BBCA
Contact our analyst Lingga
4% upside. HOLD.
7 November, 2019
Price Rp31,475
Target price Rp33,000
Targeting Higher Net Income
- BBCA net profit increased + 13.0% YoY in 3Q19. Revenue increased from credit growth in most segments, and there was also an increase in demand deposits and savings, supported by an increase in the number of transactions on electronic channels.
- We now estimate net profit growth CAGR during 2019-2020 to average 14% compared to 2018A.
NIM is stable
- As of 3Q19, NIM was up + 10bps from a year ago, but remained stable QoQ.
- BBCA reduced deposit rates following JIBOR's interest rate reduction and will reduce loan interest rates with other banks to maintain NIM.
- We estimate NIM Growth during 2019-2020 to average 6.5-7.9%.
Credit growth has risen due to two segments
- As of 3Q19, Loan Growth increased by 10.6% YoY, driven by corporate loans which grew 16.5% YoY.
- The biggest contributors to loan growth were financial institutions and infrastructure.
- However, consumer lending fell -2% from 3Q18 due to lower motor vehicle loans because of the development of more convenient online transportation services and the new MRT.
NPL rose 20bps due to the steel industry and the Palu disaster
- The NPL ratio increased slightly in 3Q19 to 1.6%, compared to 3Q18’s 1.4% due to exposure to the steel industry which has seen a ratings downgrade and the Palu earthquake Disaster.
- The increase in NPLs will result in a cost of funds increase of 0.8%, and we assume the NPL ratio will still rise slightly higher to 1.65%.
Valuation: 4% Upside, Hold.
- Based on our DDM Valuation, we have a target price within one year of IDR 33000,or trading at 3.8x PBV which gives 4% potential upside, Hold.
