Flash Focus – Bank Negara Indonesia 4Q18 earnings flash review by Lee Young Jun (lee.youngjun@miraeasset.co.id)
Jan 24, 2019
BBNI 4Q18 earnings review: A solid operational performance
Bottom line up 10.3% YoY, net interest income up 11.0% YoY
Bank Negara Indonesia (BBNI/Buy/IDR12,100) held its 4Q18 analyst meeting yesterday, reporting net profit of IDR3,577.0bn (-10.6% QoQ, +3.4% YoY). Cumulative 2018 net profit came in at IDR15.0tr, slightly below our forecast and the market consensus (94.1% and 97.2% run rates, respectively). However, 2018 top line was largely in line with expectations; net interest income and profit before tax achieved 98.0% and 98.2% of our forecasts, respectively. The reason bottom line slightly missed our forecast was higher current tax in 4Q18.
At the operational level, BBNI successfully booked double-digit net interest income growth in 2018 (+11.0% YoY) and in 4Q18 (+12.0% YoY). We believe BBNI’s core revenue growth in 2018 will easily outpace that of its peers. BBNI’s high loan growth partly stemmed from solid growth in the SoE and payroll loan segments, and its lending rates and funding costs were well-managed. Moreover, BBNI lowered its loan-to-deposit ratio to 88.8% (from 89.0% in 3Q18) on the back of strong flows in CASA accounts (64.8% in 4Q18 vs. 61.9% in 3Q18). Moreover, asset quality metrics have improved; credit cost improved 20bps YoY, while NPL ratio dropped 40bps YoY.
The company will publish its full financial statement on IDX today. We currently recommend Buy on BBNI with a target price of IDR12,100.
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