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26 Oktober 2021

BBCA IJ - MNC Sekuritas Equity Report 26 October 2021

9M21 Earnings : Slightly Above Expectations

 

Solid Earnings Driven by Lower Interest Expenses, Opex and Provision
• BBCA posted a net profit of IDR8.74tn in 3Q21, implying +17.9% QoQ growth. The double digit growth of BBCA’s bottom line was attributable to a significant decrease in provision (-66.5% QoQ) despite lower NII (-1.9% QoQ) and Non-II (-0.3% QoQ).
• Cumulatively BBCA’s net profit was at IDR23.2tn in 9M21 (+15.8% YoY) on the back of lower interest expense (-16% YoY), Opex (-4.1% YoY) and provision (-16.2% YoY). BBCA’s net profit for 9M21 was slightly above our expectation and consensus estimate reflecting 77% of a run rate.
• NII grew moderately by 3.3% YoY in 9M21, primarily driven by a decline in BBCA’s CoF on the back of strong CASA growth (+21% YoY). CASA ratio also improved by 170 bps to 78.1% as of Sep-21.
• At the same time, earnings on yielding asset also dropped more than 85 bps YoY in 9M21, causing 63 bps lower in NIM to 5.2%, but still in line with management’s conservative guidance at 5.1%-5.3%.
• Non-II also booked a moderate growth of 2.4% YoY in 9M21, supported by +11.2% YoY growth in fees and commissions. Growth in fee and commissions was in line with increasing mobile and internet banking transaction values which grew 50.8% YoY and 33.7% YoY respectively.
• On the expense side, lower Opex was driven by Covid-19 pandemic. However, BBCA management expect CIR to bounce back to 39-40% on the back of improving pandemic conditions.
• In addition, lower provision was also in line with lower restructured loans. BBCA also managed to keep a sizeable coverage ratio.

Positive Credit Growth in 3Q21
• BBCA’s loans grew +2.1% QoQ/+4.1% YoY in 3Q21 driven corporate loans segment. Corporate loans portfolio which accounted 44.54% from total outstanding grew 7.1% YoY.
• On the other hand, commercial & SME as well as consumer loan segment grew by 1.5% YoY and 2.1% YoY respectively.
• BBCA’s tried to monetize accommodative macroprudential policy enacted by Bank Indonesia (BI) in property and automotive sector by carrying out a virtual expo to boost mortgage and auto loans.
• Total restructured loans dropped 2% YoY as of Sep-21. Meanwhile BBCA’s NPL remained manageable at 2.4% in line with management guidance.
• We expect BBCA could achieve management guidance on loan growth target at 4-6% FY21, given the loosening social restriction and speedy rollout Covid-19 vaccination in 4Q21.

BBCA “Blu” Digital Banking Update and Progress
• According to management statement, BBCA has injected additional capital equivalent to IDR2.7tn to BCA digital to strengthen its digital bank’s arm capital structure. In total BCA digital equity stood at IDR4tn.
• Since the launching, BCA digital successfully raised IDR800bn in funding and hitting another milestone of 100k daily transactions.

Rerating to HOLD with TP of IDR7,200
We maintain BBCA IJ target price at IDR7,200 with HOLD rating after stock split which implied PBV FY21E/FY22F at 4.5x/4.2x. BBCA is currently traded close to +1STD of 5-year average PBV at 4.69x level. BBCA IJ key upside potentials include stronger than expected earning results while risk remain on asset quality.

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