by Batavia Prosperindo Sec
· Still dominated by micro and SME segment
As per 9M11, BBRI’s loan disbursement was still dominated by the micro and SME segment. BBRI booked Rp276.32 trillions of total outstanding loan (+20.8% y-o-y), in which 59.4% was disbursed in micro and SME segment, which increased by 15.22% to Rp164.1 trillions. In corporate credit segment, 61.4% of total corporate loan was disbursed to state-owned enterprises (SOE).
SOE lending provides benefits to BBRI due to its lower risk. In future, we believe BBRI will still focus on micro and SME lending segment, even though its corporate loan is increasing significantly.
· Significant rise in net profit
BBRI booked Rp26.7 trillions of net interest income, rose by 27% y-o-y. 9M11 net profit increased quite significantly by 56.7% to Rp10.4 trillions. Increase in net interest income and net profit are partially due to reduction in cost of fund by 12bps to 4.78%. BBRI NIM rose by 74bps from 9.5% to 10.2% in 9M11. Meanwhile, ROE increased to 39.9% with total CAR of 14.84%
• BUY with TP of Rp8,100
We view that BBRI will be able to maintain loan growth above 20% and NIM around 10.4%, on the back of potential decline in interest rate due to declining of BI rate. We recommend BUY with target price of Rp8,100 (at 3.4X 2012F PBV). There is 23.7% potential upside from the last closing price of Rp6,550.