Live Chat Software
Berita Dan Riset Terbaru
Company Research
BMRI - Profitability to hold up
November 28, 2014 09:10

Despite the challenging economic environment, we are encouraged by BMRI’s ability to maintain its low cost CASA at 63.3% as of September 2014 – a relatively sound level. By comparison, note that back in 2008 - when the banking sector was affected by the impact of the global economic downturn – BMRI’s proportion of TD climbed to 43.3% as of December 2008 from 41.4% on a quarterly basis. As such, we remain confident that the bank can maintain a CASA proportion above the 60.0% level. Margins wise, NIM was maintained at 5.6% in 9M14 backed by the bank’s active earning assets management. Also positively, the yield on earning assets increased to 9.3% in 9M14 from 8.5% in 9M13 since BMRI enjoyed a recap bonds yield of 5.4% in 9M14 – helped by its sizable VR bonds of IDR64.5 tn as of September 2014. For 2014-15F, we expect that the bank can maintain its NIM at around 5.6%. Against this backdrop, we maintain our positive stance on BMRI going forward. Derived from the DBV model, our Target Price is unchanged at IDR12,400, implying PBV 2015-16F of 2.5-2.2x. BUY maintained. 

Better positioning in deposits
Although BMRI now ranks second in deposits with a 13.5% market share as of September 2014, the bank was still able to maintain its CASA composition at 63.3% as of September 2014.  As such, the 36.7% proportion of deposits coming from TD as of September 2014 looks quite sound in the more challenging economic environment at the present time. Recall that back in 2008 - when the banking sector was affected by the impact of the global economic downturn – BMRI’s proportion of TD climbed to 43.3% as of December 2008 from 41.4% on a quarterly basis. Looking forward, we are confident that the bank can maintain a CASA proportion above the 60.0% level.

Steady Margins  
BMRI could maintain its NIM at 5.6% in 9M14 backed by the bank’s active earning assets management. In our calculation, the yield on earning assets rose to 9.3% in 9M14 from 8.5% in 9M13 due to a higher loans yield of 10.2% and a higher recap bonds yield of 5.4% in 9M14 – helped by its sizable VR bonds of IDR64.5 tn as of September 2014. Meanwhile, the blended CoF rose by nearly 60 bps to 3.9% in 9M14 from 3.8% in 1H14. For 2014-15F, we expect that the bank can maintain its NIM at around 5.6% supported by its manageable blended CoF of 3.7% for FY14F, and the fact that 90.4% of its TD have maturities less than three months, then falling slightly to 3.6% in FY15F.

Maintain BUY, TP of IDR12,400
Given that the 9M14 result was in-line with our expectation, we maintain our positive stance on BMRI, particularly liking the bank’s better deposits structure and sound margins. Derived from the DBV model with a 15.75% cost of equity and 6.0% terminal growth rate, our Target Price is unchanged at IDR12,400, implying PBV 2015-16F of 2.5-2.2x. BUY maintained.