Come Back Stronger
FY21 Result : Strong Bottom Line & Improving Asset Quality
• BBNI booked consolidated net profit attributable to shareholder of IDR10.89tn (+232% YoY) throughout FY21.
• Solid earnings came from significantly lower provisioning expense (-17% YoY) due to front loading strategy during Covid-19.
• Furthermore, the decline in interest expense (-35% YoY) and rising non-interest income (+13% YoY) also supported company’s top line.
• CASA grew +17% YoY outperforming TD growth of +12% YoY helped lower CoF to 1.6% (-100 bps YoY).
• Non-interest income rose by +13% YoY on the back of solid growth on e-channel, trade finance, securities trading and syndication.
• Loan expanded 5.3% YoY in line with industry performance primarily attributable to : 1) private corporate segment (+8% YoY); 2) large commercial segment (+10% YoY) and 3) Govt subsidized KUR (+35% YoY).
• Blended loan yield dropped to 7.25% (-76 bps YoY) amid low interest rate environment. However strengthening CASA structure has boosted net interest income causing NIM to increased 20 bps to 4.7% in FY21 (vs 4.5% in FY20).
• Despite the increase in loan disbursement, BBNI still have ample liquidity with LDR stood at 79.7% primarily driven by higher TPF.
• Asset quality improved with gross NPL declined 60 bps to 3.7% in FY21 (vs 4.3% in FY20) in line with lowering restructured loan.
• As of Dec-21, total Covid-19 restructured loan stood at IDR72.13tn (vs IDR102.39tn in Dec-20), implying a decrease of 29.55% YoY. While at the same time LaR decreased from 28% in Dec-20 to 23.3% in Dec21.
One Step Closer to Having Digital Bank
• BBNI announced its plan to acquire majority stake in Bank Mayora with the transaction value amounting at IDR3.5tn (2x PBV) to establish digital bank as part of its inorganic growth digital strategy.
• We believe that by acquiring large stake in Bank Mayora, BBNI could further boost its growth through leveraging Mayora ecosystem that currently has vast ecosystem both in modern and traditional retail outlets across Indonesia.
• It is worth noted that BBNI could serve more domestic SME customers and increasing its fee based income once its acquisition is executed and the new digital bank is established.
ESG Focus : Affirming A Rating
• BBNI total green portfolio amounting to IDR172.4 tn or equivalent to 29.6% of bank only total loan comprised of : 1) socioeconomic empowerment segment (IDR117tn); 2) sustainable environment (IDR14tn); 3) renewable energy (IDR9.5tn); 4) pollution prevention (IDR5.1tn) and 5) sustainable water & wastewater management (IDR26.8tn).
• BBNI set a strict policy on its loan disbursement in CPO and coal sectors by requiring debtor to demonstrate sustainable environment operation (having at least Blue PROPER rating from KLHK and RSPO/ISPO certificate for CPO sector).
• As of Nov-22, BBNI successfully obtained A-rating from MSCI ESG Rating, the highest among peers.
Outlook & Recommendation : Maintain BUY Rating with Upgraded TP : IDR8,500
We believe BBNI’s loan could grow 10% in FY22F. In addition, we believe BI’s policy to increase IDR statutory reserves will translate into slightly higher CoF in FY22F, but we are optimistic that BBNI could maintain NIM at 4.7%. We maintain BUY rating for BBNI with upgraded TP : IDR8,500 from our previous TP : IDR7,800 based on our DDM valuation, implying 1.05x forward PBV FY22F. Risk to our call include : 1) slower than expected loan growth; 2) deteriorating asset quality due to rising Covid-19 cases and 3) slower execution of digital bank.
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