BMRI
Contact our analyst Lingga
5% upside. HOLD.
28 January, 2020
Price Rp7,725
Target price Rp8,100
Corporate Segment Main Focus
Loans rose 10.7% YoY to Rp907.5 trillion. This was supported by corporate loans which rose by 13.3% YoY from financing to infrastructure projects and which contributed 23% to the total loan portfolio. Payroll loans grew by 17.5% YoY and microloans grew by 19.4% YoY, becoming a major driver. The main focus of BMRI remains in the Corporate Segment and strengthening integration between the wholesale and retail segments. In line with last year's growth estimate of 10.21%. The estimated loan growth for 2020-2021 is also in the range of 10%.
NIM increased 10Bps
In 4Q19, BMRI NIM increased only slightly by 10bps, to 5.56% from 5.66% in 4Q18. The Cost of Funds (CoF) decreased to 1.4% in 4Q19 from 1.8% in 4Q18.BMRI indicated they have reduced the proportion of Time Deposits and increased CASA by 13.1% YoY. We lower our estimates because the bank’s ability to reduce CoF will be less during tight liquidity conditions in the banking system and we estimate the Net Interest Margin in 2020 will be 5%.
NPLs Improve
NPL improved to 2.3% in 4Q19 from 2.8% in 2018 driven by the small and commercial segments. BMRI anticipates strong risk management supervision will further reduce NPLs, and our estimate is in the range of 2.3%.
Valuation: 5% Upside, Hold.
Based on our DDM Valuation, we have a target price within one year of IDR 8100,or trading at 1.5x PBV which gives 18% potential upside, Hold.
Loans rose 10.7% YoY to Rp907.5 trillion. This was supported by corporate loans which rose by 13.3% YoY from financing to infrastructure projects and which contributed 23% to the total loan portfolio. Payroll loans grew by 17.5% YoY and microloans grew by 19.4% YoY, becoming a major driver. The main focus of BMRI remains in the Corporate Segment and strengthening integration between the wholesale and retail segments. In line with last year's growth estimate of 10.21%. The estimated loan growth for 2020-2021 is also in the range of 10%.
NIM increased 10Bps
In 4Q19, BMRI NIM increased only slightly by 10bps, to 5.56% from 5.66% in 4Q18. The Cost of Funds (CoF) decreased to 1.4% in 4Q19 from 1.8% in 4Q18.BMRI indicated they have reduced the proportion of Time Deposits and increased CASA by 13.1% YoY. We lower our estimates because the bank’s ability to reduce CoF will be less during tight liquidity conditions in the banking system and we estimate the Net Interest Margin in 2020 will be 5%.
NPLs Improve
NPL improved to 2.3% in 4Q19 from 2.8% in 2018 driven by the small and commercial segments. BMRI anticipates strong risk management supervision will further reduce NPLs, and our estimate is in the range of 2.3%.
Valuation: 5% Upside, Hold.
Based on our DDM Valuation, we have a target price within one year of IDR 8100,or trading at 1.5x PBV which gives 18% potential upside, Hold.
Previously
