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Free float (%) 50.9 Modest result. BBCA reported profit of Rp11.4tn in 1H18 (+8.6% yoy), with its
Avg. 6m daily T/O (US$ m) 25.2 2Q/1Q profits forming 23.2%/21.6% of our FY18F forecast of Rp25.4tn (in-line)
vs. consensus estimate of Rp25.9tn (still within expectations). We view this as
Price Performance
modest results, with steady, albeit moderating, profit growth reflecting the bank’s
3M 6M 12M strong asset quality. Net interest income grew 7% in 1H on the back of modest
Absolute (%) 8.5 2.3 23.2 asset growth (+7.3%) and stable NIMs of 6.6%, while operating cost growth was
Vs. JCI (%) 8.0 13.3 21.2 under control (+8.3%) and provisions were lower (-12%). ROAA was sustained
high at 2.98% while ROAE moderated to 16.9% in 1H18 (1H17: 17.9%).
52w high/low (Rp) 23,325 - 18,575
135 Stable NIMs. BBCA’s loan portfolio grew 14.2% in 1H, well outpacing its deposit
130
125 growth (+7.5%), driven by strong growth of its corporate and commercial/SME
120 loans at 19% and 15%, respectively. Meanwhile, consumer loan growth slowed to
115
110 6%, due to slower growth across all products (mortgage: 4%; vehicle: 8%; credit
105 cards: 11% yoy) in recent quarters. However, the bank’s NIM of 6.58% in 1H (our
100
95 calculation) was only marginally lower vs. last year (-4bps) as NIM pressure from
90 falling asset yields is mitigated by stronger growth of loans vs. deposits. Given the
Oct-17
Mar-18
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Jul-18
Aug-17
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Apr-18
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Feb-18
100bps rate rises so far this year, we believe BBCA should be able to maintain its
BBCA-Rebase JCI Index-Rebase NIMs relatively stable in coming years as the bank usually benefits from rising
rates on the back of its strong CASA ratio of 78%.
Major Shareholders
Asset quality. BBCA’s NPL ratio was stable at 1.4%, with high provision/NPL
PT Dwimuria Investama 54.9%
coverage of 186%, as a decline in corporate NPL ratio to 1.0% in 2Q (1Q: 1.4%)
has offset the uptrend in consumer NPL ratio to 1.4% in 2Q (1Q: 1.2%; FY17:
1.0%). Meanwhile, credit cost of 33bps in 1H was significantly improved vs. 43bps
Estimate Change; Vs. Consensus in 1H17 despite higher provisioning in 2Q vs. 1Q (51bps vs. 16bps). This was in
2018F 2019F line with our credit cost assumptions of 54bps for FY18F (FY19F: 42bps).
Latest EPS (Rp) 1,032 1,146
Valuation. We maintain our earnings forecasts unchanged but lower our TP to
Vs. Prior EPS (%) 0.0 0.0
Rp20,500 (from Rp22,000) due to our 50bps higher cost of capital assumption of
Vs. Consensus (%) -1.7 -3.0 12.5% (from 12.0%) in line with rising 10-yr yields during the second quarter.
Source: Bloomberg Our GGM-derived TP assumes LT ROAE of 22% (from 21.1%), LT growth of 8.5%,
cost of equity of 12.5%. We estimate BBCA’s LT ROAE based on DuPont analysis,
assuming LT ROAA of 2.74% and asset/equity leverage of 8x. Despite BBCA’s
steady growth and its high earnings quality and visibility, we reiterate our HOLD
rating due to the stock’s premium valuation over peer major banks in Indonesia.
Fig. 1: Net Interest Income (Rp bn) and NIMs (%) Fig. 2: Non-Interest Income (Rp bn; % of Gross Income)
Net Interest Income Net Interest Margin Other Income Other Income % of Total
12,000 Rp bn 8% 5,000 Rp bn 35%
10,000 7% 30%
4,000
25%
8,000 6%
3,000 20%
6,000 5%
2,000 15%
4,000 4%
10%
2,000 3% 1,000
5%
0 2% 0 0%
2Q15
3Q15
4Q15
1Q16
2Q16
3Q16
4Q16
1Q17
2Q17
3Q17
4Q17
1Q18
2Q18
2Q15
3Q15
4Q15
1Q16
2Q16
3Q16
4Q16
1Q17
2Q17
3Q17
4Q17
1Q18
2Q18
Source: Company, IndoPremier Source: Company, IndoPremier
Fig. 3: Operating Expense (Rp bn) and Cost/Income Ratio (%) Fig. 4: Pre-Provision Profit (Rp bn; % of Average Assets)
0 0% 0 0%
2Q15
3Q15
4Q15
1Q16
2Q16
3Q16
4Q16
1Q17
2Q17
3Q17
4Q17
1Q18
2Q18
2Q15
3Q15
4Q15
1Q16
2Q16
3Q16
4Q16
1Q17
2Q17
3Q17
4Q17
1Q18
2Q18
Source: Company, IndoPremier Source: Company, IndoPremier
Fig. 5: Net Loan Provisioning (Rp bn; bps of Average Loans) Fig. 6: Net Profit (Rp bn) and ROAA (%)
5,000 3.0%
1,600 400
2.5%
1,200 300 4,000
2.0%
800 200 3,000
1.5%
400 100 2,000 1.0%
0 0 1,000 0.5%
3Q15
4Q15
1Q16
2Q16
3Q16
4Q16
1Q17
2Q17
3Q17
4Q17
1Q18
2Q18
2Q15
3Q15
4Q15
1Q16
2Q16
3Q16
4Q16
1Q17
2Q17
3Q17
4Q17
1Q18
2Q18
1H 2018 Results
Income Statement
Balance Sheet
Profitability Ratios
ROAA (%) 3.24 3.23 3.19 3.14 3.18
ROAE (%) 19.8 19.1 18.1 17.5 17.4
NIM (%) 7.17 6.59 6.55 6.25 6.24
Credit cost (bps) 114.7 59.4 53.7 41.9 41.4
Cost/income (%) 43.6 44.2 44.1 44.0 42.8
LDR (%) 80.7 82.7 84.6 86.4 88.2
CAR (%) 22.2 20.4 20.4 20.4 20.4
NPL ratio (%) 1.3 1.4 1.5 1.4 1.4
Provisions/NPL (%) 235.7 197.1 181.8 175.0 167.9
Source: BBCA, IndoPremier
INVESTMENT RATINGS
BUY : Expected total return of 10% or more within a 12-month period
HOLD : Expected total return between -10% and 10% within a 12-month period
SELL : Expected total return of -10% or worse within a 12-month period
ANALYSTS CERTIFICATION.
The views expressed in this research report accurately reflect the analyst;s personal views about any and all of the subject securities or issuers; and no part of the
research analyst's compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in the report.
DISCLAIMERS
This reserch is based on information obtained from sources believed to be reliable, but we do not make any representation or warraty nor accept any
responsibility or liability as to its accruracy, completeness or correctness. Opinions expressed are subject to change without notice. This document is prepared for
general circulation. Any recommendations contained in this document does not have regard to the specific investment objectives, finacial situation and the
particular needs of any specific addressee. This document is not and should not be construed as an offer or a solicitation of an offer to purchase or subscribe or
sell any securities. PT. Indo Premier Sekuritas or its affiliates may seek or will seek investment banking or other business relationships with the companies in this
report.