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15% UPSIDE, Hold
15th February, 2022
Target price Rp5,080
Higher Profit from Lower Cost of Funds
BBRI recorded a Net Profit of IDR 30.7 trillion up 64.8% YoY driven by a significant increase in Net Interest Income, which was IDR 114 trillion or up 21.9% from IDR 93.5 trillion in FY20. Cost of Funds declined in 2021 to 2.05%. Operating Expenses were up 12.5% due to expenses for pension funds (PP 36/2021) of IDR 4.5 trillion, employee share options and termination of employment in Aceh plus a subrogation allowance of IDR 2.6 trillion and KUR allowance of IDR 0.8 trillion.
Credit Growth from Micro KUR
Loan Growth was up 7.2% driven by micro loan growth of 13% coming especially from KUR which was up 50% YoY, with the composition of MSME increasing to 82% in FY21 from 80.1% in FY20. BRI is guiding loan growth of 9-11% this year, driven again by the micro loan segment which is estimated to grow 13%-15% while the micro loans to total loans portfolio is expected to reach 45% in 2022F. Permodalan Nasional Madani are expected to grow 17-20% YoY and Pegadaian 10-11%. PNM and Pegadaian are micro loans with ticket sizes lower thab BBRI’s micro loan segment
Declined in Quality Asset
Non-Performing Loans were 3.08% in FY21, with NPL Coverage of 278.1%. Improved economic growth should help to improved loan repayment ability, bringing NPLs down slightly in the range of 2.8-3%. In restructured loans, BBRI had IDR 62.1 trillion of restructured loans which have started to settle their interest as well as their principal payments in FY21. The outstanding restructured loans decreased to IDR 157 trillion by December from IDR 186.2 trillion in FY20.
Valuation: 15%, Upside, Hold
Based on our DDM Valuation, we have a target price within one year of IDR. 5,080 or trading at 2.1x PBV which gives 15% potential upside, Hold.