6 March 2013

EQUITY RESEARCH

Bank Jatim Visit Notes

FY12 Result: Bitter and Sweet

We attended Bank Jatim (BJTM) analyst meeting for the presentation of FY12
result. The bank posted a lackluster performance in 2012 with 16% yoy decline
in the net income to Rp725bn; 10% lower than the consensus estimate of
Rp807bn in FY12. Key takeaways from the meeting are as follows:

In Rpbn FY11 FY12 yoy 3Q12 4Q12 qoq

BJTM NR
Nii (Net interest income) 1,924 1,978 3% 564 525 -7%

Non int income (expense) 254 280 10% 77 35 -55%

Share Performance
PPOP 1,183 1,287 9% 360 281 -22%
3M 6M 12 M
Provision 2 307 N.A. 121 2 -98%
Absolute (%) 15.8 12.8 N.A.

Relative to JCI (%) 4.9 -.38 N.A. Operating Profit 1,181 980 -17% 239 279 17%

52-WK range (Rp) 355 - 480 Net income 860 725 -16% 194 196 1%

EPS 58 49 -16% 13 13 1%
Price Chart
BVPS 219 368 68% 355 368 4%
130
120 NIM (cumulative) 8.0% 6.5% 6.6% 6.5%
110
LDR 80% 84% 71% 84%
100
90 NPL 1.0% 3.0% 2.7% 3.0%
80
70
Source: The company, IndoPremier
60
50 Our View:
40
30 We have concerns with BJTM’s FY12 performance, especially in the bank’s CoF
11-Jul 11-Oct 11-Jan
uptrend and deteriorating asset quality. While the banking sector was
JCI BJTM
experiencing around 20bps-40bps decline in CoF and around 20bps-50bps
Source: Bloomberg
improvement in the asset quality, BJTM on the other hand, faced a raising CoF
and NPL.
Share Data  We estimate that the bank’s experienced around 90bps increase in
Out’ shares (m) 14,917 CoF in 4Q12 leading to the increase in interest expense by 26% qoq.
Significant increase in the interest expense was the main culprit of the decline
Market Cap (US$ m) 676.93
in net interest income by 7% qoq to Rp525bn in 4Q12.
6 M avg.daily (US$) 939,895  Interestingly NIM only slightly contracted by 10bps to 6.5% in 4Q12
which we believe is due to the decline in the earning assets in 4Q12. Earning
asset declined by 16% qoq in 4Q12.
Shareholder information
 NPL was still trending up to 3% in 4Q12 from 2.7% in 3Q12, and
Government of East Java Provinces 51.5%
significantly increased in yoy basis (1% in FY11). The jump in NPL was mainly
Government of East Java Regencies and Cities 28.5% caused by Rp100bn commercial loan and Rp150bn KUR loan, however,
Free Float 20.0%
management is expecting 50% recovery from the commercial loan in FY13.
Going forwards, management believes that NPL should start to normalize to
around 2% as the bank has prepared a better risk management.
 On the sweet side, the bank offers a very attractive dividend yield –
around 9%-10% yield in FY13, the highest in our sector coverage.

Dividend yield BJBR BMRI BBNI BBRI BBTN BJTM

Agus Pramono, CFA
agus.pramono@ipc.co.id th
Share price in 5 March 1,260 9,550 4,725 8,550 1,690 440

Jovent Giovanny DPS based on FY11 NI 50.0 105.0 62.5 124.6 21.3 32.5
jovent.giovanny@ipc.co.id
Yield 4.0% 1.1% 1.3% 1.5% 1.3% 7.4%

Sources: IndoPremier, Companies

1
Refer to important disclosures on the last of this report
 Head Office

PT INDO PREMIER SECURITIES

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Jl. Jend. Sudirman No.28
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Research

Agus Pramono, CFA Head of Research, Banking, Automotive, agus.pramono@ipc.co.id

Consumer and Cement

Alice Lie Property alice.lie@ipc.co.id

Jovent Giovanny Banking and Small Cap jovent.giovanny@ipc.co.id

William Simadiputra Plantation and Heavy Equipment william.simadiputra@ipc.co.id

Seto Wardono Senior Economist seto.wardono@ipc.co.id

Ikhsan Binarto Technical ikhsan.binarto@ipc.co.id

Muhammad Wafi Technical wafi@ipc.co.id

Dang Maulida Fixed Income dang.maulida@ipc.co.id

Dedikasi Sitorus Fixed Income dedikasi.sitorus@ipc.co.id

Institutional Sales & Private Client

Benny Soebagjo benny.soebagjo@ipc.co.id

Angkula Ruriawan angkula.ruriawan@ipc.co.id

Henry Sutanto henry.sutanto@ipc.co.id

INVESTMENT RATINGS
Buy : Expected total return of 10% or more within a 12-month period
Hold: Expected total return between -10% and 10% within a 12-month period
Sell : Expected total return of -10% or worse within a 12-month period

ANALYSTS CERTIFICATION. The views expressed in this research report accurately reflect the analyst's personal views about any and all of the subject securities
or issuers; and no part of the research analyst's compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in
the report.

DISCLAIMER: This research is based on information obtained from sources believed to be reliable, but we do not make any representation or warranty nor accept
any responsibility or liability as to its accuracy, completeness or correctness. Opinions expressed are subject to change without notice. This document is prepared for
general circulation. Any recommendation contained in this document does not have regard to the specific investment objectives, financial situation and the particular
needs of any specific addressee. This document is not and should not be construed as an offer or a solicitation of an offer to purchase or subscribe or sell any
securities. PT. Indo Premier Securities or its affiliates may be involved in transactions contrary to any opinion herein to make markets, or have positions in the
securities recommended herein. PT. Indo Premier Securities or its affiliates may seek or will seek investment banking or other business relationships with the
companies in this report.