BMRI
Contact our analyst Lingga
19% upside. Buy
27th May, 2021
Price Rp5900
Target price Rp7090
Quarterly Net income increased significantly
In 1Q21, BMRI reported net profit down by -25% YoY to IDR 6,519 billion, but up significantly from the previous quarter, +91.5%, not including profit from Bank Syariah Indonesia. This was due to provisions of IDR 5.4T which is higher than a year ago and lower than the previous quarter. Net Interest Income growth for banking was actually, flat YoY and was positive up 9% QoQ. NIM was 5.10% on lower interest rates along with solid liquidity and a significant reduction in the cost of funds. BMRI has seen improvements in liquidity and cuts in deposit rates. We estimate NIM will be in the range of 4.8 -5.1% in FY2021F.
Credit growth is good
Credit increased by 9.1% YoY driven by commercial 5.5% YoY, SMEs 4.5% YoY, Subsidiaries 76.6% YoY. The creation of BSI, which is the result of the merger of BRI Syariah, BNI Syariah, and Bank Mandiri Syariah, will help to increase loans. We estimate credit growth of 11% in FY2021F.
Asset Quality and Restructured Loans
In 1Q21, NPL was 3.15%, Special Mention 4.46%. This year, we expect an improvement. BMRI will focus on asset quality in 2021. In 1Q21, the restructured loans amounted to IDR 94 trillion or 12% of total loans. Restructured loans with a low risk, 66%, are likely to return to normal after restructuring, 23% are medium risk, and 11% are high risk.
Valuation: 19% Upside, Buy.
Based on our DDM Valuation, we have a target price within one year of IDR 7,090,or trading at 1,5x PBV which gives 19% potential upside, Buy.
In 1Q21, BMRI reported net profit down by -25% YoY to IDR 6,519 billion, but up significantly from the previous quarter, +91.5%, not including profit from Bank Syariah Indonesia. This was due to provisions of IDR 5.4T which is higher than a year ago and lower than the previous quarter. Net Interest Income growth for banking was actually, flat YoY and was positive up 9% QoQ. NIM was 5.10% on lower interest rates along with solid liquidity and a significant reduction in the cost of funds. BMRI has seen improvements in liquidity and cuts in deposit rates. We estimate NIM will be in the range of 4.8 -5.1% in FY2021F.
Credit growth is good
Credit increased by 9.1% YoY driven by commercial 5.5% YoY, SMEs 4.5% YoY, Subsidiaries 76.6% YoY. The creation of BSI, which is the result of the merger of BRI Syariah, BNI Syariah, and Bank Mandiri Syariah, will help to increase loans. We estimate credit growth of 11% in FY2021F.
Asset Quality and Restructured Loans
In 1Q21, NPL was 3.15%, Special Mention 4.46%. This year, we expect an improvement. BMRI will focus on asset quality in 2021. In 1Q21, the restructured loans amounted to IDR 94 trillion or 12% of total loans. Restructured loans with a low risk, 66%, are likely to return to normal after restructuring, 23% are medium risk, and 11% are high risk.
Valuation: 19% Upside, Buy.
Based on our DDM Valuation, we have a target price within one year of IDR 7,090,or trading at 1,5x PBV which gives 19% potential upside, Buy.
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