Company Update Banks IJ 31 January 2023
Authors: Jovent Muliadi and Anthony
- FY22 net profit of Rp41.2tr (+47% yoy) was ahead. Both NII and PPOP grew by 20% and 25% yoy, the strongest among big banks.
- Lower provisioning (-17% yoy) was attributed to better asset quality. NPL/LAR improved to 1.9/11.7% in 4Q22 vs. 2.7/17.4% in 4Q21.
- NIM improved to 5.5% in FY22 (+40/20bp yoy/qoq) from repricing. Loan growth was also the strongest. Upgrade our EPS and TP.
Strongest PPOP growth among big banks
FY22 net profit of Rp41.2tr (+47% yoy/+1% qoq) was ahead at 108%/104% of our/consensus estimates. Headline PPOP was robust at +25% yoy/-2% qoq (highest among big banks) as strong NII (+20% yoy/+8% qoq) was complemented by mild opex (+8% yoy/+31% qoq). Concurrently, provision also improved (-17% yoy/+2% qoq) which result in lower CoC at 1.4% in FY22 vs. 2.1% in FY21 - at the lower end of its guidance of 1.4-1.7%. It guides for 1.3-1.5% CoC in FY23F, which we think is conservative.
Robust NIM in FY22, ample upside in FY23F guidance
NIM improved to 5.5% in FY22 (vs. 5.1/5.4% in FY21/9M22) on the back of loan repricing (+70bp yoy/+50bp qoq) and low CoF (+10bp yoy/+15bp qoq). This was quite a feat considering its LDR only stood at 80% in 4Q22 (vs. 81%/85% in 4Q21/3Q22). Deposit grew at 15% yoy (+10% qoq) driven by (+22% yoy/+15% qoq), while TD was relatively flat (+1% yoy/-4% qoq). It conservatively guides for NIM of 5.3-5.6% in FY23 which suggests plenty of upside given the current pace of repricing. Strong loan growth across segments Loan grew 14% yoy (+3% qoq), primarily supported by subsidiaries (mostly from BSI) at 21% yoy (+4% qoq); while other segments posted low to midteens yoy growth. It guides for 10-12% growth in FY23.
Improving asset quality with sufficient provisioning
NPL improved to 1.9% in 4Q22 vs. 2.2% in 3Q22 (2.7% in 4Q21) while loanat-risk (LAR) also improved to 11.7% in 4Q22 vs. 13.4% in 3Q22 (17.4% in 4Q21) with LAR coverage stood at 46% in 4Q22 (vs. 44/39% in 3Q22/4Q21).
Maintain Buy with higher TP
We raise our EPS by 13/12% for FY23/24F on the back of better NIM outlook. This also resulted in higher TP of Rp11,800 based on 2x P/B ( ROAE : 18%, Ke: 14%) - note we expect 's ROAE to reach 18.5% by FY23F and 19% in FY24F (higher if it increases its dividend payout). It currently trades at 1.7x FY23F P/BV (10-year average: 1.7x). Risk is slow loan repricing. (Indo Premier Research)
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