BNGA
Contact our analyst Lingga
26% upside. BUY.
18th November 2021
Price Rp 1,035
Target price Rp1,310
Increased Net Profit
In 9M21, Bank CIMB Niaga (BNGA) recorded a net profit of IDR 3.2 trillion, up 69.1% YoY. This increase was driven by a significant decrease in interest expense by 31.4% YoY from lower interest rates and a better funding mix, interest income decreased by 8.7% YoY, driven by a decrease in the average earning assets i.e. loans and securities and a decreased return on assets. PPoP grew by 15% YoY in line with the growth of recuring fee based income. Cost control resulted in operating costs being flat, up just 0.5% YoY.
Loan down, deposits up
Loan growth weakened by 2.2% YoY, dragged down by the corporate (-4.2% YoY) and commercial (-13.0% YoY) segments due to sluggish economic activity, but the consumer loan segment continued to grow by 5.7% and accounts for 33% of total loans driven by housing loans and motor vehicle loans. Third Party Funds increased 7.6% from CASA which grew by 10% YoY with Saving accounts up 11.7% YoY and Currents Accounts up 8.5% YoY driven by development of digital banking capabilities which increased customer engagement with the bank, also contributing to the growth of non-Interest Income.
Increased Digital transactions
BNGA reintroduced OCTO Mobile so customers can enjoy contactless credit card services and mobile payments. BNGA has added features for deposit and investment, transactions, loans, and other services into their digital application. More complex transactions are served through “OCTO Clicks”. Digital transactions through “OCTO Mobile” and “OCTO Clicks” showed significant growth, surpassing ATM channels. Digital revenue grew 47% YoY to IDR 306 billion, driven by digital source revenue which jumped 67.7% YoY. The value of digital transactions through OCTO Mobile and OCTO Clicks increased by 41% YoY (to IDR 37 trillion) and 7% YoY (to IDR 24 trillion). Meanwhile, the value of ATM transactions fell 6.4% YoY (to IDR 20 trillion). A strong digital platform should attract customers to deposit more cash in savings accounts, combining digital and physical networks should work well in Indonesia given the differences in internet coverage between regions and large cash transactions in traditional markets. In addition, many people are not digital savvy enough to access digital banking. Branches are also required for complex and high-value transactions.
Valuation: 26% Upside, BUY.
Based on our DDM Valuation, we have a target price within one year of IDR 1,310 or trading at 0.6x PBV which gives 26% potential upside, Buy.
ave a target price within one year of IDR 1,210 or trading at 0.6x PBV which gives 22% potential upside, Buy.
In 9M21, Bank CIMB Niaga (BNGA) recorded a net profit of IDR 3.2 trillion, up 69.1% YoY. This increase was driven by a significant decrease in interest expense by 31.4% YoY from lower interest rates and a better funding mix, interest income decreased by 8.7% YoY, driven by a decrease in the average earning assets i.e. loans and securities and a decreased return on assets. PPoP grew by 15% YoY in line with the growth of recuring fee based income. Cost control resulted in operating costs being flat, up just 0.5% YoY.
Loan down, deposits up
Loan growth weakened by 2.2% YoY, dragged down by the corporate (-4.2% YoY) and commercial (-13.0% YoY) segments due to sluggish economic activity, but the consumer loan segment continued to grow by 5.7% and accounts for 33% of total loans driven by housing loans and motor vehicle loans. Third Party Funds increased 7.6% from CASA which grew by 10% YoY with Saving accounts up 11.7% YoY and Currents Accounts up 8.5% YoY driven by development of digital banking capabilities which increased customer engagement with the bank, also contributing to the growth of non-Interest Income.
Increased Digital transactions
BNGA reintroduced OCTO Mobile so customers can enjoy contactless credit card services and mobile payments. BNGA has added features for deposit and investment, transactions, loans, and other services into their digital application. More complex transactions are served through “OCTO Clicks”. Digital transactions through “OCTO Mobile” and “OCTO Clicks” showed significant growth, surpassing ATM channels. Digital revenue grew 47% YoY to IDR 306 billion, driven by digital source revenue which jumped 67.7% YoY. The value of digital transactions through OCTO Mobile and OCTO Clicks increased by 41% YoY (to IDR 37 trillion) and 7% YoY (to IDR 24 trillion). Meanwhile, the value of ATM transactions fell 6.4% YoY (to IDR 20 trillion). A strong digital platform should attract customers to deposit more cash in savings accounts, combining digital and physical networks should work well in Indonesia given the differences in internet coverage between regions and large cash transactions in traditional markets. In addition, many people are not digital savvy enough to access digital banking. Branches are also required for complex and high-value transactions.
Valuation: 26% Upside, BUY.
Based on our DDM Valuation, we have a target price within one year of IDR 1,310 or trading at 0.6x PBV which gives 26% potential upside, Buy.
ave a target price within one year of IDR 1,210 or trading at 0.6x PBV which gives 22% potential upside, Buy.
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