Bank - Big Cycle Is Coming

[Indonesia]
Bank (Overweight)
2021 outlook: Big cycle is coming
Mirae Asset Sekuritas Indonesia

Lee Young Jun lee.youngjun@miraeasset.co.id
Value stock (banking) to benefit Heading into growth-driven market

most in 2021  Ever since COVID-19 broke out globally, market has been driven by liquidity. Around the
world, central banks act by cutting rates and doing quantitative easing, while governments
have taken forceful measures to cushion the blow by providing unprecedented fiscal policy.
 However, we think that we are in the middle of a transitional period into a market which will
be driven not by liquidity but by growth. When it comes to growth-driven market, value stock
would be the beneficiary of the flow, and we deem banking as the most recognized traditional
value stock in Indonesia.
Recovery, backed by low base, Recovery to come soon

economic recovery, and OJK’s  We forecast our ROE of banks under our coverage to come in at 7~16% in 2021F and 13~16%
support in 2022F. We revise up our net profit and ROE forecast in 2021 and expect solid growth in
2022, given: 1) Low base effect; and, 2) fundamental improvement on the back of the
extended OJK restructuring, as well as global and domestic economic recovery.
Repeating the past 2015-2017 as a benchmark

 In 2016, banks’ NPL ratio picked up on the back of large exposures to commodity sector. As a
result, banks’ provisioning expenses surged in 2015 and 2016. However, we saw amazing
stock price rallies in 2016 and 2017 as the market believed that provisions had already been
provided enough and expected CoC to decrease in 2017. Although the origin of the economic
downturn back then is different from the current one, the outcomes look similar. Thus, we
believe the upcycle of banking industry can also occur in 2021 on the back of normalized CoC.
Conviction call with BBCA and Upgrade our call from Neutral to Overweight
BBRI as top picks  All in all, we expect the share price rally to continue in 2021 on the back of improvement in
fundamentals (rebound in ROE), foreign inflows into banking sector, and reasonable
valuation. We upgrade our call from Neutral to Overweight with Bank Central Asia
(BBCA/Buy/IDR38,400) and Bank Rakyat Indonesia (BBRI/Buy/IDR5,580) as our top picks.
ROE of banks under our coverage
(%) BBCA BMRI BBRI BBNI
20
18
16
14
12
10
8
6
4
2
0
2019 2020F 2021F 2022F
Source: Company data, Mirae Asset Sekuritas Indonesia Research
PLEASE SEE ANALYST CERTIFICATIONS AND IMPORTANT DISCLOSURES AND DISCLAIMERS IN APPENDIX 1 AT THE END OF REPORT.
December 2, 2020 Bank
C O N T E N T S
2021 banking industry 3

Whatever the case is, we see upside potential for 2021 3
Recovery to come soon 4
Upgrade our call from Neutral to Overweight 7
Bank Central Asia 9
Bank Mandiri 12
Bank Rakyat Indonesia 15
Bank Negara Indonesia 18
Mirae Asset Sekuritas Indonesia Research 2

2021 banking industry
Whatever the case is, we see upside potential for 2021
Heading into growth-driven market

Post the coronavirus crash, stock market has recovered sharply across the countries. If we
take a very close look, two major themes are in the lead: 1) untact and 2) growth. That is one
reason why we think Indonesia’s stock market rebound was weaker than that of other
countries with those stocks in the market, such as the US, China, and South Korea.
Nevertheless, we can explain this rebound in terms of liquidity-driven market. Ever since
COVID-19 broke out globally, market has been driven by liquidity. Around the world, central
banks act by cutting rates and doing quantitative easing, while governments have taken
forceful measures to cushion the blow by providing unprecedented fiscal policy.
However, we think that we are in the middle of a transitional period into a market which will
be driven not by liquidity but by growth. As can be seen from Figures 4. below, both liquidity
and growth can be drivers of stock rally but with different impacts on the economy. We have
witnessed the signals of a liquidity and growth-driven market since the US election and
Pfizer’s vaccine news. If vaccine can be commercialized as planned and COVID-19 can be
contained better, we think the transition from a liquidity-driven market to a growth-driven
market will happen smoothly. When it comes to growth-driven market, value stock would be
the beneficiary of the flow, and we deem banking as the most recognized traditional value
stock in Indonesia.
Figure 1. Global stock market Figure 2. Additional spending and forgone revenue
(2019=100) S&P 500 KOSPI JCI (% of GDP) Additional spending and forgone revenue
NIKKEI FTSE 100 SHCOMP
130 25 Equity, loans, and guarantees
120
20
110
15
100
10
90
5
80
70 0
60
12/19 1/20 2/20 3/20 4/20 5/20 6/20 7/20 8/20 9/20 10/20 11/20
Source: Bloomberg, Mirae Asset Sekuritas Indonesia Research Source: IMF, Mirae Asset Sekuritas Indonesia Research

Figure 3. EM’s policy rate Figure 4. Growth- vs. liquidity-driven market
(bps) Changes Latest 19-Feb (%)

350 14
300 12
250 10
200 8
150 6
100 4
50 2
0 0
TUR
MEX
RUS
IDN
IND
ZAF
PHL
CHN
BRA
COL
MYS
HUN
THA
CHL
PER
POL
Source: IMF, Mirae Asset Sekuritas Indonesia Research Source: Mirae Asset Sekuritas Indonesia Research
Potential risk of transition

Although a transition into a growth-driven market is positive for banking industry, in our
view, one potential risk that could slow down the transition is a slow recovery in global
demand, and this could only happen if vaccine commercialization is delayed. As COVID-19 is
around the corner, while vaccine is a relatively long story, the key to this potential problem
would be government spending. If the government is not going to spend as much as the
market expected before vaccine was introduced, we think there will be fluctuations in stock
market. In fact, a similar case happened back in 2016, when the market was worried about
trade wars after President Donald Trump got elected, but he ignited the market with fiscal
policy.
Figure 5. US’ stock market with bond yield Figure 6. Indonesia’s stock market with bond yield
(pt) S&P 500 10YR bond yield (%) (pt) JCI 10YR bond yield (%)
4,000 A B C D 6 8,000 A B C D 23
7,000 21
3,500 5
19
6,000
3,000
4 17
5,000
2,500 15
3 4,000
2,000 13
3,000
2 11
1,500
2,000
9
1,000 1
1,000 7
500 0 0 5
2003 2005 2007 2009 2011 2013 2015 2017 2019 2003 2005 2007 2009 2011 2013 2015 2017 2019
Source: Bloomberg, Mirae Asset Sekuritas Indonesia Research Source: Bloomberg, Mirae Asset Sekuritas Indonesia Research
Recovery to come soon

We forecast our ROE of banks under our coverage to come in at 7~16% in 2021F and
13~16% in 2022F. We revise up our net profit and ROE forecast in 2021 and expect solid
growth in 2022, given: 1) Low base effect; and, 2) fundamental improvement on the back of
the extended OJK restructuring, as well as global and domestic economic recovery.
Loan growth to revert to high single digit post COVID-19

In 2020, we expect loan growth to come back to 7-9% level due to: 1) Low base effect; 2)
increased demand in 2H21; and, 3) potential additional loan demand as a positive result of
the Omnibus Law (FDI).
As of 9M20, banks in Indonesia booked loan growth of -1.5% YTD. Consumer loan (without
mortgage) growth was the lowest by hitting -2.4% YTD as banks tried to tighten the
underwriting process and demand was low due to restricted social life. MSME and large
corporate also decreased by 2.0% and 1.5%, respectively. The decrease in the MSME
segment was largely due to weakened consumption, it has been better now as the
government keep supporting MSMEs for the sake of maintaining labor force. Meanwhile,
the decline in corporate loan was mostly due to decreases in working capital loan. In 2020,
we expect loan growth to rebound slightly from September 2020 figure and end up at
+0.5%. Although banks in Indonesia have suffered from sluggish loan growth, it would be
positive in 2021, given the low base effect.
In addition, we believe loan demand could jump in 2H21. The degree of the jump could even
be higher than normal, even if we consider seasonality effect. Post vaccine
commercialization in Indonesia, we believe banks will unleash working capital loan to
corporates while investment loan demand is also likely to pick up in 2H21 to prepare for
2022. For MSME segment, we expect that an improvement in consumers’ purchasing power
would trigger higher loan demand. Moreover, we expect pent-up demand from the
consumer segment as well as mortgage and vehicle sectors to drive up loan growth in
2H21.
Last but not least, the government is in preparation of the Omnibus Law to welcome foreign
investment to Indonesia. We don’t think higher FDI will directly impact the banks; rather, we
think that the indirect impacts of the highly likely economic growth and its multiplier effects
will be higher.
Figure 7. YTD Loan growth by segment
(YTD, %) Large Corporate MSME Household w/o Mortg

4 Household w Mortg Total Loan
-1
-2
-3
-4
1/20 2/20 3/20 4/20 5/20 6/20 7/20 8/20 9/20
Source: OJK, Mirae Asset Sekuritas Indonesia Research
Extended credit restructuring by OJK until 2022

In October 2020, OJK announced the extension of Regulation No.11/POJK 03/2020 from
2021 to 2022. This could slow down NIM recovery in 2021, although the regulation helps to
limit the downside risk caused by higher credit cost. Moreover, once asset quality can be
managed well, then the realization of NIM in 2021 would be not as low as in 2020.
Slight uptick in NIM in 2021

As the credit restructuring will continue until 2021, we don’t expect a strong recovery in
NIM. However, we believe that an economic recovery will help total restructured amount to
gradually decrease in 2021F, especially in 2H21. In addition, banks are arguing whether the
success rate of restructured loan is higher than their initial forecast, with only a small
number of restructured loan missing the new scheme. Ergo, we expect higher interest
income in 2021 vs. 2020, even though interest income would be lower than the one without
the extension of the regulation.
In addition, large banks under our coverage has ample liquidity. Due to the pandemic, they
are maintaining low Loan-to-Deposit Ratio (LDR). However, we predict that banks will start
to let LDR go in 2021 to optimize their funding structure by lowering deposit rate. All in all,
we expect banks’ NIM to rebound by 1~75bps in 2021.

Figure 9. Loan-to-deposit ratio and deposit growth under our

Figure 8. NIM trend
coverage
(%) BBCA BMRI BBRI BBNI (%) LDR (L) Deposit growth (R) (YoY, %)
94 17
9
16
92
8
15
90
7 14
88 13
6
86 12
5 11
84
10
4 82
9
3 80 8
3Q16 3Q17 3Q18 3Q19 3Q20 3Q17 3Q18 3Q19 3Q20
Source: Company data, Mirae Asset Sekuritas Indonesia Research Source: Company data, Mirae Asset Sekuritas Indonesia Research
Normalized credit cost

The biggest positive catalyst from the extended regulation is provisioning expenses, we
think. In 2020, we expect banks under our coverage to spend IDR86tr for provisioning
expenses. Nonetheless, this does not include CoC caused by COVID-19 as most of banks did
not downgrade it. This was one of threat to banks’ earnings in 2021 before the extension of
the regulation, but now the possibility of higher CoC due to restructured loan has reduced.
Thanks to OJK’s decision, banks have gained some time to either maintain their current
restructured loan or bring it back to normal loan post the containment of the pandemic
later on. Moreover, we don’t expect any additional new restructured loan in 2021 as: 1) The
government keep supporting business entities; and, 2) loan of low credit profile borrowers
has already been restructured. Thus, we expect credit cost to drop by 66~105bps in 2021.
Figure 10. Provisioning expenses under our coverage Figure 11. CoC trend
(IDRbn) BBNI BBRI BMRI BBCA (%) BBCA BMRI BBRI BBNI
90,000 4.0
80,000 3.5
70,000
3.0
60,000
2.5
50,000
2.0
40,000
1.5
30,000
20,000 1.0
10,000 0.5
0 0.0
2019 2020F 2021F 2022F 2019 2020F 2021F 2022F
All in all, we expect banks’ ROE to rebound back to 7~16% level in 2021 on the back of: 1)
Higher loan growth; 2) improved NIM; and, 3) low probability of high provisions.

2015-2017 as a benchmark
COVID-19 is an unprecedented event, which calls for unprecedented policy responses.
However, we can find similar trends back in 2015-2017 when banks were struggling with the
cooling down of commodity boom. In 2016, banks’ NPL ratio picked up on the back of large
exposures to the commodity sector. As a result, banks’ provisioning expenses went up
significantly in 2015 (mix of front-loading and downgrades) and 2016 (result of
downgrades). However, we saw amazing stock price rallies in 2016 and 2017 as the market
believed that provisions had been provided enough and expected CoC to decrease in 2017.
In 2016, the share prices of banks under our coverage increased by 2~25%, while the share
prices jumped by 48~88% post normalized CoC in 2017.
Although the origin of the economic downturn back then is different from the current one,
the outcomes look similar. Thus, we believe the upcycle of banking industry can also occur
in 2021 on the back of normalized CoC.
In addition, an economic recovery would bring foreign capital inflow in JCI market, and we
think banks would be among the beneficiaries as they are the biggest contributors to the
JCI. In fact, there was a big outflow in 2015, followed by massive inflows during 2016 and
2017 post the eased sentiment and realization of low CoC.
Table 1.Growth of PPOP, provision, and net profit in 2015, 2016, and 2017 (%)
BBCA BMRI BBRI BBNI
2015 2016 2017 2015 2016 2017 2015 2016 2017 2015 2016 2017
PPOP 13.8 16.2 4.6 20.6 13.6 0.0 20.1 16.6 12.9 10.7 19.4 10.2
Provision 56.5 30.0 -42.2 115.8 113.5 -35.4 55.5 54.1 24.1 101.4 7.0 -9.3
Net profit 9.3 14.4 13.1 2.3 -32.1 49.5 4.9 3.1 10.7 -15.9 25.1 20.1
Source: Company data, Mirae Asset Sekuritas Indonesia Research
Figure 12. Performance during 2015-2017 Figure 13. Foreign net buy/sell
(2016=100) BBCA BBRI BMRI BBNI BBCA BMRI BBRI BBNI

(IDRbn)
210 8,000
6,000
190
4,000
170 2,000
0
150
-2,000
130 -4,000
-6,000
110
-8,000
90 -10,000
12/16 3/17 6/17 9/17 12/17 3/18 6/18 9/18 12/18 2015 2016 2017 10M20 Nov-20
Source: Bloomberg, Mirae Asset Sekuritas Indonesia Research Source: Mirae Asset Sekuritas Indonesia Research
Upgrade our call from Neutral to Overweight

All in all, we expect the share price rally to continue until 2021 on the back of improvement
in fundamentals (rebound in ROE), foreign inflows into the banking sector, and reasonable
valuation.
We upgrade our call from Neutral to Overweight with Bank Central Asia
(BBCA/Buy/IDR38,700) and Bank Rakyat Indonesia (BBRI/Buy/IDR5,580) as our top picks.
BBCA has the best franchise with deep knowledge in credit risk management and stable
performance. Meanwhile, we think that BBRI can continue benefitting from fiscal policy,
which will help improve its NIM, limit quality deterioration, and also support loan growth
higher.

Figure 14. BBCA - 12-month forward P/B band Figure 15. BMRI - 12-month forward P/B band
((IDR) (IDR)
50,000
14,000
45,000 5.0x 2.5x
12,000
40,000
35,000 4.0x 10,000 2.0x
30,000
8,000
3.0x 1.5x
25,000
6,000
20,000 2.0x 1.0x
15,000 4,000
10,000 2,000
5,000
0
0 1/06 1/09 1/12 1/15 1/18 1/21
1/06 1/09 1/12 1/15 1/18 1/21
Source: Mirae Asset Sekuritas Indonesia Research Source: Mirae Asset Sekuritas Indonesia Research
Figure 16. BBRI - 12-month forward P/B band Figure 17. BBNI - 12-month forward P/B band
(IDR) (IDR)
9,000
30,000
8,000 4.0x 4.0x
7,000 25,000
6,000 3.0x 20,000 3.0x

5,000
15,000
4,000 2.0x
2.0x
3,000 10,000
1.0x
2,000 1.0x
5,000
1,000
0 0
1/06 1/09 1/12 1/15 1/18 1/21 1/06 1/09 1/12 1/15 1/18 1/21
Source: Mirae Asset Sekuritas Indonesia Research Source: Mirae Asset Sekuritas Indonesia Research

[Indonesia] Bank
Bank Central Asia Buy

(BBCA IJ) (Maintain)
Leading the recovery with lower CoC TP: IDR38,700

Upside: 21.0%

Net profit to come in at IDR33tr Earnings to recover in 2021

in 2021  For 2021, we expect Bank Central Asia’s (BBCA) net profit to come in at IDR33tr (23.5% YoY) on
the back of: 1) Economic rebound; 2) improved NIM; and, 3) normalized credit cost. We expect
to see a clearer seasonality in 2021, especially in 3Q21 post vaccine commercialization in
Indonesia.
 In October 2020, OJK announced the extension of POJK 11/No.03/2020 from 2021 to 2022. We
think it has relatively limited benefit for BBCA, versus its peers, but it will still add value by
giving options for BBCA to control its restructured loan.
CoC to drop by 66bps in 2021 NIM to rebound, while CoC to normalize in 2021
 In 2021, we believe loan demand across all segments will pick up, especially from the end of
2Q21 to 4Q21. As BBCA has a relatively balanced loan portfolio, we expect balanced growth in
2021. We expect loan growth to come in at 10.3%. On the other hand, we expect deposit to
grow by 8.1%. Since BBCA has ample liquidity, we believe that it will start to optimize funding
cost and liquidity in 2Q21 once global uncertainties start to ease.
 Extended POJK regulation is favorable for banks as they can maintain their current
restructured loan while adding new restructured loan or reducing existing restructured loan
in 2021. Since BBCA has good borrower profiles, we think total restructured loan outstanding
will decrease between 2Q~3Q21. This could lead to higher interest income. Moreover,
optimizing funding could also boost NIM in 2021. Nevertheless, we expect an uptick in NIM
(+4 bps) in 2021 as the economy will likely remain sluggish up to 1H21.
 For asset quality, we hold a positive view on this as BBCA has a well-functioning credit risk
management team. Thus, we expect deterioration to stop in early 2021 and expect NPL and
credit cost to normalize for the rest of 2021. We forecast CoC to drop by 66bps in 2021.
TP based on P/B of 4.4x Maintain Buy recommendation with TP of IDR38,700

 All in all, we expect BBCA’s ROE to pick up to 16.2% in 2021 and to 16.1% in 2022. We maintain
our Buy recommendation with a higher target price of IDR38,700 (from IDR35,500), implying
P/B of 4.4x our BPS estimate in 2021. Key risks to our call: 1) Rising number of new COVID-19
cases, coupled with extended PSBB transitional period; and, 2) increased default rate for
restructured loan.
Key data
Share Price (12/1/20, IDR) 31,975 Market Cap (IDRbn) 788,343.9
(D-1yr=100)
JCI BBCA
110
Consensus NP (21F, IDRbn) 29,992 Shares Outstanding (mn) 24,655.0
100
NP Mirae Asset vs. consensus (21F, %) 0.3 Free Float (%) 44.9
90
EPS Growth (21F, %) 23.5 Beta (Adjusted, 24M) 1.1
80
P/E (21F, x) 23.8 52-Week Low (IDR) 21,625
70
Industry P/E (21F, x) 16.8 52-Week High (IDR) 35,300
60
12/19 2/20 4/20 6/20 8/20 10/20 12/20 Benchmark P/E (21F, x) 15.0
Share performance Earnings and valuation metrics

(%) 1M 6M 12M FY (Dec.) 12/17 12/18 12/19 12/20F 12/21F 12/22F
Absolute 7.2 15.8 -1.2 Total OP (IDRbn) 56,966.3 63,021.5 71,594.9 73,725.0 79,982.0 88,306.0
Relative -2.3 0.0 5.4 PPOP (IDRbn) 31,791.4 35,382.7 40,880.3 43,658.2 48,095.3 53,371.8
Net Profit (IDRbn) 23,310.0 25,855.2 28,565.1 26,763.7 33,057.2 37,381.2
EPS (IDR) 945 1,049 1,159 1,086 1,341 1,516
BPS (IDR) 5,326 6,151 7,059 7,746 8,830 9,957
P/E (x) 33.8 30.4 27.6 29.4 23.8 21.1
P/B (x) 6.0 5.2 4.5 4.1 3.6 3.2
ROE (%) 19.1 18.5 17.6 14.8 16.2 16.1
ROA (%) 3.2 3.3 3.3 2.7 3.0 3.2
Source: Company data, Mirae Asset Sekuritas Indonesia Research estimates
Figure 18. Loan growth by segment Figure 19. Deposit growth
(YoY, %) (YoY, %) Savings

35 Corporate 40
Current account
Commercial
30 35 Time deposits
Consumer
25 30 Total
Total
20 25
15 20
10 15
5 10
0 5
-5 0
-10 -5
-15 -10
3Q13 3Q14 3Q15 3Q16 3Q17 3Q18 3Q19 3Q20 3Q13 3Q14 3Q15 3Q16 3Q17 3Q18 3Q19 3Q20
Source: Company data,, Mirae Asset Sekuritas Indonesia Research Source: Company data,, Mirae Asset Sekuritas Indonesia Research
Figure 20. Net interest margin Figure 21. NPL and SML ratio
(%) Yields on assets (%) NPL SML

10 Cost of funds 6
Net interest margins 3Q19: 3Q20:
9
8.00% 7.10% 5
8
7
4
6
3Q19: 3Q20:
5 6.20% 5.80% 3
4
2
3
2
3Q19: 1
1 3Q20:
2.00% 1.47%
0 0
3Q14 3Q15 3Q16 3Q17 3Q18 3Q19 3Q20 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20
Figure 22. Restructured loan caused by COVID-19 Figure 23. Loan to deposit & CASA ratio
(IDRtr) Restructured loan (COVID), L (%) (%) CASA ratio LDR

Restructured loan (non-COVID19), L
90 16
% to total loan (R) 88
80 14 86
70 84
12
60 82
10
50 80
8 78
40
6 76
30
74
4
20
72
10 2
70
0 0 68
3Q19 4Q19 1Q20 2Q20 3Q20 3Q13 3Q14 3Q15 3Q16 3Q17 3Q18 3Q19 3Q20

Bank Central Asia (BBCA)
Income statement (summarized) Balance sheet (summarized)

(IDRbn) 12/19 12/20F 12/21F 12/22F (IDRbn) 12/19 12/20F 12/21F 12/22F
Net interest income 50,823.9 52,847.4 57,992.6 64,947.1 Cash and cash equivalents 25,421 21,837 24,239 27,099
Non-interest income 20,771.0 20,877.6 21,989.4 23,358.9 Current account with BI 74,218 72,323 78,159 86,466
Net commission income 13,608.4 12,725.8 13,563.2 14,449.1 Placement at other banks 15,551 16,282 16,819 17,414
Trading related income 3,109.9 4,683.8 4,703.0 4,764.1 Securities assets 153,731 218,583 234,850 251,545
Other non-interest income 4,052.7 3,468.1 3,723.1 4,145.8 Net loans and advances 580,331 582,342 652,799 727,035
Total operating profit 71,594.9 73,725.0 79,982.0 88,306.0 Net loans 570,662 573,802 643,924 717,640
SG&A expenses 30,714.6 30,066.9 31,886.6 34,934.2 Gross Loans 586,940 602,359 664,108 739,202
Pre-provisioning OP 40,880.3 43,658.2 48,095.3 53,371.8 (Allowance for credit losses) -16,278 -28,557 -20,184 -21,562
Net provisions 4,591.3 9,656.9 6,099.5 5,882.8 Total assets 919,367 1,069,266 1,104,741 1,197,822
Net operating profit 36,289.0 34,001.3 41,995.8 47,489.0 Total customer deposits 698,980 788,239 851,842 942,387
Non-operating income 0.0 0.0 0.0 0.0 Demand deposits 184,918 219,304 246,867 279,728
Pretax profit 36,289.0 34,001.3 41,995.8 47,489.0 Savings Deposits 345,634 392,631 433,536 481,784
Corporate tax 7,719.0 7,232.4 8,932.9 10,101.4 Time Deposits 168,428 176,303 171,439 180,875
Minority interest 4.9 5.2 5.7 6.4 Other deposits 5,811 6,139 6,949 7,769
Attributable net profit 28,565.1 26,763.7 33,057.2 37,381.2 Borrowings 6,835 6,516 7,251 8,127
Growth (%) Debentures 1,848 2,140 2,492 3,070
Net interest income 12.1 4.0 9.7 12.0 Total liabilities 745,223 878,195 886,972 952,270
Non-interest income 17.4 0.5 5.3 6.2 Capital stock 1,541 1,541 1,541 1,541
Total operating profit 13.6 3.0 8.5 10.4 Capital surplus 5,549 5,549 5,549 5,549
SG&A expenses 11.1 -2.1 6.1 9.6 Accum. translation adjustments 8,710 11,288 15,317 20,317
Pre-provisioning operating profit 15.5 6.8 10.2 11.0 Retained earnings 156,288 170,361 192,692 215,072
Net provisions 71.5 110.3 -36.8 -3.6 Non-controlling interest 100 87 71 65
Net operating profit 11.0 -6.3 23.5 13.1 Total shareholders' equity 174,143 191,071 217,769 245,552
Attributable net profit 10.5 -6.3 23.5 13.1
Key performance indicators Balance sheet growth rate

12/19 12/20F 12/21F 12/22F (%) 12/19 12/20F 12/21F 12/22F
Per share data Cash and cash equivalents 17.2 -14.1 11.0 11.8
EPS (IDR) 1,159 1,086 1,341 1,516 Current account with BI 14.7 -2.6 8.1 10.6
EPS growth (%) 10.5 -6.3 23.5 13.1 Placement at other banks -18.3 4.7 3.3 3.5
BPS (IDR) 7,059 7,746 8,830 9,957 Securities assets 26.1 42.2 7.4 7.1
BPS growth (%) 14.8 9.7 14.0 12.8 Net loans and advances 8.2 0.3 12.1 11.4
DPS 371 271 335 379 Net loans 8.8 0.6 12.2 11.4
Key ratios (%) Gross Loans 9.1 2.6 10.3 11.3
Non-int. inc./ Total OP 29.0 28.3 27.5 26.5 (Allowance for credit losses) 20.0 75.4 -29.3 6.8
Cost-to-income 42.9 40.8 39.9 39.6 Total assets 11.2 16.3 3.3 8.4
Provisions/Loans 0.83 1.62 0.96 0.84 Total customer deposits 11.0 12.8 8.1 10.6
Tax rate 21.3 21.3 21.3 21.3 CASA deposits 10.8 18.6 12.6 13.3
Loan-to-deposit ratio 81.7 74.4 76.0 78.4 Savings Deposits 9.3 13.6 10.4 11.1
Yields on IEA 7.80 7.10 7.15 7.43 Time Deposits 14.7 4.7 -2.8 5.5
Yields on IBL 2.01 1.61 1.61 1.77 Other deposits 13.6 5.6 13.2 11.8
Margins on IEA 6.16 5.77 5.81 5.96 Borrowings 4.4 -4.7 11.3 12.1
Spreads on IEA 5.78 5.48 5.53 5.66 Marketable Securities Issued 120.0 15.8 16.4 23.2
ROA 3.3 2.7 3.0 3.2 Total liabilities 10.4 17.8 1.0 7.4
ROE 17.6 14.8 16.2 16.1 Capital stock 0.0 0.0 0.0 0.0
Financial leverage Capital surplus 0.0 0.0 0.0 0.0
Average adjusted equity (IDRbn) 162,480 181,274 204,420 231,660 Accum. translation adjustments 41.8 29.6 35.7 32.6
Average total assets (IDRbn) 867,751 997,534 1,087,003 1,151,281 Retained earnings 14.3 9.0 13.1 11.6
Avg assets/ Avg equity (x) 5.3 5.5 5.3 5.0 Non-controlling interest 6.9 -13.1 -19.0 -7.4
Avg equity / Avg assets (%) 18.7 18.2 18.8 20.1 Total shareholders' equity 14.8 9.7 14.0 12.8

[Indonesia] Bank
Bank Mandiri Buy

(BMRI IJ) (Upgrade)
Higher infra budget to benefit SoE bank TP: IDR8,230

Upside: 26.1%

Net profit to rebound by 48.9% Confirmed recovery in 2021

YoY in 2021 nd
 BMRI was the 2 best performing bank under our coverage in 9M20. With a new
management team steering BMRI, we think its stable operational performance will persist in
2021, plus potential improvement in asset quality. We expect PPOP/provision/net profit to
grow by 8.4%/-29.0%/48.9% in 2021 and 14.0%/-11.2%/27.2% in 2022. The recovery will largely
be driven by greater loan demand, improved NIM, and lower CoC.
To see improvement in 2021 Potential loan demand from infra sector with ample liquidity and prudent risk
from all aspects management
 Although we expect loan growth of 8-10% across all banks under our coverage in 2021, we
think our prediction for BMRI’s loan growth will be more reliable as we believe SOE loan will
start to pick up. For 2021, the government have increased infrastructure budget by 47%. This
number is as high as the previous record high in budget, which could bolster BMRI’s infra-
related loan in 2021. Though COVID-19 remains a potential risk which could push back the
projects, we believe 9.3% loan growth in 2021 is achievable with seasonality in 2H21.
 Back in 2019, BMRI’s loan growth was concerning as LDR reached nearly 100%. However,
BMRI is enjoying ample liquidity due to flight-to-safety during 2020. Thus, we believe liquidity
will not be an issue in 2021. Moreover, we think with this ample deposits, BMRI might want to
reduce the portion of expensive funding source to optimize funding cost in 2H21. As a result,
we expect NIM to inch up by 6bps in 2021 and 21bps in 2022.
 With the capable new management team, we think BMRI’s focus would still be on credit risk
management. BMRI had been suffering from deteriorating asset quality few years ago. Thus,
we think BMRI will stick to its priority of improving asset quality in 2021. We believe credit cost
can go down by as much as 79bps in 2021.
ROE of 11.6% in 2021 Upgrade to Buy with higher TP of IDR8,230

 All in all, we upgrade our call from Hold to Buy as we forecast higher ROE of 11.6% and 12.7%
in 2021 and 2022, respectively, on the back of normalization (economy, credit cost, and NIM).
Our target price is IDR8,230 (from IDR6,220), which is based on P/B of 1.7x our BPS estimate in
2021. Key risks to our call: 1) Bigger restructured loan than pipeline; 2) weak economic
rebound in 2021; and, 3) higher credit cost in 2021.
Key data
(D-1yr=100)
JCI BMRI Share Price (12/1/20, IDR) 6,525 Market Cap (IDRbn) 304,500.0
120
110
100 NP Mirae Asset vs. consensus (21F, %) -0.2 Free Float (%) 37.8
90
80
70 P/E (21F, x) 12.2 52-Week Low (IDR) 3,660
60
50
12/19 2/20 4/20 6/20 8/20 10/20 12/20 Benchmark P/E (21F, x) 15.0

(%) 1M 6M 12M FY (Dec.) 12/17 12/18 12/19 12/20F 12/21F 12/22F
Relative 0.1 21.1 -2.7 PPOP (IDRbn) 42,750.2 47,781.2 48,135.1 44,626.2 48,369.5 55,139.0
Net Profit (IDRbn) 20,639.7 25,015.0 27,482.1 16,730.0 24,903.2 31,673.7
EPS (IDR) 442 536 589 358 536 684
BPS (IDR) 3,573 3,883 4,384 4,103 4,858 5,599
P/E (x) 18.1 12.2 11.1 18.2 12.2 9.5
P/B (x) 2.2 1.7 1.5 1.6 1.3 1.2
ROE (%) 13.0 14.4 14.0 8.2 11.6 12.7
ROA (%) 1.9 2.2 2.2 1.2 1.7 2.0
(YoY, %) (YoY, %) Savings account

35 Corporate & commercial 50 Demand deposits
Small & micro Time deposits
30 Consumer 40
Total deposits
25 Total
30
20
20
15
10
10
0
5
0 -10
-5 -20
(%) Net interest margins Yields on assets Cost of funds (%) SML NPL
12 10
9
10 8
7
8
6
6 5
4
4 3
2
2
1
0 0
3Q13 3Q14 3Q15 3Q16 3Q17 3Q18 3Q19 3Q20 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20
Figure 28. Restructured loan caused by COVID-19 Figure 29. Loan to deposit and CASA ratio
(IDRtr) Restructured loan (L) % to pipeline (R) (%) (%) LDR (R) CASA ratio (L) (%)
% to total loan (R)
140 100 68 100
90 98
120
80 66 96
100 70 94
60 64 92
80
50 90
60
40 62 88
40 30 86
20 60 84
20
10 82
0 0 58 80
Apr May Jun Jul Aug Sep 3Q13 3Q14 3Q15 3Q16 3Q17 3Q18 3Q19 3Q20

Bank Mandiri (BMRI)

Other non-interest income 8,027.1 5,911.5 6,236.7 6,579.7 Net loans and advances 884,330 847,314 956,826 1,066,886
Total operating profit 87,567.7 83,327.9 90,253.9 99,951.9 Net loans 855,484 816,517 921,832 1,028,305
SG&A expenses 39,432.6 38,701.7 41,884.4 44,812.9 Gross Loans 885,835 880,035 962,354 1,069,799
Net provisions 11,683.6 21,769.1 15,457.2 13,724.0 Total assets 1,318,246 1,414,495 1,536,766 1,665,585
Net operating profit 36,451.5 22,857.1 32,912.3 41,415.0 Total customer deposits 933,125 1,047,119 1,106,140 1,195,562
Non-operating income -10.1 -11.3 -12.6 -14.0 Demand deposits 250,414 297,757 323,208 368,089
Minority interest 973.5 1,012.6 1,055.1 1,119.5 Other deposits 13,844 15,187 16,660 18,276
Net interest income 8.8 -0.3 9.8 12.6 Total liabilities 1,109,212 1,217,924 1,305,076 1,399,492
Non-interest income -6.8 -14.4 4.5 6.0 Capital stock 11,667 11,667 11,667 11,667
Total operating profit 3.3 -4.8 8.3 10.7 Capital surplus 17,316 17,316 17,316 17,316
SG&A expenses 6.5 -1.9 8.2 7.0 Accum. translation adjustments 32,414 37,922 31,863 33,635
Pre-provisioning operating profit 0.7 -7.3 8.4 14.0 Retained earnings 140,977 122,340 162,714 194,388
Net provisions -15.8 86.3 -29.0 -11.2 Non-controlling interest 4,434 5,099 5,904 6,863

12/19 12/20F 12/21F 12/22F (%) 12/19 12/20F 12/21F 12/22F
EPS (IDR) 589 358 536 684 Current account with BI -4.8 106.7 -9.7 -9.7
EPS growth (%) 9.9 -39.1 49.4 27.7 Placement at other banks 10.5 -6.9 -5.0 -0.5
BPS growth (%) 12.9 -6.4 18.4 15.3 Net loans and advances 10.8 -4.2 12.9 11.5
DPS 265 161 777 1,676 Net loans 11.5 -4.6 12.9 11.6
Key ratios (%) Gross Loans 10.8 -0.7 9.4 11.2
Non-int. inc./ Total OP 32.1 28.9 27.9 26.7 (Allowance for credit losses) -5.7 109.3 -36.2 2.4
Yields on IEA 8.95 8.30 8.35 8.56 Time Deposits 7.2 12.8 3.2 5.8
Yields on IBL 3.23 2.93 2.91 3.00 Other deposits -18.2 9.7 9.7 9.7
Margins on IEA 5.81 5.38 5.44 5.61 Borrowings 4.7 9.7 9.7 9.7
Average adjusted equity (IDRbn) 195,635 202,803 214,131 248,892 Accum. translation adjustments 28.4 17.0 -16.0 5.6
Average total assets (IDRbn) 1,247,554 1,366,371 1,475,630 1,601,176 Retained earnings 13.0 -13.2 33.0 19.5
Avg assets/ Avg equity (x) 6.4 6.7 6.9 6.4 Non-controlling interest 18.0 15.0 15.8 16.3
Avg equity / Avg assets (%) 15.7 14.8 14.5 15.5 Total shareholders' equity 13.0 -6.0 17.9 14.8

[Indonesia] Bank
Bank Rakyat Indonesia Buy

(BBRI IJ) (Upgrade)
Bounceback to continue, backed by gov’t support TP: IDR5,580

Upside: 31.6%

Government to continuously The weakest becomes the strongest

support MSMEs  In 2020, BBRI is our biggest concern as it has the largest exposure to MSME segment, which
has the weakest cash flow. However, it turns out that the government’s supportive policy has
limited the downside risk to MSMEs and held BBRI firmly. Despite the government’s reduction
in COVID-19-related budget for MSME sfrom IDR115tr to IDR49tr (-57.5%), we believe the
government will set extra budget when there is a sign of deterioration in MSME segment.
NIM and CoC to improve each by High yield segment to foster NIM and credit quality
75bps and 1%p YoY in 2021  Loan and deposit growth are likely to come in at 8.4% and 6.9%, respectively. MSME will lead
loan growth, while CASA will lead deposit growth. We believe LDR will stay at low 80s
percentage as loan demand will remain weaker than what it used to be. We think the
government’s guarantee program will continue until Indonesia has a confirmation on vaccine.
 In addition, we forecast restructured loan to come down as borrowers’ cash flow will be back
to normal on the back of the government’s supportive policy and economic rebound. On top
of that, BBRI will likely focus on high yield segment, like MSME, as it has low risk with most of
the risk being borne by the government. Thus, we think NIM will improve by 75bps in 2021.
 Moreover, high success rate of restructured loan will lead to healthy asset quality, and we
project CoC to come down in 2021 without any surprises. CoC and provisions are expected to
decline by 1%p and 23%, respectively.
Big upside potential post ROE Upgrade to Buy with higher TP of IDR5,580
adjustment  We forecast our ROE to come in at 12.4% in 2021 and 14.5% 2022. We revise up our net profit
from IDR22tr to IDR28tr in 2021 as we believe BBRI has limited downside risk in credit cost
with potential upside risk from high yield segment.
 We upgrade our call from Hold to Buy with a higher target price of IDR5,580 (from IDR3,750),
reflecting earnings adjustment. Our target price is based on P/B of 2.8x our BPS estimate in
2021. Key risks to our call: 1) Termination of government’s stimulus packages for the micro
segment; 2) lower success rate of restructured loan; and, 3) slower-than-expected consumers’
purchasing power recovery.
Key data
Share Price (12/1/20, IDR) 4,240 Market Cap (IDRbn) 522,986.2
(D-1yr=100)
JCI BBRI
120
110
90
80
70 P/E (21F, x) 18.7 52-Week Low (IDR) 2,160
60
50
12/19 2/20 4/20 6/20 8/20 10/20 12/20 Benchmark P/E (21F, x) 15.0

(%) 1M 6M 12M FY (Dec.) 12/17 12/18 12/19 12/20F 12/21F 12/22F
Absolute 21.7 28.6 0.0 Total OP (IDRbn) 92,144.1 101,742.8 110,108.6 104,783.4 114,048.8 129,882.3
Relative 12.3 12.8 6.6 PPOP (IDRbn) 53,805.3 59,537.2 65,550.7 55,903.3 61,375.6 71,691.6
Net Profit (IDRbn) 28,997.1 32,351.2 34,372.6 15,124.4 27,924.8 37,199.3
EPS (IDR) 235.1 262.3 278.7 122.6 226.4 301.6
BPS (IDR) 1,355.5 1,483.4 1,672.7 1,709.8 1,909.8 2,199.8
P/E (x) 15.5 14.0 15.2 34.6 18.7 14.1
P/B (x) 2.7 2.5 2.5 2.5 2.2 1.9
ROE (%) 18.9 18.9 18.1 7.4 12.4 14.5
ROA (%) 2.8 2.8 2.7 1.1 1.8 2.3
(YoY, %) Consumer Micro (%) Total Deposit Saving

50
50 Small Commercial Medium Demand Deposit Time Deposit
Corporate Total 40
40
30 30
20
20
10
10
0
0
-10
-20 -10
(%) Funding costs (%) NPL SML

Net interest margins 10
10
9
9
8
8 7
6
7
5
6
4
5 3
2
4
1
3
3Q13 3Q14 3Q15 3Q16 3Q17 3Q18 3Q19 3Q20 0
3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20
(IDRtr) Total (L) Monthly (L) % to total loan (R) (%) (%) LDR (L) (%)
98 66
250 25 CASA (R)
96
189.1 193.7 192.3
200 183.7
171.9 21.8 22.1 21.9 20 94
160.5 21.3 62
19.8 92
150 18.6
101.2 15 90
100 58
11.7 88
59.3 10
86.3
50 86
14.9 11.8
11.4 5.4 54
14.9 4.6 -1.4 5 84
0
82
1.7
-50 0 80 50
March April May June July Aug Sep Oct 3Q14 3Q15 3Q16 3Q17 3Q18 3Q19 3Q20

Bank Rakyat Indonesia (BBRI)

Other non-interest income 11,889.9 11,164.2 11,692.1 12,774.5 Net loans and advances 848,426 861,994 975,345 1,071,030
Total operating profit 110,108.6 104,783.4 114,048.8 129,882.3 Net loans 839,080 851,386 963,194 1,057,111
SG&A expenses 44,558.0 48,880.1 52,673.2 58,190.7 Gross Loans 877,444 912,603 989,451 1,087,399
Net provisions 22,105.5 33,879.5 26,088.6 24,726.0 Total assets 1,416,759 1,486,115 1,595,255 1,708,425
Net operating profit 43,445.1 22,023.8 35,287.1 46,965.6 Total customer deposits 1,020,855 1,158,517 1,238,622 1,322,308
Non-operating income -81.1 -80.7 -80.2 -79.7 Demand deposits 168,485 224,203 254,309 289,593
Attributable net profit 34,372.6 15,124.4 27,924.8 37,199.3 Borrowings 68,420 21,901 -14,720 -51,247
Net interest income 5.2 -6.7 10.2 15.4 Total liabilities 1,207,975 1,272,729 1,357,167 1,434,532
Non-interest income 18.0 0.6 5.2 9.5 Capital stock 6,167 6,167 6,167 6,167
SG&A expenses 5.6 9.7 7.8 10.5 Accum. translation adjustments 17,990 20,084 22,032 24,169
Net provisions 24.2 53.3 -23.0 -5.2 Non-controlling interest 2,461 2,492 2,522 2,553

12/19 12/20F 12/21F 12/22F (%) 12/19 12/20F 12/21F 12/22F
EPS (IDR) 278.7 122.6 226.4 301.6 Current account with BI 23.3 -14.6 5.5 5.5
EPS growth (%) 6.2 (56.0) 84.6 33.2 Placement at other banks -5.5 -29.1 9.7 9.7
BPS (IDR) 1,672.7 1,709.8 1,909.8 2,199.8 Securities assets 2.4 67.9 (9.8) (3.4)
BPS growth (%) 12.8 2.2 11.7 15.2 Net loans and advances 6.5 1.6 13.1 9.8
DPS 125.4 49.0 92.8 126.7 Net loans 6.9 1.5 13.1 9.8
Key ratios (%) Gross Loans 7.0 4.0 8.4 9.9
Non-int. inc./ Total OP 25.8 27.3 26.4 25.3 (Allowance for credit losses) 9.6 59.6 (57.1) 15.4
Tax rate 20.6 31.0 20.6 20.6 CASA deposits -5.4 33.1 13.4 13.9
Margins on IEA 6.76 5.36 6.11 6.61 Borrowings 44.4 -68.0 (167.2) 248.1
Financial leverage Capital surplus -5.9 100.0 100.0 100.0
Average adjusted equity (IDRbn) 190,093 205,026 225,737 255,990.5 Accum. translation adjustments 38.8 11.6 9.7 9.7
Average total assets (IDRbn) 1,436,413 1,540,685 1,651,840 Retained earnings 11.4 -0.5 9.3 11.1
1,288,379
Avg assets/ Avg equity (x) 6.8 7.0 6.8 6.5 Non-controlling interest 6.6 1.2 1.2 1.2
Avg equity / Avg assets (%) 14.8 14.3 14.7 15.5 Total shareholders' equity 12.7 2.2 11.6 15.0

[Indonesia] Bank
Bank Negara Indonesia Trading Buy

(BBNI IJ) (Upgrade)
Every cloud has a silver lining TP: IDR6,950

Upside: 11.2%

Net profit in 2021 to recover to Big jump in net profit to be expected

56% of 2019 net profit  Bank Negara Indonesia (BBNI) is one of the worst performers under our coverage. BBNI even
recorded a net loss in 3Q20 due to asset quality deterioration, and we think this trend could
continue up to 1Q21. Nevertheless, we expect net profit to jump by 86.3% in 2021 given the
facts that: 1) Weak 2020 performance means low base effect; 2) infrastructure-oriented
government budget in 2021 is positive for BBNI’s loan growth; and, 3) NIM and CoC can
potentially recover in 2021. However, net profit in 2021F is only 56% of net profit in 2019.
CoC to drop by 80 bps, while loan Uncertainties gone, growth coming

to grow by 8.8%  With the new management, we think BBNI will focus again on infrastructure and SOE loan,
collaborating with BMRI. Loan growth is expected at 8.8% in 2021. Moreover, the recent
successful CASA strategy has put BBNI in a better position in terms of liquidity. With ample
liquidity, we think the new management are likely to pursue higher profitability by reducing
unnecessary funds and lowering funding cost. We expect LDR and NIM to increase by 3.1%p
and 1bps, respectively, in 2021.
 As of 9M20, BBNI’s NPL and SML are 3.6% and 5.8%, respectively. The deterioration was
largely driven by corporate and medium segments. BBNI has shown the least preferable risk
management in 2020, and we have doubt that this quality can be managed well in 2021. Thus,
we expect deterioration to continue in 1H21. However, an economic rebound in 2H21 is likely
to reverse the trend. Thus, we expect CoC to decline by 80 bps in 2021. In addition, the
extended POJK 11/No.03/2020 is a positive measure for BBNI as chances of potential addition
in SML and NPL have gone.
Trading Buy call with ROE of 7% Upgrade to Trading Buy with higher TP of IDR6,950
in 2021  As we adjust our CoC and NIM assumption, we revise up our earnings forecast in 2021. Thus,
we expect net profit to come in at IDR8.7tr in 2021 and IDR18.2tr in 2022. This means that
BBNI can deliver ROE of 7.0% and 13.6%, respectively.
 We upgrade our call from Sell to Trading Buy with a higher target price of IDR6,950 (from
IDR4,000), as we adjust up our ROE forecast. Our target price is based on P/B of 1.1x our BPS
estimate in 2012. Key risks to our call: 1) Unexpected credit deterioration; 2) slower economic
rebound; and, 3) less collaboration (or syndication loan) with SoE banks.
Key data
(D-1yr=100)
JCI BBNI Share Price (12/1/20, IDR) 6,250 Market Cap (IDRbn) 116,554.1
110
100
80
70
60 P/E (21F, x) 13.5 52-Week Low (IDR) 2,970
50
40
12/19 2/20 4/20 6/20 8/20 10/20 12/20 Benchmark P/E (21F, x) 15.0

(%) 1M 6M 12M FY (Dec.) 12/17 12/18 12/19 12/20F 12/21F 12/22F
Relative 17.1 35.4 -13.4 PPOP (IDRbn) 24,200.1 26,729.0 28,466.5 26,319.9 27,272.4 32,408.6
Net Profit (IDRbn) 13,616.5 15,015.1 15,384.5 4,645.0 8,654.0 18,154.4
EPS (IDR) 730 805 825 249 464 974
BPS (IDR) 5,287 5,795 6,581 6,268 6,663 7,420
P/E (x) 8.6 7.8 7.6 25.1 13.5 6.4
P/B (x) 1.2 1.1 0.9 1.0 0.9 0.8
ROE (%) 14.5 14.5 13.1 3.8 7.0 13.6
ROA (%) 2.1 2.0 1.9 0.5 0.9 1.7
(YoY, %) Total (YoY, %) Time Deposit

60 Corporate loans 50 Saving
Small and Medium Current Account
50 40
Consumer loans Total
40
30
30
20
20
10
10
0 0
-10 -10
(%) Net interest margins (%) SML NPL

12 Loan yield 10
11 Funding costs
9
10
8
9
8 7
7 6
6 5
5
4
4
3
3
2
2
1 1
0 0
3Q13 3Q14 3Q15 3Q16 3Q17 3Q18 3Q19 3Q20 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20
(IDRbn) Consumer (%) (%) LDR (L) CASA (R) (%)

120,000 Small 20 100 70
Medium 18
100,000 Corporate 16
95
% to total loan 14
80,000 65
12
60,000 10 90
8
40,000 60
6 85
4
20,000
2
80 55
0 0 3Q13 3Q14 3Q15 3Q16 3Q17 3Q18 3Q19 3Q20
3M20 4M20 5M20 6M20 9M20

Bank Negara Indonesia (BBNI)

Other non-interest income 4,861.0 4,059.7 4,711.1 7,573.8 Net loans and advances 562,648 563,573 622,257 702,822
Total operating profit 51,520.0 49,569.4 53,015.0 61,042.5 Net loans 539,408 536,952 591,763 667,891
SG&A expenses 23,053.6 23,249.5 25,742.7 28,633.9 Gross Loans 555,883 560,977 610,298 689,521
Net provisions 8,838.2 20,398.6 16,701.6 13,363.5 Total assets 873,919 892,859 991,399 1,117,894
Net operating profit 19,628.3 5,921.3 10,570.8 19,045.2 Total customer deposits 617,446 708,887 742,384 845,850
Non-operating income -259.2 42.5 415.7 3,824.0 Demand deposits 205,608 238,626 256,124 323,165
Corporate tax 3,860.5 1,188.7 2,189.7 -4,558.1 Time Deposits 189,256 223,323 226,063 237,775
Net interest income 3.3 -3.5 6.6 15.3 Total liabilities 748,915 773,695 864,897 977,279
Non-interest income 19.6 -4.6 7.8 24.8 Capital stock 9,055 9,055 9,055 9,055
SG&A expenses 8.8 0.8 10.7 11.2 Accum. translation adjustments 12,153 13,332 14,625 16,044
Net provisions 19.6 130.8 -18.1 -20.0 Non-controlling interest 2,283 2,269 2,255 2,241

12/19 12/20F 12/21F 12/22F (%) 12/19 12/20F 12/21F 12/22F
Per share data Cash and cash equivalents 9.4 4.9 9.7 10.2
EPS (IDR) 825 249 464 974 Current account with BI 5.2 6.1 8.3 5.5
EPS growth (%) 2.5 -69.8 86.3 109.8 Placement at other banks 9.0 9.7 9.7 9.7
BPS growth (%) 13.5 -4.7 6.3 11.4 Net loans and advances 8.5 0.2 10.4 12.9
DPS 268 75 139 292 Net loans 8.3 -0.5 10.2 12.9
Key ratios (%) 2022 Gross Loans 8.6 0.9 8.8 13.0
Non-int. inc./ Total OP 29.0 28.7 29.0 28.9 (Allowance for credit losses) 17.1 45.8 -22.9 16.7
Loan-to-deposit ratio 90.0 79.1 82.2 81.5 Savings Deposits -1.8 10.9 4.6 9.4
Margins on IEA 4.88 4.50 4.51 4.63 Borrowings 9.2 9.9 9.9 9.9
Spreads on IEA 4.65 4.45 4.53 4.58 Marketable Securities Issued -11.4 -19.1 -23.4 -16.3
Average adjusted equity (IDRbn) 117,841 122,084 122,833 133,558 Accum. translation adjustments 9.0 9.7 9.7 9.7
Average total assets (IDRbn) 828,307 883,389 942,129 1,054,646 Retained earnings 15.2 -4.8 8.1 15.7
Avg assets/ Avg equity (x) 7.0 7.2 7.7 7.9 Non-controlling interest -0.6 -0.6 -0.6 -0.6
Avg equity / Avg assets (%) 14.2 13.8 13.0 12.7 Total shareholders' equity 13.3 -4.7 6.2 11.2

APPENDIX 1
Important Disclosures & Disclaimers

2-Year Rating and Target Price History
Company (Code) Date Rating Target Price Company (Code) Date Rating Target Price
BBCA IJ 12/2/2020 Buy 38,700 10/23/2020 Hold 3,410
10/22/2020 Buy 35,500 8/20/2020 Hold 3,220
7/22/2020 Trading Buy 34,370 8/12/2020 Sell 2,460
6/22/2020 Hold 29,270 6/22/2020 Sell 2,700
5/28/2020 Trading Buy 28,520 5/15/2020 Trading Buy 2,650
3/16/2020 Trading Buy 31,160 4/3/2020 Buy 4,020
3/4/2020 Trading Buy 38,500 3/16/2020 Hold 4,020
3/2/2020 Buy 38,500 3/2/2020 Buy 5,400
10/29/2019 Buy 38,500 10/25/2019 Trading Buy 5,100
7/25/2019 Trading Buy 34,500 8/28/2019 Buy 5,100
4/26/2019 Trading Buy 31,900 1/31/2019 Hold 4,000
12/14/2018 Trading Buy 30,000 12/14/2018 Hold 3,860
BMRI IJ 12/2/2020 Buy 8,230 BBNI IJ 12/2/2020 Trading Buy 6,950
10/27/2020 Hold 6,220 11/2/2020 Sell 4,000
10/22/2020 Trading Buy 6,220 8/19/2020 Sell 4,200
8/20/2020 Hold 6,220 7/27/2020 Hold 4,200
8/6/2020 Hold 5,280 6/22/2020 Hold 4,040
6/22/2020 Hold 4,550 5/20/2020 Sell 3,080
6/9/2020 Sell 4,350 4/1/2020 Buy 5,630
5/28/2020 Hold 4,370 3/16/2020 Hold 5,630
3/27/2020 Buy 6,560 3/4/2020 Buy 8,800
3/16/2020 Hold 6,560 1/20/2020 Trading Buy 8,800
1/21/2020 Hold 8,000 12/3/2019 Hold 8,250
12/3/2019 Hold 7,800 10/24/2019 Hold 8,300
10/29/2019 Trading Buy 8,200 10/21/2019 Hold 8,000
6/27/2019 Trading Buy 9,100 9/2/2019 Buy 9,850
4/23/2019 Trading Buy 8,700 7/18/2019 Buy 10,900
1/29/2019 Buy 8,700 6/27/2019 Buy 11,450
BBRI IJ 12/2/2020 Buy 5,580 1/25/2019 Buy 11,450
11/11/2020 Hold 3,750 12/14/2018 Buy 12,100
(IDR) BBCA Analyst's TP (IDR) BMRI Analyst's TP (IDR) BBRI Analyst's TP (IDR) BBNI Analyst's TP
40,000 11,000 6,000 14,000
12,000
35,000 9,000 5,000
10,000
30,000 7,000 4,000 8,000
6,000
25,000 5,000 3,000
4,000
20,000 3,000 2,000 2,000
Dec-18 Dec-19 Dec-20 Dec-18 Dec-19 Dec-20 Dec-18 Dec-19 Dec-20 Dec-18 Dec-19 Dec-20
Stock Ratings Industry Ratings

Buy : Relative performance of 20% or greater Overweight : Fundamentals are favorable or improving
Trading Buy : Relative performance of 10% or greater, but with volatility Neutral : Fundamentals are steady without any material changes
Hold : Relative performance of -10% and 10% Underweight : Fundamentals are unfavorable or worsening
Sell : Relative performance of -10%

Ratings and Target Price History (Share price (─), Target price (▬), Not covered (■), Buy (▲), Trading Buy (■), Hold (●), Sell (◆))
* Our investment rating is a guide to the relative return of the stock versus the market over the next 12 months.
* Although it is not part of the official ratings at PT Mirae Asset Sekuritas Indonesia, we may call a trading opportunity in case there is a technical or short-term
material development.
* The target price was determined by the research analyst through valuation methods discussed in this report, in part based on the analyst’s estimate of future
earnings.
* The achievement of the target price may be impeded by risks related to the subject securities and companies, as well as general market and economic
conditions.
Equity Ratings Distribution

Buy Trading Buy Hold Sell
Equity Ratings Distribution 44.68% 31.91% 19.15% 4.26%
* Based on recommendations in the last 12-months (as of September 30, 2020)
Disclosures
As of the publication date, PT Mirae Asset Sekuritas Indonesia and/or its affiliates do not have any special interest with the subject company and do not own 1% or
more of the subject company's shares outstanding.
Analyst Certification
Opinions expressed in this publication about the subject securities and companies accurately reflect the personal views of th e Analysts primarily
responsible for this report. Except as otherwise specified herein, the Analysts have not received any compensa tion or any other benefits from the subject
companies in the past 12 months and have not been promised the same in connection with this report. No part of the compensati on of the Analysts was,
is, or will be directly or indirectly related to the specific recommendations or views contained in this report but, like all employees of PT Mirae Asset
Sekuritas Indonesia, the Analysts receive compensation that is impacted by overall firm profitability, which includes revenue s from, among other business
units, the institutional equities, investment banking, proprietary trading and private client division. At the time of publication of th is report, the Analysts do
not know or have reason to know of any actual, material conflict of interest of the Analyst or PT Mirae Asset Sekuritas Indonesia except as otherwise stated
herein.
Disclaimers
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Indonesia Exchange. Information and opinions contained herein have been compiled from sources believed to be reliable and in good faith, but such
information has not been independently verified and Mirae Asset makes no guarantee, representation or warranty, express or im plied, as to the fairness,
accuracy, completeness or correctness of the information and opinions contained herein or of any translation into English fro m the Bahasa Indonesia. If
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Bank - Big Cycle Is Coming

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Bank - Big Cycle Is Coming

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[Indonesia]

Mirae Asset Sekuritas Indonesia

Value stock (banking) to benefit Heading into growth-driven market

Recovery, backed by low base, Recovery to come soon

Repeating the past 2015-2017 as a benchmark

ROE of banks under our coverage

(%) BBCA BMRI BBRI BBNI

Source: Company data, Mirae Asset Sekuritas Indonesia Research

2021 banking industry 3

Mirae Asset Sekuritas Indonesia Research 2

2021 banking industry

Whatever the case is, we see upside potential for 2021

Heading into growth-driven market

Mirae Asset Sekuritas Indonesia Research 3

Figure 3. EM’s policy rate Figure 4. Growth- vs. liquidity-driven market

(bps) Changes Latest 19-Feb (%)

Potential risk of transition

Recovery to come soon

Loan growth to revert to high single digit post COVID-19

Figure 7. YTD Loan growth by segment

(YTD, %) Large Corporate MSME Household w/o Mortg

Source: OJK, Mirae Asset Sekuritas Indonesia Research

Extended credit restructuring by OJK until 2022

Slight uptick in NIM in 2021

Mirae Asset Sekuritas Indonesia Research 5

Figure 9. Loan-to-deposit ratio and deposit growth under our

Normalized credit cost

Mirae Asset Sekuritas Indonesia Research 6

(2016=100) BBCA BBRI BMRI BBNI BBCA BMRI BBRI BBNI

Upgrade our call from Neutral to Overweight

Mirae Asset Sekuritas Indonesia Research 7

6,000 3.0x 20,000 3.0x

Mirae Asset Sekuritas Indonesia Research 8

Bank Central Asia Buy

Leading the recovery with lower CoC TP: IDR38,700

Mirae Asset Sekuritas Indonesia

Net profit to come in at IDR33tr Earnings to recover in 2021

TP based on P/B of 4.4x Maintain Buy recommendation with TP of IDR38,700

Share performance Earnings and valuation metrics

Figure 18. Loan growth by segment Figure 19. Deposit growth

(YoY, %) (YoY, %) Savings

(%) Yields on assets (%) NPL SML

(IDRtr) Restructured loan (COVID), L (%) (%) CASA ratio LDR

Mirae Asset Sekuritas Indonesia Research 10

Bank Central Asia (BBCA)

Income statement (summarized) Balance sheet (summarized)

Key performance indicators Balance sheet growth rate

Mirae Asset Sekuritas Indonesia Research 11

Bank Mandiri Buy

Higher infra budget to benefit SoE bank TP: IDR8,230

Mirae Asset Sekuritas Indonesia

Net profit to rebound by 48.9% Confirmed recovery in 2021

ROE of 11.6% in 2021 Upgrade to Buy with higher TP of IDR8,230

Share performance Earnings and valuation metrics

Figure 24. Loan growth by segment Figure 25. Deposit growth

(YoY, %) (YoY, %) Savings account

Mirae Asset Sekuritas Indonesia Research 13

Bank Mandiri (BMRI)

Income statement (summarized) Balance sheet (summarized)

Key performance indicators Balance sheet growth rate

Mirae Asset Sekuritas Indonesia Research 14

Bank Rakyat Indonesia Buy

Bounceback to continue, backed by gov’t support TP: IDR5,580