Sunday, September 30, 2012
Banking Q3 2012
● The Indonesian constitutional court has ruled in favour of the separation of state-owned banks’ receivables from state assets. The separation would allow state-owned banks to perform haircuts on their written-off loans.
● Given the favourable ruling, we see the potential for the Indonesian parliament to pass the law in 2012. Subsequently, we may see the implementation directive issued in 2013.
● We estimate BMRI, BBNI and BBRI have c. Rp33 tn, Rp25 tn and Rp8 tn of written-off loans, or 38%, 53% and 11% of their 2013E book value, and 201%, 323% and 50% of 2013E net income, respectively. Even assuming a 90% haircut, the size of writebacks could represent 4%, 5% and 1% of FY13E book value and 20%, 32% and 5% of FY13E earnings for BMRI, BBNI and BBRI.
● We believe that we are progressing forward for this catalyst to materialise, which would be positive for Indonesian state-owned banks. We maintain OUTPERFORM ratings for BMRI, BBNI and BBRI.
Companies Mentioned (Price as of 25 Sep 12)
Bank Mandiri (Persero) (BMRI.JK, Rp8,100.00, OUTPERFORM, TP Rp9,500.00)
Bank Negara Indonesia (BBNI.JK, Rp3,900.00, OUTPERFORM, TP Rp4,700.00)
Bank Rakyat Indonesia (BBRI.JK, Rp7,350.00, OUTPERFORM, TP Rp8,700.00)
Bank Central Asia (BBCA.JK, Rp7,850.00, OUTPERFORM, TP Rp10,000.00)
Bank Tabungan Pensiunan Nasional (BTPN.JK, Rp4,950.00, NEUTRAL, TP Rp4,700.00)
Bank Jabar Banten (BJBR.JK, Rp1,090.00, OUTPERFORM, TP Rp1,200.00)