BMRI
Contact our analyst Lingga
15% upside. Hold
10th November, 2020
Price Rp6150
Target price Rp7090
Net Profit Decreased
In 9M20, BMRI recorded a net profit of IDR 3.74Tn, a decrease of 44.4% YoY. PPOP fell by 5.7% YoY due to a decrease in Net Interest Income by 4.1% YoY and a significant increase in Provision Fees by 52.8%. The net Interest Margin decreased 90Bps to 4.68% due to the decline in asset quality and higher cost of funds.
Loan to Deposit Ratio decreased
Loans grew by 3.8% YoY, and there was a positive performance from the corporate segment up 10.6% YoY. Micro loans were also up by 10.6%, and commercial loans increased 7.7% YoY. Third Party Funds experienced a high growth of 18% YoY especially in the digital segment which pushed the LDR down to 84.4% in 9M20 from 94.1% in 9M19.
Credit Restructuring and Asset Quality
As of September 30, 2020, BMRI has restructured loans totaling IDR 116.4tn or 15% of total loans consisting of 40% corporate, 16.7% commercial, 13.4% micro. BMRI estimates that there will be no significant additional restructuring as the pace of debt restructuring has slowed down. Asset quality in terms of non-performing loans increased to 3.33%, Special Mention loans decreased to 4.6% from the corporate and consumer segments. We estimate a 2.2% decrease in Cost of Credit in FY2020.
Valuation: 15% Upside, Hold.
Based on our DDM Valuation, we have a target price within one year of IDR 7090,or trading at 1.3x PBV which gives 15% potential upside, Hold.
In 9M20, BMRI recorded a net profit of IDR 3.74Tn, a decrease of 44.4% YoY. PPOP fell by 5.7% YoY due to a decrease in Net Interest Income by 4.1% YoY and a significant increase in Provision Fees by 52.8%. The net Interest Margin decreased 90Bps to 4.68% due to the decline in asset quality and higher cost of funds.
Loan to Deposit Ratio decreased
Loans grew by 3.8% YoY, and there was a positive performance from the corporate segment up 10.6% YoY. Micro loans were also up by 10.6%, and commercial loans increased 7.7% YoY. Third Party Funds experienced a high growth of 18% YoY especially in the digital segment which pushed the LDR down to 84.4% in 9M20 from 94.1% in 9M19.
Credit Restructuring and Asset Quality
As of September 30, 2020, BMRI has restructured loans totaling IDR 116.4tn or 15% of total loans consisting of 40% corporate, 16.7% commercial, 13.4% micro. BMRI estimates that there will be no significant additional restructuring as the pace of debt restructuring has slowed down. Asset quality in terms of non-performing loans increased to 3.33%, Special Mention loans decreased to 4.6% from the corporate and consumer segments. We estimate a 2.2% decrease in Cost of Credit in FY2020.
Valuation: 15% Upside, Hold.
Based on our DDM Valuation, we have a target price within one year of IDR 7090,or trading at 1.3x PBV which gives 15% potential upside, Hold.
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