Solid Earnings Should Continue
Key Takeaways:
▪️ Net profit reached IDR36.4tn in 9M23(+26% YoY), meeting expectations at 76/75% of our/cons FY23E est. due to robust expansion of net interest income, consistent growth in NII growth, and reduced provision charges. The robust PPOP growth of +19% YoY was mainly propelled by a strong NII (+21% YoY), offset by higher opex (+17% YoY). We expect the strong earnings should continue in 4Q23 which reflect to IDR46.2tn of NPAT in FY23E.
▪️ Loan grew +4% QoQ/+12% YoY reaching IDR766tn in 9M23, with nearly all segments achieving double-digit growth. In terms of sectors, the primary contributors to YTD loan growth are edible oils, non-OG mining, and FMCG. Management expects loan to grow 10%-12% in FY23E.
▪️ The bank only-NPL showed improvement, declining -20bps to 2.0% in 9M23, although there was a slight increase from 1.9% in 6M23. Furthermore, the bank revised down its LAR ratio target to a range of 7.1%-7.5% in FY23E, compared to the earlier target of 8%-9%.
▪️ Since BBCA's stock has experienced a significant decrease lately, and we observe that the decline is constrained with a reversal in direction, we are elevating our recommendation from HOLD to BUY, maintaining the unchanged TP of IDR9,900 which implied 4.4x PBV FY24E.
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