Analisa Saham BMRI | 13 September 2018

BMRI
Rebalancing the loan portfolio with the more retail-centric

Shinhan Sekuritas Indonesia
Helmi Therik

Back ground. BMRI is the largest bank in Indonesia and become the systematic and important financial institution in Indonesia with the total assets reached IDR1,155tn. The company is a state owned company which plays important rules in Indonesia through its synergetic between government and other SOE business that support the government related projects. The bank is positioned as a corporate bank with the total loan shares in Indonesia at 15.2% while the shares of its customer deposit is about 15.3% of the national saving.

Balancing the corporate exposure to be more retail centric.  Bank Mandiri is benefiting by its position as the largest state bank that have higher a business exposure in the corporate and SOE. However, on the other side the portfolio mix with higher exposure in corporate loan is a disadvantageous due to its lower yield compares to the consumer segment. The stiffer competition in the corporate loan also limits the margin expansion. To mitigate this situation, the company aims to raise its exposure in the consumer segments that could provide better yield than the corporate segments. The corporate segment contributes 66% of its total assets portfolio in 1H’18 while the small-medium-micro and consumer segment contributes 34%. The company is aiming to re-profiling its business exposure by expanding the consumer and small medium segment to 40% while at the same time reducing the corporate portion to 60% by 2020. This would maintain the NIM at above 5.4%. The company is well capitalized with its CAR stood at 20% and sound assets quality as shown in NPL at 2.5%.

Satisfactory growth with improving assets quality. The company booked the loan growth at 11.8%yoy in 1H to IDR762.5tn. However the NIM was slightly declined by 14bps to 5.74% mainly due to the lower assets yield to 7.8% from 8.2% last year. The expectation of higher economic growth this year and stabilize provisioning due to the better asset quality improvement is expected would reduce the impact from the margin compression. We estimate the net profit would accelerate by 24%yoy to IDR 26.6tn while the NIM is expected to hover at 5.6% and the loan growth would be maintained at 10%yoy to IDR828tn. 

Risk. The unanticipated downward credit quality, stiffer interest rate competition, slower GDP that could slash down the earning outlook.

Valuation.  Our TP at IDR8,500 is calculated from the GGM approach which implying the PBV at 1.11 and 1.06 for 2018F and 2019F respectively. The CoE and the ROAE is set at 14.7 % and 15% respectively.