Bank Negara Indonesia ($BBNI
): Strong growth to stay
On track to meet FY16 target
We remain positive on the toned down expectation in BBNI’s loan growth
following its strong 5M16 achievement, as an over aggressive expansion
could result in a potential downgrade in credit quality. A downward
revision in both growth and loan quality should not alter our 24% YoY EPS
growth forecast for FY16 as we have taken a more conservative stance
compared to management. Maintain BUY with TP at IDR6,300, pegging
the stock at its average 1.4x FY16 P/BV.
Growth to remain above the sector’s average
We met BBNI following its 5M16 earnings release. After posting a strong
23% YoY loan growth for 5M16 the bank sounded more cautious in lending
as it recognizes the risk attributed to aggressive expansion during an
economic slowdown to future credit quality. However, a slight downward
revision on its 18-20% YoY loan growth target should not change our 24%
YoY EPS growth forecast for FY16 as we already took a more conservative
stance with 16% YoY expansion this year, which is still above the sector’s
estimated growth of 10% YoY.
Taking safety measure on quality
We saw IDR1t MoM jump in provision to IDR2.7t in 5M16, implying 41% of
our FY16 estimate. This resulted in a seemingly weak 5M16 profit of
IDR4.3t (+8% YoY). However, the safety measure was necessary as NPLs
might peak to 3.2% in June when BBNI downgrades the IDR1.3t Trikomsel
(TRIO IJ) loan to NPL. We maintain our NPL estimate at 3%, which is
40bps higher than the bank’s 2.6% target by YE16.
Maintain BUY; TP at IDR1,175
For BBNI, the confidence comes from its on-going loan restructuring
programme, which includes another IDR1.5t to be made in 2Q16 in
addition to the IDR1.3t in 1Q16, as well as write-offs. Faster-thanexpected
improvement in loan quality could pose as a catalyst to our
IDR6,300 (1.4x FY16 P/BV) TP. Maintain BUY.