Bank Central Asia (BBCA IJ)
26 October 2018 (BBCA IJ)
Bank Central Asia Results Note (Unchanged)
HOLD Stock Data Stronger growth outlook as rate rises
Target price (Rp) Rp21,200 Modest profit growth in 9M18 (+10%) despite strong loan growth.
Prior TP (Rp) Rp20,500 However, NIM downtrend reversed in 3Q (+17bps qoq) as rate rises.
Share price (Rp) Rp22,900 Stable asset quality and credit cost in line with our expectation.
Upside/downside (%) (7.4) Shares outstanding (m) 24,655 We raised our earnings and TP slightly but keep our HOLD rating.
Market cap. (US$ m) 37,174
s
Free float (%)
50.9 Modest results. BBCA’s net profit of Rp18.5tn in 9M18 (+9.9% yoy) came in line
k with our forecast and consensus expectations. We view this as modest results,
Avg. 6m daily T/O (US$ m)
23.6
n with steady, albeit moderating, profit growth reflecting its strong asset quality. a
Price Performance Quarterly profit jumped 20% qoq in 3Q18, driven by better NIMs, strong trading
B
3M
6M
12M incomes while operating cost eased after seasonally higher costs in the first two quarters. Going forward, we expect stronger earnings growth outlook in next 2
|
Absolute (%) -1.4
3.6
7.4
years, given a trend reversal in rates on the back of BI’s 125bps policy rate rises ia Vs. JCI (%)
2.5
7.6
12.1 this year, which usually has positive impact on BBCA’s NIMs.
s
52w high/low (Rp) 22,900 - 20,350
e n 125
NIM trend reversal. BBCA’s NIM of 6.51% in 9M18 (our calculation) was only o 120
8bps lower than in the prior year, reflecting the effect of declining rates which was d 115 mitigated by much stronger loan vs. deposit growth (17.3% vs. 6.9%). However, n 110 with interest rates started rising this year, owing to Indonesia’s worsening current
105
I account deficit and its weakening currency, BBCA’s NIM widened to 6.62% in 3Q
100 |
(+17bps qoq), a trend which we believe will be sustained in next 2 years given
95 y
90 the bank’s strong deposit mix (CASA: 78%). BBCA’s strong loan growth was
7
8
8
7
7
7
8
8
8
8
8
8
8
8
8
8
8
8
1
1
1
1
1
1 it
- 1 -1 -1 -1 -1 -1 -1 -1 -1 -1
- 1 -1 t- r- r- l- l- t- v c c n b b y y n p p c u u g c driven by corporate lending (+23%) and commercial/SME loans (+17%) while its a p o e e a e e a a u u e e J J O A O
u J F F M J S S N D D M M A consumer loans grew only 9% due to slowing home mortgage loans.
BBCA-Rebase JCI Index-Rebase q E
Asset quality. BBCA’s asset quality remained very strong with low and stable Major Shareholders
NPL ratio of 1.4% and high provision coverage of 187%. Over the past year, NPL
PT Dwimuria Investama 54.9%
ratios for its corporate loans improved to 1.0% (from 1.2%), commercial/SME loans eased to 2.0% (from 2.3%) while consumer NPLs worsened to 1.3% (from 1.1%). Meanwhile, the bank’s credit cost rose to 71bps in 3Q (2Q: 51bps) but at only 46bps in 9M18, the credit cost was still lower than last year (56bps) and it
Estimate Change; Vs. Consensus was still in line with our forecast assumption of 54bps for FY18F. We expect the
2018F 2019F bank’s credit cost to remain at this levels in the next 2 years.
Latest EPS (Rp) 1,036 1,180 Vs. Prior EPS (%) +0.5 +3.2
Valuation. We raised our earnings forecasts by 3% for FY19F/FY20F on the back
Vs. Consensus (%) -1.0 -0.4
of better NIMs, and lift up TP slightly to Rp21,200 (from Rp20,500). Our GGM- derived TP assumes LT ROAE of 22.4% (from 22.0%), LT growth of 8.5%, cost of Source: Bloomberg equity of 12.5%. We estimate BBCA’s LT ROAE based on our DuPont analysis, assuming LT ROAA of 2.80% and asset/equity leverage of 8x. Despite BBCA’s steady growth, high earnings quality, and its stronger earnings growth outlook in the next 2 years on the back of rising rates, we reiterate our HOLD rating due to the stock’s premium valuation over peer major banks in Indonesia.
Year To 31 Dec 2016A 2017A 2018F 2019F 2020F
Operating income (RpBn) 53,643 56,950 62,586 69,915 78,379 PPOP (RpBn) 30,264 31,760 34,877 39,434 45,136 Net profit (RpBn) 20,470 23,278 25,579 29,149 33,149 Net profit growth (%)
13.7
13.7
9.9
14.0
13.7 FD EPS (Rp) 830 944 1,037 1,182 1,345 P/E (x)
27.6
24.3
22.1
19.4
17.0 P/B (x)
5.0
4.3
3.7
3.3
2.8 Stephan Hasjim Dividend yield (%)
0.7
1.1
1.1
1.3
1.5 PT Indo Premier Sekuritas ROAA (%)
3.2
3.2
3.2
3.2
3.3 [email protected] ROAE (%)
19.8
19.1
18.3
18.0
17.8
- 62 21 5793 1168 Source: BBCA, IndoPremier Share Price Closing as of : 25-October-2018
Rp bn
1
1
8
2 Q
1
8
3 Q
1
8 Pre-Provision Profit Pre-Provision Profit ROAA
Rp bn
600
2,400
3 Q
5
7
4 Q
1
5
1 Q
1
6
2 Q
1
6
3 Q
1
6
4 Q
1 Q
1
6
3 Q
4,000 6,000 8,000 10,000
3 Q
1
5
4 Q
1
5
1 Q
1
6
2 Q
1
6
1
4 Q
6
4 Q
1
6
1 Q
1
7
2 Q
1
7
3 Q
1
7
1
1 Q
8 Operating Expenses Cost-Income Ratio
3 Q
6
3 Q
1
6
4 Q
1
6
1 Q
1
7
2 Q
1
7
1
2 Q
7
4 Q
1
7
1 Q
1
8
2 Q
1
8
3 Q
1
8 Net Profit Net Profit ROAA
1
6
1
2 Q
7
2 Q
1
7
3 Q
1
7
4 Q
1
7
1 Q
1
8
1
1
8
3 Q
1
8 Net Provisions bps of Loans
bps Rp bn 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 1,000
2,000 3,000 4,000 5,000 6,000 7,000
3 Q
1
5
4 Q
1
5
1 Q
Rp bn 0% 1% 2% 3% 4% 5% 6% 2,000
1
Fig. 1: Net Interest Income (Rp bn) and NIMs (%) Fig. 2: Non-Interest Income (Rp bn; % of Gross Income) Source: Company, IndoPremier Source: Company, IndoPremier
10% 15% 20% 25% 30% 35%
4 Q
1
7
1 Q
1
8
2 Q
1
8
3 Q
1
8 Net Interest Income Net Interest Margin
Rp bn 0% 5%
1,000 2,000 3,000 4,000 5,000
1
3 Q
1
5
4 Q
1
5
1 Q
1
6
2 Q
1
6
3 Q
7
3 Q
6
6
Fig. 3: Operating Expense (Rp bn) and Cost/Income Ratio (%) Fig. 4: Pre-Provision Profit (Rp bn; % of Average Assets) Source: Company, IndoPremier Source: Company, IndoPremier
Fig. 5: Net Loan Provisioning (Rp bn; bps of Average Loans) Fig. 6: Net Profit (Rp bn) and ROAA (%) Source: Company, IndoPremier Source: Company, IndoPremier
2% 3% 4% 5% 6% 7% 8% 2,000
4,000 6,000 8,000 10,000
12,000
3 Q
1
5
4 Q
1
5
1 Q
1
2 Q
7
1
6
3 Q
1
6
4 Q
1
6
1 Q
1
7
2 Q
1
1
4 Q
3 Q
2 Q
6
2 Q
1
6
3 Q
1
6
4 Q
1
6
1 Q
1
7
1
1 Q
7
3 Q
1
7
4 Q
1
7
1 Q
1
8
2 Q
1
8
1
5
1
1 Q
6
1 Q
1
7
2 Q
1
7
3 Q
1
7
4 Q
1
7
1
1
8
2 Q
1
8
3 Q
1
8 Other Income Other Income % of Total
Rp bn 0% 10% 20% 30% 40% 50% 60% 2,000
4,000 6,000 8,000
3 Q
1
5
4 Q
- 400 400 800 1,200 1,600 2,000
- 100 100 200 300 400 500
Third-Quarter 2018 Results Results (Rp Bn)
9M18
9M17 % Y-Y
3Q18
2Q18 % Q-Q Net Interest Income 33,338 30,948 7.7 11,576 10,990
5.3 Fees & Commissions 8,609 7,565
13.8 3,093 2,847
8.6 Insurance & Other Incomes 2,131 1,847 15.4 735 747 -1.6 Trading Income 1,836 1,361 34.9 1,029 229 349.3
Operating Income 45,914 41,721 10.0 16,433 14,813
10.9 Operating Expenses -20,875 -18,785
11.1 -6,528 -6,750 -3.3
Pre-Provision Profit 25,039 22,936 9.2 9,905 8,063
22.8 Provision for Impairment -1,747 -1,829 -4.5 -921 -638
44.4 Operating Profit 23,300 21,106
10.4 8,984 7,425
21.0 Other Non Operating Items
21 n.m 21 n.m
Pre-Tax Profit 23,312 21,106 10.4 8,984 7,437
20.8 Tax -4,802 -4,256
12.8 -1,896 -1,524
24.4 Net Profit 18,508 16,841
9.9 7,087 5,913
19.9 Gross Loans 529,836 451,693 17.3 529,836 508,822
4.1 Customer Deposits 614,500 574,836
6.9 614,500 615,551 -0.2 Non-Performing Loans (NPL) 7,418 6,728 10.2 7,418 7,124
4.1 Special Mention Loans 7,783 7,783 0.0 7,783 10,805 -28.0 Loan Loss Reserves (LLR) 13,900 12,842 8.2 13,900 13,283
4.6 Total Assets 798,966 739,883 8.0 798,966 791,730
0.9 Risk-Weighted Assets 623,734 544,478 14.6 623,734 601,841
3.6 Shareholders’ Funds 143,607 127,317
12.8 143,607 136,747
5.0 BV Per Share 5,825 5,164 12.8 5,825 5,546
5.0 Source: Company, IndoPremier Key Ratios (%)
9M18
9M17 % Y-Y
3Q18
2Q18 % Q-Q ROAA (annualized)
3.18
3.15
0.9
3.56
3.05
16.9 ROAE (annualized)
18.0 18.7 -4.0
20.2
17.3
16.8 Net Interest Margin (bps) 651 659 -1.2 662 645
2.7 Credit Cost (bps)
46 56 -17.2
71
51
38.1 Fee Inc/Operating Income
18.8
18.1
3.4
18.8 19.2 -2.1 Non Int Inc/Operating Income
27.4
25.8
6.1
29.6
25.8
14.5 Op. Cost/ Operating Income
45.5
45.0
1.0
39.7 45.6 -12.8 Loan-to-Deposit Ratio (LDR)
86.2
78.6
9.7
86.2
82.7
4.3 NPL/Loan Ratio
1.4 1.5 -6.0
1.4
1.4
0.0 LLR/NPL Ratio 187.4 190.9 -1.8 187.4 186.5
0.5 Tier-1 Capital Ratio
22.7 23.1 -1.6
22.7
22.4
1.2 Total Capital Ratio
23.7 24.0 -1.1
23.7
23.4
1.6 Source: Company, IndoPremier
Year To 31 Dec (RpBn) 2016A 2017A 2018F 2019F 2020F Income Statement
Interest income 50,426 53,768 57,076 67,386 77,131 Interest expense (10,347) (11,941) (11,888) (15,732) (18,868) Net interest income 40,079 41,826 45,188 51,653 58,264 Fees and commissions 9,401 10,386 11,736 12,910 14,201 Trading income 2,210 1,772 2,400 1,600 1,600 Other operating income 1,954 2,966 3,262 3,752 4,315 Total operating income 53,643 56,950 62,586 69,915 78,379 Personnel expenses (10,630) (11,335) (12,469) (13,716) (14,950) G&A expenses (11,229) (12,306) (13,536) (14,890) (16,230) Other operating expenses (1,520) (1,550) (1,704) (1,875) (2,062) Pre-provision operating profit 30,264 31,760 34,877 39,434 45,136 Provisions (4,561) (2,633) (2,743) (2,986) (3,688) Loan recovery income Operating profit 25,703 29,127 32,134 36,449 41,449 Non-operating profit Exceptional items Pre-tax profit 25,703 29,127 32,134 36,449 41,449 Income tax (5,207) (5,838) (6,555) (7,290) (8,290) Minority interests (27) (11) (10) (10) Reported net profit 20,470 23,278 25,579 29,149 33,149
Balance Sheet
Cash 15,944 16,754 25,093 28,203 31,744 Current account with BI 40,597 43,473 44,083 49,369 55,380 Placements at BI & other banks 47,830 28,063 29,466 30,940 32,487 Short-term investments 44,365 76,977 85,987 96,161 107,667 Government bonds 72,019 69,388 75,278 78,700 82,293 Gross loans 427,866 480,584 551,287 632,457 695,703 Loan provisions (12,849) (13,686) (14,537) (16,072) (18,310) Other assets 40,968 48,766 51,204 53,764 56,453 Total Assets 676,739 750,320 847,862 953,522 1,043,416 Customer deposits 530,134 581,115 651,749 731,950 823,177 Deposits from other banks 4,901 5,758 6,768 7,966 9,387 Securities and borrowings 5,121 3,651 4,016 4,418 4,860 Other liabilities 23,504 27,914 34,615 35,697 6,611 Total Liabilities 563,659 618,439 697,148 780,030 844,035 Share capital 7,105 7,090 7,090 7,090 7,090 Reserves and others 6,824 8,215 8,215 8,215 8,215 Retained earnings 98,503 115,998 135,291 158,045 183,907 Shareholders' equity 112,433 131,304 150,596 173,350 199,212 Minority interest 282 98 118 141 170 Total Liabilities & Equity 676,374 749,841 847,862 953,522 1,043,416
Source: BBCA, IndoPremier
Year To 31 Dec 2016A 2017A 2018F 2019F 2020F Growth Ratios (% yoy)
Gross loans
7.4
12.3
14.7
14.7
10.0 Total assets
13.9
10.9
13.0
12.5
9.4 Customer deposits
11.9
9.6
12.2
12.3
12.5 Net interest income
11.7
4.4
8.0
14.3
12.8 Non-interest income
13.2
11.5
15.0
5.0
10.2 Total operating income
13.6
13.3
10.3
13.4
13.7 Operating expense
7.7
7.7
10.0
10.0
9.1 PPOP
15.8
4.9
9.8
13.1
14.5 Net profit
13.7
13.7
9.9
14.0
13.7 Profitability Ratios ROAA (%)
3.24
3.23
3.25
3.24
3.32 ROAE (%)
19.8
19.1
18.3
18.0
17.8 NIM (%)
7.17
6.59
6.53
6.58
6.72 Credit cost (bps) 114.7
59.4
53.8
50.4
55.5 Cost/income (%)
43.6
44.2
44.3
43.6
42.4 LDR (%)
80.7
82.7
84.6
86.4
84.5 CAR (%)
22.2
20.4
20.4
20.5
21.3 NPL ratio (%)
1.3
1.4
1.4
1.4
1.5 Provisions/NPL (%) 235.7 197.1 182.1 177.5 170.9
Source: BBCA, IndoPremier
Head Office PT INDO PREMIER SEKURITAS Wisma GKBI 7/F Suite 718 Jl. Jend. Sudirman No.28 Jakarta 10210 - Indonesia p +62.21.5793.1168 f +62.21.5793.1167
INVESTMENT RATINGS
BUY : Expected total return of 10% or more within a 12-month period HOLD : Expected total return between -10% and 10% within a 12-month period SELL : Expected total return of -10% or worse within a 12-month period ANALYSTS CERTIFICATION.
The views expressed in this research report accurately reflect the analyst;s personal views about any and all of the subject securities or issuers; and no part of the research analyst's compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in the report.
DISCLAIMERS
This reserch is based on information obtained from sources believed to be reliable, but we do not make any representation or warraty nor accept any responsibility or liability as to its accruracy, completeness or correctness. Opinions expressed are subject to change without notice. This document is prepared for general circulation. Any recommendations contained in this document does not have regard to the specific investment objectives, finacial situation and the particular needs of any specific addressee. This document is not and should not be construed as an offer or a solicitation of an offer to purchase or subscribe or sell any securities. PT. Indo Premier Sekuritas or its affiliates may seek or will seek investment banking or other business relationships with the companies in this