by Kresna Securities
BBCA 9M11 result concluded revealing a strong set of results with Rp7.7tr net income, augmented by 25.3%YoY and arriving at 79.7% to FY11 consensus estimates. The loan inked 27.0%YoY growth, surpassing industrial average of 23.4%YoY. Such robust growth is mainly attributed to 28.2% and 33.7% YoY growth in consumer spending (mortgages jumped 41.4%YoY) as well as commercial. Meanwhile, on a QoQ basis, NIM continued expanding, up to 5.7%, this resulting from asset yields improving to 8.12% and CoF declining to 2.62% (saving interest rates were slashed to 2.35% from 2.6% in 2Q11 and 3% in 1Q11).
Net interest income increased by 36.3%YoY to Rp12.4tr… The robust growth in net interest income was supported by 2 main factors: 1) Loan growth jumped heartily by 27.0%YoY to Rp176.3tr, driven by consumer (28.2%YoY) and commercial (33.7%YoY). (2) Asset shifting from SBI held in trading accounts to BI term deposits, a trend gradually building since July-10. By excluding factor number 2, net interest income might grow by around 16%YoY.
… while non interest income fell 10.4%YoY to Rp5.1tr. In contrast to assets shifting to BI term deposits, gains on sales of financial assets in 9M11 dropped 82.7%YoY to Rp296bn. Meanwhile, fees and commissions continue to grow, rising by 14.8%YoY to Rp3.3tr. Other accounts also recorded an increase of 16.1%YoY to Rp1.0tr, mainly supported by 18%YoY growth in BCA finance operating income (Rp930bn).
Expanding NIM. Continuing the positive trend of 2 preceding quarters, NIM continued expanding, arriving at 5.7% in 9M11 figure. This is supported by improving asset yield (to 8.12% in 9M11) due to robust grow in loan portfolio, while cost of funds was reduced (to 2.62%); the drop in cost of funds is facilitated by saving interest rate cut to 2.35% from 2.6% in 2Q11 and 3%in 1Q11.
Improving LDR; slowdown in time deposit market. In line with strong loan growth of 27.0%YoY, LDR increased to 58.3% from 52.6% last year. On the other hand, third party funds grew 14.6%YoY, dominated by CASA; savings accounts and demand deposits grew 19.5% and 17.2% YoY. Meanwhile, time deposit balance only improved by 2.2%YoY, as management decided not to push this expensive funding so aggressively.
Extending mortgages program. With respect to this successful two-year 7.5% fixed rate mortgage programs, management decided to extend it through Dec-11. Worth noting: since company introduced this product, mortgage loans spiked 30% above normal. Though mortgages loan contain 1%NPL, the 7.5% interest rate (hasn’t included additional provision) should still comfort the company’s margin. Currently, mortgages loan dominates 54.1% portion of consumer lending or 13.5% from total lending.
Premium for A Reason. Despite its premium valuation, FY11 P/BV at 4.9x vs sector's 2.8x, investors continue to like BBCA due to its good GCG, conservative management and superior funding and retail chain. At current level, it is trading 9.1% lower than its highest position in 2011.