BNGA
Contact our analyst Lingga
10% upside. Hold.
7th December, 2020
Price Rp870
Target price Rp960
Net Profit decreased
In 9M20, BNGA profit decreased -30.4% YoY to IDR.1.86 trillion from IDR.2.68 trillion in 9M19. PPOP decreased -3.1% YoY due to lower Net Interest Income -2.3% because BNGA posted a decrease in credit growth of -5.6% YoY. SME Banking fell -8.4%, Consumer Banking increased +4.1% driven by mortgage loans, Commercial Banking fell -16.4%, Corporate Banking decreased -5.1%. However, Operating Expense efficiency improved by +3.2%. Provision expenses increased +48.1% in 9M20.
The Restructuring Process
As of September 30, 2020, loans restructured due to Covid-19 reached IDR.28.6 trillion or 16% of total loans in 3Q20. BNGA estimates 10-15% of restructured Covid-led loans are vulnerable to downgrades in the future. The restructured loans came from the consumer segment 36%, the commercial segment 26%, the corporate segment 24%. By the end of the year, BNGA targets restructured loans to reach IDR.39 trillion or 20% of total loans.
Cost of Credit higher
In 9M20, Cost Of Credit increased to 2.56% from 1.79% in 9M19, BNGA estimates it will reach 2.6% by the end of the year to anticipate the risks associated with Covid-19. Loan loss coverage increased to 163.38% in 9M20 from 111.86% in 9M19.
Valuation: 10% Upside, HOLD.
Based on our DDM Valuation, we have a target price within one year of IDR 960 or trading at 0.4x PBV which gives 10% potential upside, Hold.
In 9M20, BNGA profit decreased -30.4% YoY to IDR.1.86 trillion from IDR.2.68 trillion in 9M19. PPOP decreased -3.1% YoY due to lower Net Interest Income -2.3% because BNGA posted a decrease in credit growth of -5.6% YoY. SME Banking fell -8.4%, Consumer Banking increased +4.1% driven by mortgage loans, Commercial Banking fell -16.4%, Corporate Banking decreased -5.1%. However, Operating Expense efficiency improved by +3.2%. Provision expenses increased +48.1% in 9M20.
The Restructuring Process
As of September 30, 2020, loans restructured due to Covid-19 reached IDR.28.6 trillion or 16% of total loans in 3Q20. BNGA estimates 10-15% of restructured Covid-led loans are vulnerable to downgrades in the future. The restructured loans came from the consumer segment 36%, the commercial segment 26%, the corporate segment 24%. By the end of the year, BNGA targets restructured loans to reach IDR.39 trillion or 20% of total loans.
Cost of Credit higher
In 9M20, Cost Of Credit increased to 2.56% from 1.79% in 9M19, BNGA estimates it will reach 2.6% by the end of the year to anticipate the risks associated with Covid-19. Loan loss coverage increased to 163.38% in 9M20 from 111.86% in 9M19.
Valuation: 10% Upside, HOLD.
Based on our DDM Valuation, we have a target price within one year of IDR 960 or trading at 0.4x PBV which gives 10% potential upside, Hold.
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