BMRI and mid-sized banks deliver better results — Indonesian banks maintained
their YoY growth momentum in 1Q12 as balance sheets continued to strengthen. Net
profit growth for 8 banks (NP +13% reported and +25% ex Garuda write-back in 1Q11)
was driven by loan growth, and lower deposit rates and credit costs. Of the big banks,
BMRI’s revenue growth was the strongest, whereas BBRI continued to lag. Smaller
banks also benefitted from lower deposit costs. BMRI and BBNI remain our top Buys
and BBCA is still our top Sell. BBNI’s 1Q results are due later this month, in which we
expect moderating growth at the operating level due to slower loan growth.
Consensus 2012 EPS growth stays 6% — The relatively low EPS growth forecast is
due to above-consensus 2011 earnings, concentrated mostly in 4Q11. We expect the
current strong growth momentum to continue in 2Q, boosted by a lower guaranteed
deposit rate from April. The real test will be 3Q, when down-payments for consumer
loans will rise and fuel prices could be increased.
Revenue growth of 17% — NII grew in a range of 16-31%, with BBRI’s at +3%.
Interest earned on loans rose 19%, while interest paid on deposits increased 5%.
BBRI’s NIM remains volatile, but is on a downward trajectory. The impact of lower bond
yields for BMRI will be larger in 2Q due to a 3M time lag in adjustment. 1Q12 yield of
4.3% was 230bps lower than 1Q11 (NIM impact 37bps), while 2Q12E would be ~2.5%.
Opex growth (+24%) largely absorbed by revenue — BBRI and BBCA suffered
jumps in cost-to-income ratios due to lower revenue growth and one-off expenses,
respectively. Network expansion and employee wages (seasonal spike in 1Q due to
employee bonuses) continue to drive operating expenses.
Lower credit costs with stable NPL and coverage — Credit costs (net of recoveries)
remained low, with a sharp decline for BBRI boosting net profits. Gross NPLs were
relatively steady, while cash recoveries for BMRI and BBRI (c~Rp0.5trn each) were in
line with CY11 and above our assumptions.
Loan growth 26%, CASA growth 22% — BMRI, BBCA, Permata and BTPN delivered
30+% loan growth. Corporate, SME, mortgages and auto loan growth remained strong.
BBRI’s loan growth was slower due to micro, SME and payroll-based lending. CASA
growth performance was strong for most banks. BBRI’s was +23% even with a sharp
cut in SD rates (now comparable to BBCA). For large banks SD was <2%, but for midsized
banks 3-4%.
CAR in 15-17.5% range for banks under coverage — CAR improved due to 1) a
seasonal peak as March includes the previous year’s entire profit; and 2) accounting
policy change to a standardized approach, reducing the risk weighting of retail loans
and undisbursed loans.
Download file : Citigroup Indonesia Bank Big PIcture_1Q12
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