Good
morning,
Bank
Negara Indonesia: Temporary Weakness
We maintain our BUY
call and IDR6,200 TP (20% upside) on BBNI due to a softer pressure in asset
quality with a supportive macroeconomic environment and the easing monetary
stance from regulators. We view recent Trikomsel’s downgraded loan to NPL
should provide better outlook in 2H16 as BNI also maintain its loan loss
coverage ratio at 142.8% as of June 2016. Its commitment to support key
government infrastructure projects should also be the main loan growth driver.
The bank’s net interest margin can be maintained at 6.1% in 2Q16 following its
parting with TD customers that seek preferential rates.
Key highlights:
¨ Net interest income
represents 48.1%/48.9% of our and consensus forecast supported by strong loan
growth (+9.3% qoq) coming from corporate SOE loan segment.
¨ Manageable loan yield
as small loan (max size IDR5bn) that offer 9.95% lending rate only accounted
for 4.4% (c.IDR15.9trn) of total loan book.
¨ Net interest margin
(NIM) stable at 6.1% with flat blended CoF of 3.1% given that BNI aggressively
push current account saving account (CASA) deposits on institutional customers.
¨ Asset quality
deteriorated with NPL rose to 3% as BNI downgraded Trikomsel’s loan
(IDR1.3trn). June’s figure should be the peak for NPL.
¨ Earnings down by 52.5%
qoq to IDR1.4trn due to substantial provisions in order to maintain loan loss
coverage ratio of 142.8%.
¨ BNI allocate
additional provisions of c.IDR1trn for Trikomsel in 2Q16 resulting to total
provisions on Trikomsel of c.IDR1.7trn or equals to LLC ratio of c.130%. This
should be inline with general management’s policy on LLC ratio of above 130%
level.
¨ Net profit represents
38.9%/39.9% of our/consensus forecast.
What to expect:
¨ High loan growth
coming from infrastructure-related loan following management’s full commitment
to support government projects.
¨ NIM would likely to
compress despite falling blended CoF due to lower lending rate following BI’s
aggressive cut on policy rate. NIM would dip by 20bps to 5.6% according to our
forecast.
¨ Expect gradual
improvement in NPL with stable LLC ratio. (Eka
Savitri)
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Media Highlights:
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Economics
Inflation end of July below 1%
Update on Tax
Amnesty proceeds
Corporates
Alam Sutra Realty recorded IDR966bn
marketing sales
Bank Rakyat Indonesia to issue IDR20trn
bonds
Ciputra Development recorded IDR3trn
marketing sales
Surya Semesta Internusa acquired 120ha of
land in Subang
Pakuwon Jati booked
marketing sales of IDR1.14trn in 1H16
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Best regards,
Helmy Kristanto
Director
Head of Indonesia Research
PT. RHB Securities Indonesia
