Analisa Saham BMRI
FIGHT BAD LOANS MONSTER
BMRI FY17 net profit grew by 49.5% YoY to Rp 20.6 tn (vs FY16: -32.1% YoY). Improving FY17 net profit was contributed by lower provision growth of -35.3% YoY (vs FY16: 104.6% YoY) and lower cost of fund (FY17: 2.7% vs in FY16: 3.0%). Loan grew by +10.2% YoY while deposits grew by +7.0% YoY lead to higher LDR (FY17: 89.2% vs FY16: 86.54%). Loan growth dominated by corporate loan (FY17:14.7% YoY vs FY16: 15.6% YoY) and commercial loan (FY17: -5.7%YoY vs FY16: 2.8% YoY). Based on sector, the manufacturing (30% of total loan) and plantation companies (14% of total loan) companies are the biggest contributors. NPL slightly decrease to 3.46% in FY17 (vs FY16: 4.00%) due to sizeable write-off of Rp 190.2 tr (vs FY16: 180.0Rp tr), driven by commercial segment in distribution trading, raw material manufacturing, and retail trading sectors. NIM squeezed by 57bps YoY to 5.87% in FY17 due to lower loan yield (FY17: 10.3% vs FY16: 11.3%). Thus, we re-initiate HOLD on BMRI with a target price 9,100/share.
BMRI reported net profit of Rp 20.6tr (FY17: +49.5% YoY vs FY16: -32.1% YoY), supported by lower provision in FY17 (Rp15.9tr; +-35.3 %YoY). Loan grew to Rp 729.5 tr (+10.2% YoY) in FY17, dominated by corporate loan (FY17:14.7% YoY vs FY16: 15.6% YoY) and commercial loan (FY17: -5.7%YoY vs FY16: 2.8% YoY). Based on sector, the manufacturing (30% of total loan) and plantation companies (14% of total loan) companies are the biggest contributors.
NPL slowed by 54bps YoY to 3.46% in FY17, driven by better quality of corporate loan (FY17:0.37% vs FY16:1.01%), while the commercial loan’s quality declining (FY17:10.01% vs FY16: 9.32%). Of the total NPL of Rp 21.65 tr in FY17, 64.5% were more than 90 days overdue on interest payment. Based on the sector, the NPL is contributed mostly by trading distribution, raw material manufacturing, chemical manufacturing sectors which used the loan mostly for working capital. Of the total loan, Rp 46.34 tr restructured loan generated recoveries (4Q17: Rp 83.5 bn vs 4Q16: Rp78.7bn) and write-off (4Q17: Rp 190.2 bn vs 4Q16: Rp194.6 bn).
NIM is squeezed by 57bps YoY to 5.87% in FY17 due to lower loan growth (FY17: 10.2% YoY vs FY16: 11.2% YoY) and lower loan yield, 10.3% in FY17 (vs FY16: 11.3%) as an impact of expansive monetary policy and price wars from other banks and capital markets which offer competitive yield to the debtor.
Outlook: Need to squeeze the bad loans. On loan, we see BMRI will facing a better year for a better loan quality. However, if BMRI failed to squeeze the bad loan, they will not be able to expand the growth in FY18. On margin, like the peers, we see BMRI will be facing some pressures on loan yield due to price wars amidst low-rate environment. On asset quality, we believe BMRI will be record a better year, but with a decent phase.
We re-initiate our coverage on BMRI with HOLD recommendation at a price of Rp 9.100/share. The share is currently trading at 2.0x forward P/BV, while our implied P/BV multiple of 2.1x implying limited upside potential.
Best Regards,
Panin Sekuritas
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