Some Changes on its Guidance
1H21 Performance Highlights: Slightly below our target
• Net profit stood at IDR5.65tn (-17.3% QoQ) in 2Q21, largely driven by higher provision. However, cumulatively, net profit showing recovery on YoY basis +22.5% in 1H21 on the back of loan yield improvement and CoF efficiency despite stellar increase of provision fee (+120.3% YoY) in anticipation of deteriorating asset quality. BBRI net profit only achieved 44.5% and 40.7% of our and consensus FY21 estimates.
• NII came in at IDR23.96tn (+54.22% YoY; +3.33% QoQ), mainly driven by micro-segment's loan growth and lower cost of fund.
• Thus, NIM strongly increases to pre-Covid level at 7.02% in 2Q21 (vs 6.0% in FY20).
• BBRI bank's only loan grew 5.0% YoY with strong micro-loan growth of 17.0% YoY. Micro-loan accounted for 40.2% of the total loan. BBRI expect micro-loan composition to reach 45% in 2025.
• CoF decreased by 136 bps YoY to 2.18% in 1H21 on the back of improving CASA to 60.10% (vs 56.64% in 1H20). This helped boost NIM to 7.02% in 1H21 (vs 5.72% in 1H20).
• Gross NPL rose by 29bps YoY to 3.27% in 1H21 and was attributable to the increase of small and corporate segment's NPL. Small loans NPL increased 51 bps YoY to 4.14% in the first half, while corporate non-SOE loans NPL rose by 106 bps YoY to 11.81% during the same period.
• The good news was that BBRI's restructured loan decelerated. As of June-21 total restructured loan was IDR175.2tn or equivalent to 19.2% from loan outstanding. Hence total restructured loans has decreased by IDR11.4tn YTD.
• MSME segments drove the declining trend in restructured loans. BBRI's management has stated to create an adequate provision in order to mitigate the impact of Covid-19 pandemic on credit quality. BBRI's NPL coverage was at 258% in 1H21.
FY21 Management Guidance
BBRI has updated its management guidance as follow :
• Loan Growth : 6%-7% YoY (maintained)
• LDR : ~85% (maintained)
• NIM : ~6.7% (vs >6.3% previously)
• Fee Income Growth : ~8% YoY (maintained)
• Opex Growth : 8%-10% YoY (vs <8% YoY previously)
• NPL : 3.3%-3.5% (vs ~3% previously)
• Credit Cost : 3.5%-3.7% (vs ~3.1% previously)
Maintain BUY; TP: IDR4,800
Our numbers have not included Pegadaian and PNM numbers (pre-RI). However, we believe BBRI's strategy in expanding the ultra-micro segment together with Pegadaian and PNM, should be a long-term positive catalyst, given its competitive advantage and a proven track record in the MSME segment. Synergy ecosystem with Pegadaian and PNM will be fully completed at least in Sep-2021.
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