BBRI
Contact our analyst Lingga
16% UPSIDE, Hold
27th August 2020
Price Rp3740
Target price Rp4350
Focus in the Micro-Loan
In 1H20, credit growth was 3.8% YoY, driven by the micro-segment which grew by 7.1%, such that its share of total loans increased to 36.3% in line with BRI's plan to increase the composition of micro to 40% in 2022. Consumer loans grew 4.3%, Small Commercial 2.8%, Medium 3%, Corporate non-SOE & SOE -0.3%. BBRI's focus is still on the micro-segment due to the interest subsidy for ultra micro (KUR) with an average loan size of IDR 10 million. We still estimate credit growth will be 5% this year.
NPL up, Special Mention down
Non-Performing Loans increased to 2.98% from 2.35% in 1H19, The increase came from corporate which is at 10.75%, while SoE is 1.11%, and Medium 6.79%. Special Mention Loans decreased to 4.19% from 5.37% in 1H19 helped by micro, while BUMN special mention loans increased due to worsening steel industry credits. BRI's NPL Coverage is sufficient at 200.34% in 1H20, while the Write-off & Recovery Rate decreased to 44.5% from 50.1% in 1H19, due to a decline in asset market prices. BRI will focus on growing recovery income to provide future other income.
Restructuring Process
As of July 31, 2020, BBRI has restructured loans worth IDR 183.7 trillion, 21.3% of total loans, 46% from micro loans, 45% small commercial, and 6% consumer. The restructured loan amount decreased to IDR 11.4tn in June and IDR 11.8tn in July. The pace of debt restructuring has slowed down as the government has relaxed large-scale social restrictions. Cost of Credit is estimated to be around 3.5%. BBRI hopes that the total restructured loan can reach IDR 213tn by the end of the year.
Valuation: 16%, Upside, Hold.
Based on our DDM Valuation, we have a target price within one year of IDR. 4350 or trading at 2.1x PBV which gives 16% potential upside, Hold.
In 1H20, credit growth was 3.8% YoY, driven by the micro-segment which grew by 7.1%, such that its share of total loans increased to 36.3% in line with BRI's plan to increase the composition of micro to 40% in 2022. Consumer loans grew 4.3%, Small Commercial 2.8%, Medium 3%, Corporate non-SOE & SOE -0.3%. BBRI's focus is still on the micro-segment due to the interest subsidy for ultra micro (KUR) with an average loan size of IDR 10 million. We still estimate credit growth will be 5% this year.
NPL up, Special Mention down
Non-Performing Loans increased to 2.98% from 2.35% in 1H19, The increase came from corporate which is at 10.75%, while SoE is 1.11%, and Medium 6.79%. Special Mention Loans decreased to 4.19% from 5.37% in 1H19 helped by micro, while BUMN special mention loans increased due to worsening steel industry credits. BRI's NPL Coverage is sufficient at 200.34% in 1H20, while the Write-off & Recovery Rate decreased to 44.5% from 50.1% in 1H19, due to a decline in asset market prices. BRI will focus on growing recovery income to provide future other income.
Restructuring Process
As of July 31, 2020, BBRI has restructured loans worth IDR 183.7 trillion, 21.3% of total loans, 46% from micro loans, 45% small commercial, and 6% consumer. The restructured loan amount decreased to IDR 11.4tn in June and IDR 11.8tn in July. The pace of debt restructuring has slowed down as the government has relaxed large-scale social restrictions. Cost of Credit is estimated to be around 3.5%. BBRI hopes that the total restructured loan can reach IDR 213tn by the end of the year.
Valuation: 16%, Upside, Hold.
Based on our DDM Valuation, we have a target price within one year of IDR. 4350 or trading at 2.1x PBV which gives 16% potential upside, Hold.
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