BBNI
Contact our analyst Achmadi
22% upside. Buy
11th October 2022
Price Rp8650
Target price Rp10510
Net Income grew +75%
In 1H22, Bank Negara Indonesia (BBNI) reported a net income of IDR 8.80 trillion, up significantly +75.13% YoY from IDR 5.03 trillion in 1H2021. The growth was driven by Non-Interest Income such as income from insurance premiums and investment income, which grew +19.02% yoy. Overall, net interest income grew by +20.39%. We forecast BBNI will continue to improve performance and grow Net Income by +69.02% yoy from IDR 10.90 trillion in FY21 to IDR 18.42 in FY22.
Strong Loan Growth
In the first semester of 2022, BBNI recorded strong loan growth of +8.44% YoY (Bank Only). All of the four segments served by BBNI had positive growth. The fastest growth was from consumer lending, which grew +12.28%. Others like Small, Corporate and Medium grew +10.11%, 8.28%, and 3.70% respectively. The growth was driven by BBNI’s strategy to increase its lending to top tier clients. We project BBNI will continue to grow its gross loans by +8.94% yoy in FY22.
Improved Asset Quality
In 1H22, BBNI improved its asset quality with the NPL ratio declining by -70 bps to 3.20%. Consumer became the best performing segment with the lowest NPL ratio at +2.10%, down -63 bps from 1H21. The NPL ratios for Corporate, Small, and Medium were 2.40%, 2.70%, and 7.00% respectively. We forecast that BBNI will improve its NPL ratio another -113 bps to 2.57% in FY22.
Valuation: 22% Upside, Buy.
Based on our DDM Valuation, we have a target price within one year of IDR 10,510 or trading at 1.6x PBV which gives 22% potential upside, Buy.
In 1H22, Bank Negara Indonesia (BBNI) reported a net income of IDR 8.80 trillion, up significantly +75.13% YoY from IDR 5.03 trillion in 1H2021. The growth was driven by Non-Interest Income such as income from insurance premiums and investment income, which grew +19.02% yoy. Overall, net interest income grew by +20.39%. We forecast BBNI will continue to improve performance and grow Net Income by +69.02% yoy from IDR 10.90 trillion in FY21 to IDR 18.42 in FY22.
Strong Loan Growth
In the first semester of 2022, BBNI recorded strong loan growth of +8.44% YoY (Bank Only). All of the four segments served by BBNI had positive growth. The fastest growth was from consumer lending, which grew +12.28%. Others like Small, Corporate and Medium grew +10.11%, 8.28%, and 3.70% respectively. The growth was driven by BBNI’s strategy to increase its lending to top tier clients. We project BBNI will continue to grow its gross loans by +8.94% yoy in FY22.
Improved Asset Quality
In 1H22, BBNI improved its asset quality with the NPL ratio declining by -70 bps to 3.20%. Consumer became the best performing segment with the lowest NPL ratio at +2.10%, down -63 bps from 1H21. The NPL ratios for Corporate, Small, and Medium were 2.40%, 2.70%, and 7.00% respectively. We forecast that BBNI will improve its NPL ratio another -113 bps to 2.57% in FY22.
Valuation: 22% Upside, Buy.
Based on our DDM Valuation, we have a target price within one year of IDR 10,510 or trading at 1.6x PBV which gives 22% potential upside, Buy.
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