Contact our analyst Lingga
14% upside. HOLD.
26 February, 2020
Price Rp32,650
Target price Rp37,310
Investment Consideration
Loan growth above industry average
- In 2019, loan growth was 9.5% YoY, still above the industry‘s 7.1%, but much lower than FY18‘s 15.5% YoY.
- Corporate lending grew 11.1 % YoY, commercial by 12%, and consumer dropped significantly to 4.3% YoY from 9.7% in FY18. For the consumer segment, credit card growth was still quite good at 9.4% YoY, but there was a decrease in auto financing by -1.1%.
- We estimate credit growth in 2020 will rise to a double-digit rate of 12%.
Stable Asset Quality
- The NPL ratio fell -10bps to 1.3% in FY19 from 1.4% in FY18 with the largest contributors the trade sector, 2.7% and manufacturing, 1.3%, Special Mention Loans were 50% consumer loans consisting of mortgages and cars.
- BBCA made an additional provision of 6.2 trillion for IFRS 9.
Operating Costs Rise
- Operating costs increased significantly, as we can see from QoQ growth of 16.9% in 4Q19 up from 9.8% in 3Q19, the increase was from upgrading of the IT systems.
Higher CASA Growth
- In FY19, CASA growth was higher at 10% YoY from 8.9% in FY18, mostly from new account openings which grew 15% YoY. That means 3 million new CASA customers for BBCA. We estimate CASA growth in 2020 will be even higher at around 12%.
Valuation: 14% Upside, Hold.
- Based on our DDM Valuation, we have a target price within one year of IDR 37,310,or trading at 3.8x PBV which gives 14% potential upside, Hold.
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