Contact our analyst Achmadi
25% upside, Buy
May 31st, 2023
Target price Rp11,300
Net Profit Up +43%
BBCA had strong growth in net profit, which reached IDR 11.53 trillion in the first quarter of 2023, with a YoY increase of 42.97% from IDR 8.064 trillion in Q122. The growth was driven by the solid performance of interest and shariah income, which grew by 28.23% YoY, leading to a 70 bps YoY increase in the NIM ratio to 5.60%. A further boost to profit came from provisions which declined by 48.18% YoY. We forecast that BBCA will continue to experience a 24.02% increase in its net income in FY23, rising from IDR 40.74 trillion to IDR 50.52 trillion.
Solid Loan Expansion
As of March 31st, 2023, BBCA reported robust consolidated loan growth, which increased by 12.04% YoY. This growth was primarily driven by the Consumer segment, which experienced the highest growth rate at 12.73%. The Commercial & SME and Corporate segments also demonstrated significant growth, increasing by 11.82% and 11.71% respectively. Among the segments, Corporate loans had the highest proportion, accounting for 45.39% (bank-only). In terms of business banking, Manufacturing, Trading, and Business loans were the largest three sectors in terms of loan proportions. BBCA's Manufacturing Loan Portfolio exceeded the industry average by 6.10%, accounting for 22.4%. We project that BBCA will continue to expand its consolidated loan portfolio with an additional YoY growth of 11.71% in FY23.
Asset Quality Improved
BBCA's (Bank-Only) gross non-performing loan (NPL) ratio improved in Q123, with a YoY decline of -50 basis points to 1.80%, although it was 0.1% higher than the previous quarter. Similarly, for the consolidated NPLs, the ratio also decreased to 1.8% from 2.3% in Q1-23, indicating an improvement in BBCA's asset quality as of March 2023. Among the three segments, the Consumer segment had the lowest NPL, ratio of 1.33%, reflecting a 25 bps YoY decline. The Corporate segment experienced the largest decline, decreasing by 0.96% YoY to 1.885. The Commercial & SME segment also declined, by 15 bps YoY to 1.91%. Based on this trend, it is anticipated that BBCA will continue to reduce its bank-only gross NPL to 1.62% and the consolidated gross NPL to 1.61% in FY2023.
Valuation: 25% Upside, Buy
Based on our DDM valuation, we have a target price of IDR 11,300 within one year, implying a trading price of 5.71x PBV and indicating a potential upside of 25%. Therefore, we recommend a Buy rating.