BBNI
Contact our analyst Lingga
19% upside. Buy
8th February 2022
Price Rp7,500
Target price Rp8,950
Strong profit growth
Bank Negara Indonesia (BBNI) recorded a net profit of IDR 10,9 trillion, up significantly 232% YoY beating our estimate by 13%. This was mainly due to a lower effective tax rate of 12.5%. The one-off tax reversal is related to PMK No.18/2021 which means BBNI is eligible for a lower tax rate of 19% in 2022F. Net Interest Income increased to IDR 38.2 trillion up 2.9% YoY supported by a low Cost of Funds of 1.6% from 2.6% in 2020.
Focus on corporate, medium and payroll loans
Bank Negara Indonesia (BBNI) recorded a net profit of IDR 10,9 trillion, up significantly 232% YoY beating our estimate by 13%. This was mainly due to a lower effective tax rate of 12.5%. The one-off tax reversal is related to PMK No.18/2021 which means BBNI is eligible for a lower tax rate of 19% in 2022F. Net Interest Income increased to IDR 38.2 trillion up 2.9% YoY supported by a low Cost of Funds of 1.6% from 2.6% in 2020.
CASA was the main driver of deposit
Deposit growth of 15.5% YoY was driven by CASA, up 17.1% (Current Accounts +27.3% and Saving Accounts +6.3%) while Time Deposits were up 12% YoY. The CASA ratio was stable at 69.4% which resulted in a significant decrease in Cost of Fund to 1.6%. BBNI reduced time deposits to increase NIM. NIM is forecast to be in a range of 4.6%-4.8%.
Improved Asset Quality
In 2021, the Non Performing Loan Ratio improved to 3.7% from 4.3% in 2020 while the Special Mention Loan Ratio declined to 4.7% from 5.1% in 2020. As of Dec 2021, BBNI's restructured loans were down to IDR 72.1 trillion from IDR 78.8 trillion at the end of Sep 2021. Out of the total loans restructured, 89% were still classified in Collectibility 1, while 8.7% were classified as SMLs and 2.3% were classified as NPLs. With the improvement in Asset Quality, BBNI will adjust loan yields to several debtors with maintaining long term relationships and managing asset quality the main priority.
Bank Mayora Acquisition
The acquisition of Bank Mayora, which involves a transaction value of IDR 3.5 trillion with a valuation of 2x PBV, will complement BBNI with a digital bank subsidiary that focuses on the SME segment. With this deal BBNI will gain a new digital banking business collaboration while Mayor Bank’s NPL is still below 5%.
Valuation: 19% Upside, Buy.
Based on our DDM Valuation, we have a target price within one year of IDR 8,950 or trading at 1.3x PBV which gives 19% potential upside, Buy.
Bank Negara Indonesia (BBNI) recorded a net profit of IDR 10,9 trillion, up significantly 232% YoY beating our estimate by 13%. This was mainly due to a lower effective tax rate of 12.5%. The one-off tax reversal is related to PMK No.18/2021 which means BBNI is eligible for a lower tax rate of 19% in 2022F. Net Interest Income increased to IDR 38.2 trillion up 2.9% YoY supported by a low Cost of Funds of 1.6% from 2.6% in 2020.
Focus on corporate, medium and payroll loans
Bank Negara Indonesia (BBNI) recorded a net profit of IDR 10,9 trillion, up significantly 232% YoY beating our estimate by 13%. This was mainly due to a lower effective tax rate of 12.5%. The one-off tax reversal is related to PMK No.18/2021 which means BBNI is eligible for a lower tax rate of 19% in 2022F. Net Interest Income increased to IDR 38.2 trillion up 2.9% YoY supported by a low Cost of Funds of 1.6% from 2.6% in 2020.
CASA was the main driver of deposit
Deposit growth of 15.5% YoY was driven by CASA, up 17.1% (Current Accounts +27.3% and Saving Accounts +6.3%) while Time Deposits were up 12% YoY. The CASA ratio was stable at 69.4% which resulted in a significant decrease in Cost of Fund to 1.6%. BBNI reduced time deposits to increase NIM. NIM is forecast to be in a range of 4.6%-4.8%.
Improved Asset Quality
In 2021, the Non Performing Loan Ratio improved to 3.7% from 4.3% in 2020 while the Special Mention Loan Ratio declined to 4.7% from 5.1% in 2020. As of Dec 2021, BBNI's restructured loans were down to IDR 72.1 trillion from IDR 78.8 trillion at the end of Sep 2021. Out of the total loans restructured, 89% were still classified in Collectibility 1, while 8.7% were classified as SMLs and 2.3% were classified as NPLs. With the improvement in Asset Quality, BBNI will adjust loan yields to several debtors with maintaining long term relationships and managing asset quality the main priority.
Bank Mayora Acquisition
The acquisition of Bank Mayora, which involves a transaction value of IDR 3.5 trillion with a valuation of 2x PBV, will complement BBNI with a digital bank subsidiary that focuses on the SME segment. With this deal BBNI will gain a new digital banking business collaboration while Mayor Bank’s NPL is still below 5%.
Valuation: 19% Upside, Buy.
Based on our DDM Valuation, we have a target price within one year of IDR 8,950 or trading at 1.3x PBV which gives 19% potential upside, Buy.
Previously
