Contact our analyst Achmadi
25% upside, Buy
26th October, 2022
Target price Rp10,670
Net Profit up +25%
BBCA recorded a Net Profit of IDR 28.95 trillion in 9M22, up +24.81% YoY from IDR 23.20 trillion in 9M21. The growth was driven by well-managed interest expenses which decreased -15.51% and an +19.59% upsurge of non-interest income. We forecast that BBCA will grow Net Profit +30% from IDR 31.42 trillion in FY21 to IDR 40.71 trillion in FY22.
Strong Loan Growth
In 9M22, BBCA reported strong loan growth of +12.56 YoY. The growth was driven by consumer lending, which grew +14.03%, helped by the growth of mortgages. Other loans like Corporate and Commercial/SME grew too, by +13.40% and +9.76% respectively. We project Consolidated Total Gross Loans will grow +10.41% YoY in FY2022.
Asset Quality Improvement
There was an improvement in BBCA’s gross NPL ratio in 9M22 which declined -20 bps to 2.20% YoY but remains stagnant on a QoQ basis. Of the three types of loans, only Commercial/SME had a higher NPL ratio, from 2.36% in 9M21 to 2.46% in 9M22. Consumer lending had the biggest improvement with a -44bps decline to 1.47%, while Corporate NPLs were down -27 bps to 1.34%. We predict BBCA will be able to decrease its NPL ratio further to 1.92% in FY2022.
Valuation: 25% Upside, Buy
Based on our DDM Valuation, we have a target price within one year of IDR 10,670 or trading at 5.9x PBV which gives 25% potential upside, Buy.