BNIS Short

BNIS Short Notes

Note
BBRI (PT Bank BRI (Persero) Tbk)

Analyst: EQUITY RESEARCH

Posmarito Pakpahan
Posmarito.pakpahan@bnisekuritas.co.id February 9, 2021

Refocusing on Micro Lending

BUY
What’s New?
We expect continuous margin gain, driven by recovery in micro segments TP: IDR 5,000
while CoC remains elevated, anticipating the deterioration on loan quality
due to unprecedented event.

Key Highlights
Stock Data (as of February 8, 2021)

 Continuous margin gain, supported by recovery in micro segment and Last Price IDR 4,460
abundant liquidity. 52wk Range IDR 2,170-4,890
 Encouraging trend of restructuring loan, but expect a remained elevat- YTD % Change 7.0%
ed CoC, anticipating the deterioration in loan quality amid high LaR. 1 Year Total Return -0.9%
 Reiterate BUY, with TP: IDR 5,000, premium valuation may sustain as Share Outstanding 123,345.8 Mn
BRI is refocusing on micro, leading BRI to maintain its premium ROE and
Market Capitalization IDR 544,621 Bn
NIM.
Previous Recommendation BUY/4,900
Continuous margin gain, supporting PPOP growth
BRI posted 11.7% q-q growth in 4Q20 Operating revenue, driven by 18.5% q-
q increase in NII. Quarterly NIM rose by 88bps in q-q basis to 6.68% in 4Q20. Shareholders
Monthly NIM in December stood at 7.29%, continuing an upward trend since
October (Exhibit 2 & 3). The improvement was supported by a slight increase Government of Republic of Indonesia 56.75%
in yield and faster decline in 4Q20 CoF (-70bps q-q). Monthly CoF in Decem-
Public 43.25%
ber came in at 2.45% - a gradual decline since September (3.01%) due to
abundant liquidity and lower deposit rate. Given solid q-q NII growth and
15.9% q-q lower Operating Expenses, PPOP grew 37.2% q-q. In our model,
we expect BRI FY21F NIM at 6.3% (FY20:5.86%), bringing projected PPOP to
grow 12.6% by assuming a 6% y-y loan growth, a 9% y-y growth in Non-NII
and a 7.2% y-y increase in Operating expenses. We expect pressure in asset
yield to be manageable as loan growth will driven by Micro to grow 9.5% y-y,
contributing 40.4% of the estimated total loan.

Remains elevated CoC, anticipating the deterioration in loan quality

Restructured loan has been gradually declining to IDR186.6Tn in December
from IDR193.7Tn in September, accounting for 21.2% of total loans. It
brought BRI’s LaR to stand at 28.3% that dominated by micro and small com-
mercial loans (38.3%/38.4%). High LaR made BRI to book more provision in
FY20, at 3.4% while FY20 NPL stood at 2.94%, rose by 32bps from 2.62% in
FY19bps. Management guided NPL to stand at ±3.0% (our number: 3.2%,
assuming 12% of LaR falls to NPL in FY21F). Anticipating worsening asset
quality, we estimate 297bps CoC in FY21F. According to management, most
of three and six month-period restructured loan in FY20 are classified as
stage 1.

Reiterate BUY, TP: IDR 5000, premium valuation may sustain

We maintain BUY call, TP: IDR 5,000, raised from IDR4,900 owing to 2.0%
increase in our equity estimates because of lower reduction in retained
earning due to IFRS 9 implementation than our estimate. This might be the
reason of wide range of the bank’s estimated book value in market by ana-
lyst. BRI’s premium valuation over BNI and BMRI may sustain as BRI is refo-
cusing on micro lending, expecting micro to contribute 45% of total loan
disbursement by FY25 (Vs. FY20: 40%). We expect through this strategy, the
bank can maintain its above industry ROE and NIM. Thus, our 2.8x P/Bk mul-
tiple is justified against ROE improvement to 15%/17% in FY21/22 from 9.9%
in FY20. Risks to our valuation: prolonged covid-19, adverse macroeconomic,
pressure in NIM, worsening asset quality, digital fraud, increase in operating
expenses, and high LDR.

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 BNIS Short Note

Exhibit 1. Change in our Estimates after incorporating FY20 results into our model

Source: BBRI, BNI Research , Bloomberg

Exhibit 2. NIM Trend in the last twelve months Exhibit 3. CoF Trend in the last twelve months

Source: BRI, BNI Research Source: BRI, BNI Research

Exhibit 4. Plateauing in restructuring loans Exhibit 5. BRI’s Cost of Credit trend

Source: BRI, BNI Research Source: BRI, BNI Research

Analyst:
Posmarito Pakpahan
Posmarito.pakpaham@bnisekuritas.co.id

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 BNIS Short Note

Exhibit 6. Loan Quality, Adequate Coverage Ratio for high LaR

Source: BBRI, BNI Research

Exhibit 7. FY20 Results– in-line with our and market expectation

Source: BBRI, BNI Research

Analyst:
Posmarito Pakpahan
Posmarito.pakpaham@bnisekuritas.co.id

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 BNIS Short Note

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Phone: (62-274) 581001-584032 ACEH
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Phone: (62-651) 31109
SOLO Fax: (62-651) 31107
Jl. Honggo Wongso No. 24, Surakarta
Phone: (62-271) 729667, 730525 BANJARMASIN
Fax: (62-271) 729668 Gd. Bank BNI Antasari Lt. 2
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Phone: (62-511) 3253735
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Phone: (62-31) 5320912
Fax: (62-31) 5318425
e-mail: surabaya@bnisekuritas.co.id

DISCLAIMER
This document is not intended to be an offer, or a satisfaction of an offer, to buy or sell relevant securities (i.e. securities mentioned herein or of the same issuer and
options, warrants or rights to or interest in any such securities). The information and opinions contained in this document have been compiled from or arrived at in
good faith from sources believed to be reliable. No representation or warranty, expressed or implied, is made by BNI SEKURITAS or any other member of the BNI
Group, including any other member of the BNI Group from whom this document may be received, as to the accuracy or completenes s of the information contained
herein. All opinions and estimates in this report constitute our judgment as of this date and are subject to change without notice.

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