Contact our analyst Lingga
20% upside. Buy
10th November, 2020
Target price Rp6120
LDR has decreased
in 9M20, credit growth increased by 4.2% YoY This growth was driven by private corporate loans which increased by 10.4% YoY, mostly from the transportation, construction, manufacturing, telecommunications, and pharmaceutical sectors. The Medium segment decreased by 9.6% YoY, the small segment increased by 8.4% YoY and the consumer segment increased by 4.5% YoY. Total Third Party Funds grew by 21.4% to IDR 705Tn, mostly contributed by current accounts, up 33.7% YoY, time deposits 17.6% YoY, and saving accounts 14.1% YoY. As a result, the Loan to Deposit Ratio (LDR) is 83.1% compared to 96.9% in 2Q20, We estimate the LDR will be in the range of 83% in FY2020
As of September 30, 2020, BBNI has restructured loans amounting to IDR 101.7tn or 18.5% of total loans. The loan restructuring came from corporate 54.7%, Medium 26.8% and small 14.0%. In 3Q20, the additional restructuring amounted to IDR 1.75tn. BBNI estimates that the amount of restructured loans will be IDR 125tn or around 20-25% of the total loans by the end of the year
Low Asset Quality
Asset quality or Non-Performing Loans increased to 3.6% or IDR 19.6tn, and Special Mention Loans increased to 5.9%. This increase was contributed by the corporate segment, especially mining contractors, textiles, and electricity contractors. The medium segment consists of trading, restaurants and palm oil.
Valuation: 20% Upside, Buy.
Based on our DDM Valuation, we have a target price within one year of IDR 6120 or trading at 0.6x PBV which gives 24% potential upside, Buy.