BBCA
Contact our analyst Achmadi
27% upside, Buy
March 2nd, 2023
Price Rp8,625
Target price Rp10,970
Net Profit up +30%
BBCA recorded a strong net profit of IDR 40.736 trillion in FY22, up by 29.64% YoY from IDR 31.423 trillion in FY21. The growth was driven by the solid performance of interest and shariah income, which grew by 10.08% YoY. Loan receivables and investment securities became major contributors, accounting for 82.55% of the total. They also grew by 7.03% and 13.47%, respectively. We forecast BBCA will grow its net profit by 22% from IDR 40.73 trillion in FY22 to IDR 49.50 trillion in FY23.
Robust loan and CASA expansion
As of December 2022, BBCA recorded strong consolidated loan growth of +11.66% YoY, with the highest growth in Corporate Loans, which increased by 12.46% YoY. Other segments also experienced growth, with Consumer and Commercial & SME expanding by 11.72% and 10.10%, respectively. The business banking loan portfolio was primarily supported by Manufacturing, Trading, and Business Services, accounting for 58.10%. Additionally, BBCA's funding performance was strong, with CASA growing by +6.53%, and the ratio increasing by 296 bps to 81.55% fueled by the recovery of economic activities. We anticipate Consolidated Total Gross Loans will grow +14.32% YoY in FY2023, while the CASA ratio will also rise to 83.37%.
Asset Quality Improved
BBCA's (Bank-Only) gross non-performing loan (NPL) ratio showed an improvement in FY22, with a YoY decline of -50 basis points to 1.70%. Similarly, for consolidated figures, the ratio decreased from 2.16% in FY21 to 1.70% in FY22, indicating an improvement in BBCA's asset quality as of December 2022. This improvement can be attributed to BBCA's disciplined risk management approach in handling non-performing loans. The bank's risk appetite was maintained within acceptable limits, aided by the implementation of a credit relaxation policy in accordance with POJK No. 11/POJK.03/2020, which allowed restructured loans affected by the pandemic to be classified as Current for debtors who met the criteria. Based on this trend, it is anticipated that BBCA will continue to reduce its bank-only gross NPL to 1.53% and consolidated gross NPL to 1.52% in FY2023.
Valuation: 27% Upside, Buy
Based on our DDM valuation, we have a target price of IDR 10,970 within one year, implying a trading price of 5.3x PBV and indicating a potential upside of 27%. Therefore, we recommend a Buy rating.
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