BBRI
Contact our analyst Lingga
25% upside. BUY.
31th January 2020
Price Rp4,580
Target price Rp5,800
Above Industry Growth
Credit growth has been above industry averages both in terms of loans and deposit growth, which at 7.6% was driven by microloans (12% YoY) especially in the Kupedes segment (13% YoY). KUR loans (8% YoY) are still slowing down and growth in salary based loans also continues to slow down to 4% YoY, due to competition from other banks.We estimate total credit growth in 2020 will be in the range of 9-10%.
NPL increased 46Bps
2019 NPLs increased to 2.62% from 2.16% in 2018 due especially to debtors from the corporate sector namely DuniaTex and Semen Bosowa Maros, Sangyang Sri, PT Pertan and PT Perkebunan Mitra Ogan. NPLs are supported by adequate provisioning at 167%. With the reserves increase, profits grew by 6.15%. We now estimate NPLs in 2020 to be in the range of 2.4% -2.5% vs our previous estimate of 2.2%.
CASA at 59.01%
CASA funding decreased to 59.01% in 2019 from 61.8% in 2018 due to lower Giro especially from BUMNs due to the strategy of SOEs to reduce leverage by the end of 2019. We still estimate CASA in 2019-2020 will be in the range of 60-62%.CAR remained high in 2019. BRI succeeded in increasing CAR to 22.55% from 21.2% in 2018. With their high CAR, BRI is well prepared to enter the era of IFRS 9 implementation and the Dividend Payout Ratio can be the same as last year or higher. We estimate CAR will remain high in the range of 22% in 2020.
Valuation: 25%, Upside, BUY.
Based on our DDM Valuation, we have a target price within one year of IDR. 5770 or trading at 2.3x PBV which gives 25% potential upside, BUY.
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