Well Accelerated Performance
PT Bank Rakyat Indonesia (Persero) BBRI posted 1Q19 net interest income (NII) of IDR19.4 trillion, well above IDR18.6 trillion in 1Q18. The rising NII indicated its success in accelerating credit growth amid the current benchmark rate. The low provision costs, coupled with the slight NII growth of 4.2% provided boosts for rising earnings. We oversee BBRI to be capable of anticipating 175 bps rise in benchmark rates, appropriate for 2018.
Surging SMEs Credits
Small and medium enterprises (SMEs) and state-owned enterprises (SOEs) segments are two biggest contributors to BBRI’s credit growth. Of note, its 1Q19 credits surged 12.4% YoY to IDR819.6 trillion, while SMEs’ asset quality kept in check, marked by downbeat nonperforming loan (NPL) from 2.39% in 1Q18 to 2.31% in 1Q19.
Our Dec-19 price target of IDR4,950 is on the basis of solid growth in people business credit (KUR) and village credit program (Kupedes) amid the stable domestic economy. On the other flip side, fee-based incomes, efficiencies, and current account and savings account (CASA) outperformed accelerating net interest margin (NIM). 1Q19 CASA ratio was at 57.85% an increase of 24 bps from 1Q18. Meanwhile, the current account, savings, and deposits—three components of third-party funds—grew by 24.1%, 10.0%, and 12.8%, respectively.
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