BBNI
Contact our analyst Lingga
13% upside. Hold
5th February, 2021
Price Rp6,275
Target price Rp7,100
Net Profit Decreased
BBNI posted a net loss of Rp1,039.1 billion or -130.5% YoY and -664% QoQ in FY20. This decrease was due to the significant increase in provision costs by 155.6% YoY and 32.3% QoQ. Non-Interest Income grew by 1.5% YoY and 18.7% QoQ which was also supported by loan growth and LDR was still moderate with liquidity at 87.3%. Operating Expenses only grew 2% YoY and 11.6% QoQ. PPOP increased positively by 18.5% QoQ while slightly decreasing by -1.8% YoY. NIM decreased to 4.5% from 4.9% in FY19 due to efficiency in cost of funds in 4Q20.
Loan growth increased
Loan growth increased by 5.3% YoY. Loan growth was driven by state-owned companies and bluechip companies, reflected in the Corporate loans growth of 12.8% YoY. Payday loans grew 14.3%. Quarterly, loan growth grew only 0.7% because credit demand has not fully recovered. The focus of BBNI loan growth continues to be bluechip board corporate debtors and consumers, while the SME segment growth is more conservative due to the bank focus on loan quality. BBNI management believes that an agile company structure will help the bank to grow faster than its peers, especially from the network with SOEs. Also, payroll loans will be another growth engine as the market is less penetrated while BBNI has 3.4 million payroll accounts as of December 2020. We estimate loan growth of 6-9 in 2021F.
Credit Restructuring and Asset Quality
As of December 20, the restructured loans amounted to IDR 102 trillion or 18.6% of the bank-only loans, below the previous expectation of IDR 122 trillion or 22% of the loans. The high-risk category for the corporate, medium and small segments is IDR 8 trillion, medium risk is the remaining IDR 33 trillion with a proportion of almost 90% in the current category. BBNI will continue to monitor restructured loans and conduct surveys on corporate, medium, and small borrowers to determine their repayment capacity. In terms of asset quality, Non-Performing Loans increased to 4.3% from 11.9% in FY2019 which consisted of corporate 48.3%, medium 34%, consumers 9.7%, this was driven by asset clearance (shift in special mention loans to NPL). Although Cost of Credit is higher than the previous year, the coverage increased to 182.4% from 133.5% in FY19. We estimate gross NPL to reach 3.5% in 2021F.
Valuation: 13% Upside, Hold.
Based on our DDM Valuation, we have a target price within one year of IDR 7,100 or trading at 1.1x PBV which gives 13% potential upside, Hold.
BBNI posted a net loss of Rp1,039.1 billion or -130.5% YoY and -664% QoQ in FY20. This decrease was due to the significant increase in provision costs by 155.6% YoY and 32.3% QoQ. Non-Interest Income grew by 1.5% YoY and 18.7% QoQ which was also supported by loan growth and LDR was still moderate with liquidity at 87.3%. Operating Expenses only grew 2% YoY and 11.6% QoQ. PPOP increased positively by 18.5% QoQ while slightly decreasing by -1.8% YoY. NIM decreased to 4.5% from 4.9% in FY19 due to efficiency in cost of funds in 4Q20.
Loan growth increased
Loan growth increased by 5.3% YoY. Loan growth was driven by state-owned companies and bluechip companies, reflected in the Corporate loans growth of 12.8% YoY. Payday loans grew 14.3%. Quarterly, loan growth grew only 0.7% because credit demand has not fully recovered. The focus of BBNI loan growth continues to be bluechip board corporate debtors and consumers, while the SME segment growth is more conservative due to the bank focus on loan quality. BBNI management believes that an agile company structure will help the bank to grow faster than its peers, especially from the network with SOEs. Also, payroll loans will be another growth engine as the market is less penetrated while BBNI has 3.4 million payroll accounts as of December 2020. We estimate loan growth of 6-9 in 2021F.
Credit Restructuring and Asset Quality
As of December 20, the restructured loans amounted to IDR 102 trillion or 18.6% of the bank-only loans, below the previous expectation of IDR 122 trillion or 22% of the loans. The high-risk category for the corporate, medium and small segments is IDR 8 trillion, medium risk is the remaining IDR 33 trillion with a proportion of almost 90% in the current category. BBNI will continue to monitor restructured loans and conduct surveys on corporate, medium, and small borrowers to determine their repayment capacity. In terms of asset quality, Non-Performing Loans increased to 4.3% from 11.9% in FY2019 which consisted of corporate 48.3%, medium 34%, consumers 9.7%, this was driven by asset clearance (shift in special mention loans to NPL). Although Cost of Credit is higher than the previous year, the coverage increased to 182.4% from 133.5% in FY19. We estimate gross NPL to reach 3.5% in 2021F.
Valuation: 13% Upside, Hold.
Based on our DDM Valuation, we have a target price within one year of IDR 7,100 or trading at 1.1x PBV which gives 13% potential upside, Hold.
Previously