BBCA
Contact our analyst Lingga
18% upside. Hold.
15th February, 2021
Price Rp34,000
Target price Rp40,000
Slightly Lower Net Profit
BBCA posted a slightly lower net profit, -5% YoY, which was caused by weaker demand for credit at the end of the year, instead of higher as is usually the case, plus a higher cost of provisioning which surged significantly by 152.3% YoY. However, net Interest Income increased by 7.3% and PPOP rose 11.2% YoY due to an increase in trading income and a decrease in general & administrative expenses. We estimate profit growth of around 10% in 2021F.
A Lower NIM
NIM was lower in 2020 at 5.7% from 6.2% in 2019. The bank has a conservative stance on NIM and expect it to be in the 5% -5.4% range for 2021, with pressure on earnings likely to continue from deferred interest payments on restructured loans. We estimate that NIM will be around 5% in 2021F
Loan growth and Third-Party Funds
Loan growth decreased 2.1% YoY. Some credit growth was driven by the corporate segment by 7.7% YoY, meanwhile Commercial & SME were down 7.9% YoY, and Sharia Financing was down 1.3% YoY. BBCA remains conservative seeing that the Covid-19 pandemic could disrupt loan demand in early 2021. Third-Party Funds increased by 19.30% YoY driven by Current account growth of 23.7%, Saving accounts 19.6%, Time Deposit 14%. This meant CASA grow quite significantly by 21% YoY.
Loan Restructured and Asset Quality
As of 31 December 2020, the amount of restructured loans amounted to IDR 88.0 trillion, or 15% of the total loans. Most of the restructured loans, 37.6%, are from the corporate segment, 27% from the commercial segment, 24.6% from the consumer segment, and 10.8% from the SME segment. BBCA estimates that 12-15% of the total risky loans may require an extension during the restructuring period. On Asset Quality, Non-Performing Loans were stable at 1.8% and Special Mention Loans decreased to 1.8%. We estimate Non-Performing Loans to be around 2% in 2021F
Valuation: 18% Upside, Hold.
Based on our DDM Valuation, we have a target price within one year of IDR 40,000, or trading at 5.3x PBV which gives 18% potential upside, Hold.
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