Solid Operating Result in FY23
Key Takeaways:
▪️Net profit reached IDR48.6tn (+19.4% YoY), in line with our & consensus' target; due to robust expansion of NII growth and reduced provision charges by 50% YoY which resulted in all-time-low CoC of 0.3%. NIM remained flat on QoQ at 5.5% and it is anticipated that NIM to remain stable at 5.5%-5.6% in FY24E. Management foresee a possibility for a 25-50bps improvement in loan yield.
▪️Loan grew +6% QoQ/+14% YoY reaching IDR810.3tn in FY23, with nearly all segments achieving double-digit growth. Loan growth target 9%-10% in FY24E (vs 10%-12% in FY23E).
▪️The bank only-NPL showed improvement, declining -20bps from 2.0% in 9M23 to 1.8% in FY23. Management revised down its LAR ratio target to a range of 4%-6% in FY24E which justify its low CoC guidance of 0.3%-0.4%.
▪️BUY recommendation with higher TP of IDR10,500 which implied 4.6x PBV FY24E. We expect potential loan growth surprises, coupled with higher asset yields, credit cost savings and steady ROE. Downside risk: slower-than-anticipated loan growth.
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