Company Update

15 Mei 2020

BBRI - MNC Sekuritas Equity Report 15 May 2020

PT Bank Rakyat Indonesia (Persero) Tbk (BBRI)

Banking Sector


Remains Resilient in Distress


1Q20 Performance Highlights; In-line with MNCS Estimates

BBRI booked net profit of IDR8.17 trillion (-0.32% YoY) in 1Q20, this is in-line or reaching 25.54% of MNCS estimates. Net Interest Income is at the level of IDR20.96 trillion (+8.02% YoY). Despite the increase, provision expenses grew by 37.73% YoY to IDR6.59 trillion. Meanwhile the Net Interest Margin (NIM) is stable at the level of 6.59%. On the other hand, total Asset grew by 6.20% YoY in 1Q20, supported by Loan growth of 10.10% YoY, while banks-only loan grew by 9.4% YoY  due to the significant growth of micro segment (+12.70% YoY) followed by Corporate non SoE (13.20% YoY). Amid loan payment easing, consumer loan grew by 7% YoY. Whereas, micro segment remains the largest contributor with 36.2% of total loan and will still be the main focus of BBRI in FY20E. We cut down our forecast in a lower loan growth of  5.53%/8.86% in FY20E/FY21F. In addition, CASA stood at the level of 55.90%, slightly decreased from 56.28% at 1Q19 yet Cost of Fund remains stable at 3.65%. Moreover, LDR is stable at 90.45%.


Anticipated Lower Asset Quality

Non-Performing Loan (NPL) stood at 3% in 1Q20 (vs 2.42% in 1Q19), the increase on NPL has been anticipated from all segments. Meanwhile, BBRI has granted loan restructure to 1.4 million debtors from with the amount of IDR101.2 trillion as of April 2020. Furthermore, NPL coverage ratio has increased to 223.60% (vs 194.70% on 1Q19) with Provision amounting to IDR55.6 billion on 1Q20. On the other hand, both write-off and recovery increased by 60% YoY/14.28% YoY with recovery ratio at 40.60%, BBRI set a target of 52% for the recovery ratio in FY20E.


Revised FY20E Company Guidance

Management revised their previous FY20E company guidance to adjust them with the economic downtrend during Covid-19 pandemics, as follows: 1) Loan growth at 5% (previously at 10%- 11%); 2) Fee Income Growth at 7% (previously at 12% - 14%); 3) NIM at 5.5% (previously at 7%); 4) Gross NPL at 3% (previously at 2.5%); and 5) Credit Cost at 3.5% (previously at 2%).  BBRI also plans to increase the micro segment’s contribution to 40% in FY22F while the corporate segment portion is to be reduced by 20% maximum.


Recommendation: Maintain BUY at Target Price IDR3,200

BBRI’s performance remains resilient on the 1Q20 although the impact from the Covid-19 outbreak was experienced on early March 2020. Regarding the Covid-19 situation, the Government has issued POJK regulation No. 11 to ensure that NPL will not widened. BBRI ensure that liquidity is well managed and provisioning is adequate in facing troubled times. Micro and ultra micro segment will continue to be the main focus in FY20E, assisted by digitalization expansion. We maintain our recommend BUY for BBRI with a target price of IDR3,200. BBRI is currently traded at -2 STD (3-year Average) at 1.36x Forward PBV. BBRI share price decreased by 44% YTD since the beginning of 2020.


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