BNGA
Contact our analyst Lingga
30% upside. Buy.
14 May, 2020
Price Rp625
Target price Rp810
Flat Loan Growth
In 1Q20, BNGA was still able to book Loan Growth of 3.3% YoY, but quarterly growth was flat. Loans were still dominated by Consumer Banking , up 9.8% YoY, supported by mortgages. BNGA will maintain a conservative loan growth strategy and we reduce our Loan Growth estimate from 3% to 1.4% growth this year.
Asset quality decreases
Special Mention Loans surged to 8.10% in 1Q20 from 4.95% in 4Q19. The increase was partly due to the increased value of USD SML loans as BNGA has 36% of their SML loans in USDs. The main focus of BNGA is more care in channelling loans to reduce the risk of lower asset quality during these difficult economic times. Loan Loss Coverage increased to 191% in 1Q20, from 113% in 4Q19, as the company made additional provisions to comply with IFRS9.
CASA rose significantly
The CASA ratio increased to 60.06% in 1Q20, from 55.35% in 4Q19., CASA has grown18.8% YoY, higher than the industry growth of 15%. Growth from Current Accounts was 15.1% and Saving Accounts 10.1%. This increase in CASA helped offset a decrease in Net Interest Income. BNGA will continue to maintain CASA liquidity, and we estimate the CASA ratio will be 56% this year.
Valuation: 30% Upside, Buy.
Based on our DDM Valuation, we have a target price within one year of IDR 810 or trading at 0.3x PBV which gives 30% potential upside, BUY.
In 1Q20, BNGA was still able to book Loan Growth of 3.3% YoY, but quarterly growth was flat. Loans were still dominated by Consumer Banking , up 9.8% YoY, supported by mortgages. BNGA will maintain a conservative loan growth strategy and we reduce our Loan Growth estimate from 3% to 1.4% growth this year.
Asset quality decreases
Special Mention Loans surged to 8.10% in 1Q20 from 4.95% in 4Q19. The increase was partly due to the increased value of USD SML loans as BNGA has 36% of their SML loans in USDs. The main focus of BNGA is more care in channelling loans to reduce the risk of lower asset quality during these difficult economic times. Loan Loss Coverage increased to 191% in 1Q20, from 113% in 4Q19, as the company made additional provisions to comply with IFRS9.
CASA rose significantly
The CASA ratio increased to 60.06% in 1Q20, from 55.35% in 4Q19., CASA has grown18.8% YoY, higher than the industry growth of 15%. Growth from Current Accounts was 15.1% and Saving Accounts 10.1%. This increase in CASA helped offset a decrease in Net Interest Income. BNGA will continue to maintain CASA liquidity, and we estimate the CASA ratio will be 56% this year.
Valuation: 30% Upside, Buy.
Based on our DDM Valuation, we have a target price within one year of IDR 810 or trading at 0.3x PBV which gives 30% potential upside, BUY.
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