Analysis by : Deutsche Bank (DB)
BRI (Bank Rakyat Indonesia) and BTN (Bank Tabungan Negara) have released their unaudited FY 2010 , which are inline and above our estimates respectively. On YoY basis, both banks have shown strong growth. However on QoQ basis, some pressures persist resulting into flat quarterly earnings in 4Q10.
BRI (Bank Rakyat Indonesia) : unaudited FY10 NP of Rp9.0tr (+23.6% YoY, +1.6% QoQ)
This is inline with FY10 estimates from DB and consensus. The strong yoy growth comes as a result of higher NIM due to largely lower COF. But on qoq, 4Q10 NP of Rp2.4tr is only +1.6% reflecting primarily lower NIM of 9.1% down from 9.4% in 3Q10which may be due to higher COF. We estimate FY10 loan growth would be 22-23% yoy, implying 9% QoQ. This is well below its average annual loan growth of 27% during past five years. We attribute this to BRI's relatively tight capital. Going forward, to retain CAR above 12-13%, we estimate BRI's sustainable level loan growth is 20-25% with sustainable dividend payout ratio of about 30%. Our recent meeting with its CFO highlighted BRI's loan growth towards low riskweighting
portfolio (such as micro loans, where risk weighting was recently reduced to 75% from 85%). This should mitigate capital risks. However, near term headwind persists, particularly in medium and micro segments as some agriculture harvests in 1Q11 will be below projections. According to data, rice harvests in certain areas in rice producing areas in Java may be at least 20% short of average.
BTN (Bank Tabungan Negara) : unaudited FY10 NP of Rp805bn (+64% YoY, +0.6% QoQ)
This is 5% above DB FY10 NP of Rp766bn, but is inline with consensus. However, on QoQ basis, 4Q10 NP of RpXXbn is only +0.6% qoq. We attribute this to rising COFduring the quarter. Loan growth remains robust at over 25% yoy. Credit costs normalised as NPL expected to decline to 3% due to seasonality (from 4% in previous quarters).