BBNI
Contact our analyst Lingga
2% upside. HOLD.
29 October, 2019
Price Rp7,775
Target price Rp7,960
Targeting higher net profit
As of 9M19, BBNI managed to book bottom line profit of IDR. 11,973 trillion up 4.7% from 1H19 and growth of 2.7% yoy. The increase in net profit was supported by lower growth of time deposit at 0.8% yoy while current account and saving accounts increased 13%yoy and 7.5% respectively. This is inline with BBNI’s focous on lowering cost of funds to increase profitability. This strategy was proven by lower interest expense growth of 24.6% yoy in 3Q19 compared to 26.2%yoy in 2Q19. Together with slightly higher interest income growth in 3Q19 of 10.6% yoy compared to 9.4% yoy in 2Q19, net interest income (NII) grew 3.3% yoy in 3Q19 compared to 1.0%yoy in 2Q19. We estimate net profit growth in CAGR during 2019-2020 to average 16% compared to 2018A.
Corporate private loan grew faster
As of 9M19, in the business loan segment, corporate private loans grew 24.8% yoy as this type of loan has an advantage over other corporate financing given current market conditions. While in Consumer loans, Payroll loans grew fastest among others at 13.1% yoy. Going forward, BBNI is focusing on corporate private loan growth.
Added outlets for small loan segment
In order to maintain and sustainable growth momentum, BBNI’s small loan buisness segment plans to increase the number of outlets in 2019 to 269 compared to 197 in 2016. Small loans are mostly to the Trading, Restaurant, Hotel and Agriculture sectors. KUR (Kredit Usaha Rakyat) and BCM (Branch Credit Manajemen) were the main contributors to loan growth in the small loans segment.
Loan at risk fall
Loan at risk fell to 8.6% in 3Q19 from 8.7% in 3Q18. The decrease was affected by the small and medium loans segment which experienced an improvement in payments for example from coal mines in East Borneo. The increase in NPL was due to corporate and medium sized debtors.
Valuation: 2% Upside, Hold.
Based on our DDM Valuation, we have a target price within one year of IDR 7960. or trading at 1x PBV which gives 2% potential upside, Hold.
