BBRI
Contact our analyst Lingga
15% UPSIDE, Hold
2nd June, 2021
Price Rp4260
Target price Rp4900
Lower Net Profit
BBRI's net profit fell -19.6% YoY, but increased significantly from the previous quarter by +55%. PPOP grew 11.9% YoY / -2% QoQ which was supported by Net Interest income which grew +13.8% YoY, Operating Costs increased by 12% YoY mostly for employee costs related to allowances and PSAK 73 implementation which led to higher depreciation. We predict an increase in NIM based on higher loan contributions from the micro-segment and reduced CoF compared to 1Q21.
Loan Growth
Loans grew by 1,4% in 1Q21. This growth was supported by micro loans, which grew by 12.4% YoY with a composition of 40.2% of total loans. BRI expects this to grow to 45% by 2025.
Credit Restructuring and Asset Quality
Restructured loans are still rising, up by 2% QoQ, mainly from loans of Rp 12 trillion to the SoE corporate segment (construction, transportation, and toll roads). The micro / SME / consumer credit segment reported a decrease in restructured loans to Rp5.7 trillion. Total restructured borrowers fell 300,000 QoQ to 2.6 million borrowers. LAR coverage increased 2% QoQ to 28%. NPL increased to 3.12% due to the SME and Corporate segments. BRI expects a downturn in the coming quarters though and has been careful to add provisions to improve the quality of the assets.
Valuation: 15%, Upside, Hold
Based on our DDM Valuation, we have a target price within one year of IDR. 4,900 or trading at 3,2x PBV which gives 15% potential upside, Hold.
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