BNGA

Contact our analyst Lingga

20% upside. Buy.
25 February, 2020
Price Rp815
Target price Rp980

Higher Loan growth

• In FY19 Loan growth increased by 3.1% YoY from 1.8% in FY18, which was Loan growth in FY19 increased to 3.1% YoY from 1.8% in FY18.
• The growth was supported by improvements in the quality of loan assets, especially in the consumer segment which has helped to reduce the overall asset risk. 
• To further growth of it’s consumer loans, BNGA has been  partnering with several property developers. We estimate loan growth in FY20 will stay at around 3%.

Stable Net Interest Margin

• IIn FY19, the Net Interest Margin was 5.31%, an increase of 19bps YoY, driven by BNGA’s focus on higher-yielding loans.
• We expect with the current decrease in interest rates, NIM will increase further to around 5.7% in 2020.

Improvement in Asset Quality

• NPLs have shown a significant improvement over the past year, falling to 2.79% in 2019 from 3.11% in 2018, this is due to a decrease in NPLs in the commercial segment to 4.6% in 2019 from 7.9% in 2018.
• Special Mention Loans increased to 4.95% due to downgrades of PT Krakatau Steel and the Cement Industry.

CAR increased by 21.47%

• in FY19, CAR increased to 21.47%, as a result of a moderate repayment ratio and moderate loan growth in the past few years.
• With a higher dividend payout ratio of 40%, we estimate CAR will be at around 19% in 2020.

Valuation: 20% Upside, Buy.

• Based on our DDM Valuation, we have a target price within one year of IDR 980 or trading at 0.4x PBV which gives 20% potential upside, Hold.
  

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Previously

​BNGA, Dec2019