BBNI Earnings Flash: Rising CoF put pressure on NIM
Key Takeaways:
◼️Net profit stood at IDR10.3tn in 1H23 (+17% YoY) or IDR5.1tn ( -2.7% QoQ) in Q2-23, slightly below the consensus target with 48%. The lower semi-annual net profit was particularly affected by some key factors: 1) Flattening interest income; 2) Soaring interest expense; 3) Higher opex.
◼️Management revised their FY23 target for NIM from 4.7% to 4.6%. Nonetheless, the actual realization of NIM is still slightly under the target with 4.56% figure in 1H23.
◼️Loan grew at +2.6% QoQ, +4.9% YoY to IDR650.8tn, lower than the management target with an expectation of +7-9% YoY and industry growth.
◼️BBNI experienced better credit quality with an NPL of 2.5% (-70 bps YoY) and an NPL Coverage of 308.8% in 1H23.
◼️On the funding side, the recent upward trend in BI Rate boost BBNI time deposit with a growth rate of +9.3% YoY. CASA ratio stood at 69.6% (+0.4% YoY, +0.7% QoQ) and succeeded in maintaining their LDR above 80% (85.2% in Jun-23). We expect CASA ratio remain stable >70% in FY23F.
◼️We maintain our BUY rating with slightly lower GGM-based TP of IDR10,200/share implying 1.3x/1.2x of FY23F/FY24F P/B. Management FY23F guidance: 1) 7%-9% of loan growth; 2) 4.6% of NIM. Downside risks to our call include slower than expected loan growth and asset quality deterioration.
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