Equity Research

Company Update

Tuesday,06 October 2020

BUY Bank Central Asia (BBCA IJ)

Upgrade More room for flexibility
Last price (IDR) 27,600 We upgrade our call on BBCA to BUY with an unchanged GGM­derived TP of
Target Price (IDR) 33,000 IDR33,000 (implying 4.2x 2021F PBV) following the release of the 8M20 set of
results (bank only). We expect flattish loans growth this year with estimated
Upside/Downside +19.6%
restructured loans at a maximum 30% of the loans book. As such, we estimate
Previous Target Price (IDR) 33,000 5.8% NIM this year supported by its sizeable CASA deposits contribution to
total funding. The gross NPLs ratio is estimated to reach 2.3% as of December
Stock Statistics
2020F with higher credit costs of 215bps. All in all, we maintain our FY20F net
Sector Banking profits estimate of IDR21.5tn.
Bloomberg Ticker BBCA IJ
No of Shrs (mn) 24,945 8M20 highlights. The 8M20 bank only net profits of IDR18.5tn (+2.8% yoy) were
driven by a c.18bps drop in NIM to 6.1% and 168bps credit costs. Meanwhile,
Mkt. Cap (IDRbn/USDmn) 688,476/46,519
the operating expenses declined by 7.5% yoy to IDR18.1tn, resulting in a lower
Avg. daily T/O (IDRbn/USDmn) 578.2/39.1 Cost to Income Ratio (CIR) at 38.3% in 8M20. With 1.3% yoy loans growth and
13.9% yoy customer deposits growth, LDR declined to 70.9% in August 2020.
Major shareholders (%)
PT Dwimuria Investama 54.9 Ample room for a lower blended CoF. Amid the COVID­19 outbreak and
Anthony Salim 1.8 dimmer outlook for global and domestic economic growth, NIM could be
Estimated free float 43.1 managed at 6.1% in 8M20 (bank only). This reflects a c.50bps drop in the
blended CoF to 1.5% in 8M20 based on our calculation. BBCA’s management
EPS Consensus (IDR) also emphasised that the bank would continue to cut the TD rate, seeking to
2020F 2021F 2022F lower the blended CoF. We believe such a target is achievable due to the
sizeable and sticky CASA deposits. As such, we expect a 75.3% CASA deposits
Danareksa 872.8 1,164.9 1,409.2
contribution to total customer deposits as of December 2020F.
Consensus 937.3 1,200.3 1,409.4
Danareksa/Cons (6.9) (2.9) 0.0 Expecting a higher gross NPLs ratio and higher credit costs. During the latest
analyst meeting, BBCA’s management emphasised that eligible restructured
BBCA relative to JCI Index loans should be 30% of its loans book at most. This amount may be dominated
by vehicle loans, both 2W and 4W. Yet for this segment, BBCA only provides
longer tenor schemes. Nonetheless, given the currently challenging climate, we
assume a higher gross NPLs ratio of 2.3% by December 2020F with 215bps
credit costs. We believe that our assumptions for both figures are relatively
conservative, thus providing more upside potential for BBCA’s performance
going forward.

Upgrade to BUY, unchanged TP of IDR33,000. We upgrade our call to BUY with

an unchanged GGM­derived TP of IDR33,000 (implying 4.2x 2021F PBV). We
assume a 6.7% CoE, 18.3% sustainable ROAE and 3% long­term growth.

Key Financials
Source : Bloomberg
Year to 31 Dec 2018A 2019A 2020F 2021F 2022F
PPOP (IDRbn) 35,383 40,880 39,123 44,481 50,293
Net profit (IDRbn) 25,855 28,565 21,520 28,722 34,743
EPS (IDR) 1,048.7 1,158.6 872.8 1,164.9 1,409.2
EPS growth (%) 10.9 10.5 (24.7) 33.5 21.0
BVPS (IDR) 6,151.3 7,059.1 7,376.9 7,929.9 8,577.8
Eka Savitri PER (x) 26.3 23.8 31.6 23.7 19.6
(62­21) 5091 4100 ext.3506 PBV (x) 4.5 3.9 3.7 3.5 3.2
eka.savitri@danareksa.co.id Dividend yield (%) 1.2 2.0 1.8 2.3 2.7
ROAE (%) 18.3 17.5 12.1 15.2 17.1
Source : BBCA, Danareksa Estimates

www.danareksa.com See important disclosure at the back of this report 1

Exhibit 1. Loans and Growth Exhibit 2. Net Interest Income and Growth

Source: Company, Danareksa Sekuritas estimates Source: Company, Danareksa Sekuritas estimates

Exhibit 3. NIM and LDR Exhibit 4. NPLs

Source: Company, Danareksa Sekuritas estimates Source: Company, Danareksa Sekuritas estimates

Exhibit 5. PBV ROAE Band Chart Exhibit 6. PE Band Chart

Source: Bloomberg, Danareksa Sekuritas estimates Source: Bloomberg, Danareksa Sekuritas estimates

www.danareksa.com See important disclosure at the back of this report 2

 Exhibit 7. BBCA’s 8M20 highlights (bank only)
FY End (IDR bn) 5M20 6M20 7M20 8M20

Interest income 26,152 33,186 36,372 41,458

Interest expense (4,772) (5,937) (6,594) (7,496)
Net interest income 21,380 27,249 29,778 33,962
Net interest margin (%) 6.1 6.5 6.1 6.1

Non­interest income 12,526 10,531 11,493 13,156

Total operating income 33,906 37,780 41,271 47,118

Operating expenses (16,649) (16,248) (16,181) (18,064)
CIR (%) 49.1 43.0 39.2 38.3

Pre­provision operating profit 17,257 21,532 25,090 29,053

Total provisions (5,708) (6,541) (6,633) (6,493)

Credit costs (bps) 232 224 195 168

Pre­tax profit 11,549 14,990 18,496 22,599

Net profit 9,574 12,240 15,214 18,524
Net profit yoy growth (%) (3.5) (4.8) 0.0 2.8

Key Balance Sheet Data (IDR bn)

Gross loans 595,029 582,184 577,375 570,354
Total assets 954,071 957,694 967,842 982,435
CASA deposits 575,569 574,785 580,829 588,198
Customer deposits 757,157 756,917 763,139 769,347
Equity 158,066 161,885 166,348 170,805

Key Ratios
Gross loans yoy growth (%) 7.2 5.5 3.4 1.3
Cust. deposits yoy growth (%) 14.7 13.2 13.1 13.9
LDR (%) 75.3 73.6 72.3 70.9
CASA ratio (%) 76.0 75.9 76.1 76.5
Cost of funds (%) 1.5 1.6 1.5 1.5
NIM (%) 6.1 6.6 6.1 6.1
Asset yields (%) 7.5 8.0 7.4 7.4
Source : Company, Danareksa Sekuritas estimates

www.danareksa.com See important disclosure at the back of this report 3

 Exhibit 8. Income Statement
Year to 31 Dec (IDRbn) 2018A 2019A 2020F 2021F 2022F
Interest Income 56,767 63,838 61,349 67,404 73,073
Interest Expense (11,476) (13,360) (12,799) (12,986) (13,317)
Net Interest Income 45,291 50,477 48,550 54,417 59,756
Non­Interest Income (NII) 17,744 21,145 23,219 24,757 27,888
Oper. Income 63,034 71,623 71,769 79,175 87,643
Oper. Expenses (27,652) (30,742) (32,646) (34,694) (37,350)
Pre­provisions profit 35,383 40,880 39,123 44,481 50,293
Provisions & Allowances (2,677) (4,591) (12,711) (9,233) (7,656)
Operating Profits 32,706 36,289 26,411 35,248 42,637
Non­Operating Income 0 0 0 0 0
Exceptionals 0 0 0 0 0
Pre­tax Profit 32,706 36,289 26,411 35,248 42,637
Income Tax (6,854) (7,719) (4,886) (6,521) (7,888)
Minorities 3 (5) (5) (6) (6)
Net Profit 25,855 28,565 21,520 28,722 34,743

Exhibit 9. Balance Sheet

Year to 31 Dec (IDRbn) 2018A 2019A 2020F 2021F 2022F
Gross Loans 538,099 586,940 595,815 633,521 693,597
Provisions (13,569) (14,906) (27,582) (26,659) (26,531)
Net Loans 524,530 572,034 568,233 606,862 667,066
Govt. Bonds 0 0 0 0 0
Securities 114,922 148,893 177,179 191,893 194,819
Other Earnings Assets 12,612 16,181 13,395 14,502 14,447
Total Earnings Assets 726,610 812,552 850,787 906,607 972,134
Fixed Assets 29,453 31,874 33,198 34,485 35,859
Non­Earnings Assets 24,023 23,980 22,200 23,401 23,194
Total Assets 824,788 918,989 950,947 1,010,662 1,077,206

Customer Deposits 629,812 698,980 723,955 768,852 817,938

Banks Deposits 6,494 6,717 6,898 6,749 6,845
Int. Bearing Liab. ­ Others 5,217 5,815 6,014 6,386 6,812
Total Liabilities 673,035 744,846 768,969 815,050 865,620
Share capital & Reserves 16,091 18,929 17,510 18,219 17,865
Retained Earnings 135,569 155,114 164,368 177,293 193,622
Shareholders' Funds 151,660 174,043 181,878 195,512 211,486
Minority interests 94 100 100 100 100
Total Equity & Liabilities 824,788 918,989 950,947 1,010,662 1,077,206

www.danareksa.com See important disclosure at the back of this report 4

Exhibit 10. Ratios
Year to 31 Dec (IDRbn) 2018A 2019A 2020F 2021F 2022F
Yield on Earning Assets 8.2 8.3 7.4 7.7 7.8
Cost of funds 1.8 1.9 1.7 1.7 1.6
Interest Spread 6.3 6.3 5.6 6.0 6.1
Net Interest Margin 6.5 6.6 5.8 6.2 6.4
Cost/Income Ratio 43.9 42.9 45.5 43.8 42.6
Oper. Exp./Oper. Gross Inc. 56.1 57.3 68.8 61.8 57.8
Gross NPL Ratio 1.4 1.3 2.3 2.1 1.9
LLP/Gross NPL 178.7 189.2 197.1 199.1 201.1
Cost of Credit 0.5 0.8 2.1 1.5 1.2
Loan to Deposit Ratio 85.4 84.0 82.3 82.4 84.8
Loan to Funding Ratio 85.4 83.8 82.1 82.3 84.7
CASA Mix 75.9 75.2 75.3 75.7 76.0
ROAE 18.3 17.5 12.1 15.2 17.1
ROAA 3.3 3.3 2.3 2.9 3.3
CAR 24.6 22.6 22.4 22.6 22.1

Exhibit 11. Dupont and growth

Year to 31 Dec 2018A 2019A 2020F 2021F 2022F
Dupont
Pre­Tax ROAA 4.2 4.2 2.8 3.6 4.1
Tax Retention rate 79.0 78.7 81.5 81.5 81.5
Post­Tax ROAA 3.3 3.3 2.3 2.9 3.3
Goodwil, Assoc& Min 0.0 0.0 0.0 0.0 0.0
Leverage 5.6 5.4 5.3 5.2 5.1
ROAE 18.3 17.5 12.1 15.2 17.1
Growth (%)
Interest income 5.6 12.5 (3.9) 9.9 8.4
Net Interest Income 8.3 11.5 (3.8) 12.1 9.8
Other Oper. Expenses 9.8 11.2 6.2 6.3 7.7
Fee Based Income 15.5 13.4 10.7 11.5 13.8
Pre­Provision Oper. Profit 11.3 15.5 (4.3) 13.7 13.1
Net Profit 10.9 10.5 (24.7) 33.5 21.0
Shareholders’ Equity 15.5 14.8 4.5 7.5 8.2
Loan 15.1 9.1 1.5 6.3 9.5
Earnings Asset 9.3 11.8 4.7 6.6 7.2
Deposit 8.4 10.9 3.6 6.1 6.3
Int. Bearing Liab. 8.2 10.9 3.5 6.1 6.4
CASA 8.9 9.8 3.8 6.6 6.8
Total Asset 9.9 11.4 3.5 6.3 6.6

Source : BBCA, Danareksa Estimates