BBNI
Contact our analyst Lingga
18% upside. Hold
1st November, 2021
Price Rp7,000
Target price Rp8,300
Strong profit
In 9M21, Bank Negara Indonesia (BBNI) recorded a net profit of IDR 7.7 trillion, up 79% from IDR 4.3 trillion in 9M20. This was mainly due to non-interest income growing by 14.2% YoY contributed by securities and e-channel fees, while NII grew by 17.6% YoY. Interest income decreased -3.9% YoY to IDR 37.5 trillion in 9M21, following lower interest rates which reduced asset yields and credit refocusing to higher quality loans that yield lower yields. Provision expenses decreased by 1.5% YoY due to improvements in asset and credit quality.
Stable credit growth and CASA growth
Loans grew by 3.7% YoY driven by corporate private loans, up 5.2% YoY, small loans up 14.7% YoY, and payroll loans up 17.5% YoY. The Bank has a more optimistic credit outlook for the coming quarters and maintains its loan growth target of 5-7% in 2021. Deposit growth was 1.4% YoY with 9.2% growth in current accounts, so the CASA ratio was higher at 69.7% from 69.6% in 2Q21. Most CASA growth has come from far increased penetration of mobile banking and cash management services. BBNI says that >70% of their CASA comes from these two platforms and the contribution is growing.
Digital bank acquisition and capital increase
BBNI has made an agreement to acquire a small bank (capital IDR 2-3tn) which will be developed into a digital bank in collaboration with a technology company (reported to be Sea Ltd) with a focus on SME customers due to the tremendous growth potential and also in line with the ESG goal to have a positive impact on society. The acquisition will have little impact on the CAR at <1%. BBNI also detailed their rights issue plan with a timeline of early next year and with IDR 3.5 trillion of government participation (IDR 5.8 trillion total rights issue to maintain 40% public ownership).
Valuation: 18% Upside, Hold.
Based on our DDM Valuation, we have a target price within one year of IDR 8,300 or trading at 1.3x PBV which gives 18% potential upside, Hold.
In 9M21, Bank Negara Indonesia (BBNI) recorded a net profit of IDR 7.7 trillion, up 79% from IDR 4.3 trillion in 9M20. This was mainly due to non-interest income growing by 14.2% YoY contributed by securities and e-channel fees, while NII grew by 17.6% YoY. Interest income decreased -3.9% YoY to IDR 37.5 trillion in 9M21, following lower interest rates which reduced asset yields and credit refocusing to higher quality loans that yield lower yields. Provision expenses decreased by 1.5% YoY due to improvements in asset and credit quality.
Stable credit growth and CASA growth
Loans grew by 3.7% YoY driven by corporate private loans, up 5.2% YoY, small loans up 14.7% YoY, and payroll loans up 17.5% YoY. The Bank has a more optimistic credit outlook for the coming quarters and maintains its loan growth target of 5-7% in 2021. Deposit growth was 1.4% YoY with 9.2% growth in current accounts, so the CASA ratio was higher at 69.7% from 69.6% in 2Q21. Most CASA growth has come from far increased penetration of mobile banking and cash management services. BBNI says that >70% of their CASA comes from these two platforms and the contribution is growing.
Digital bank acquisition and capital increase
BBNI has made an agreement to acquire a small bank (capital IDR 2-3tn) which will be developed into a digital bank in collaboration with a technology company (reported to be Sea Ltd) with a focus on SME customers due to the tremendous growth potential and also in line with the ESG goal to have a positive impact on society. The acquisition will have little impact on the CAR at <1%. BBNI also detailed their rights issue plan with a timeline of early next year and with IDR 3.5 trillion of government participation (IDR 5.8 trillion total rights issue to maintain 40% public ownership).
Valuation: 18% Upside, Hold.
Based on our DDM Valuation, we have a target price within one year of IDR 8,300 or trading at 1.3x PBV which gives 18% potential upside, Hold.
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