Bank Central Asia (BBCA.IJ Rp 10,075; BUY; TP Rp 11,300) 1H24 results: in-line earnings, supported by robust loan growth, resilient NIM, and stable LaR ratio

Stock Code	Last Price	Change	Change %
DNET	10.700	1.775	19,89%
RDTX	15.200	950	6,67%
PTRO	13.600	400	3,03%
FORU	3.750	340	9,97%
MFIN	3.000	300	11,11%
SMMA	14.900	300	2,05%
SILO	3.530	280	8,62%
SMAR	4.120	280	7,29%

Bank Central Asia (BBCA IJ)

1H24 results: in-line earnings, supported by robust loan growth, resilient NIM, and stable LaR ratio

Amid tight liquidity condition, BBCA maintained its NIM flat at 7.4% in 1H24, supported by a higher LDR and higher contribution from loans.
Despite the higher NPL ratio and lower coverage in 1H24, the bank`s LaR ratio and coverage remained robust, suggesting still strong credit quality.
We maintain our FY4F forecasts and TP of Rp11,300. We reiterate our Buy rating and preference on BBCA in the sector.

Inline 1H24 net profit, supported by high loan growth and robust NIM

BBCA reported a net profit of Rp14.0tr (+11% yoy, +9% qoq) in 2Q24, bringing 1H24 net profit to Rp26.9tr (+11% yoy), in line with our (at 51% of FY24F) and consensus (at 50%) estimates. The bank’s 1H24 ROE improved to 22.7%, driven by strong loan growth, other income, and opex efficiencies. Loans reached Rp850tr (+15% yoy) while TPF rose 5%. The corporate segment drove loan growth with +20% yoy growth, followed by consumer (+14% yoy) and SME (+13% yoy). CIR improved to 34.4% in 1H24 from 35.6% in 1H23 as the higher NII growth (8% yoy) and other income growth (12% yoy) offset opex growth (5% yoy).

Steady NIM amid higher LDR

BBCA`s NIM remained steady at 6.3% in 1H24 (flat yoy) with both loan yield and CoF also remaining relatively stable, despite the higher LDR (from 66% in 1H23 to 73% in 1H24). We note that the steady NIM was caused by the non-loan asset yield, which declined to 7.0% in 1H24 from 7.2% in 1H23 as a result of a lower yield of 6.8% in 2Q24 (2Q23/1Q24: 7.0%/7.2%).

Lower provisions and higher NPL led to lower NPL coverage

BBCA's negligible provisions in Jun24 led to 2Q24 provisions of only Rp381bn (-63% qoq), resulting in a lower CoC of 0.2% in 2Q24 (from 0.5% in 1Q24). Coupled with a higher NPL of 2.1% in 2Q24 (from 1.9% in 1Q24), this led to a lower NPL coverage of 191% (from 221% in 1Q24). Yet, we see that the LaR ratio remained stable qoq at 6.3% in 2Q24 (from 6.6% in FY23), which offset the lower provisions, resulting in only a slight decline in LaR coverage.

Maintain BUY; robust loan growth, NIM and credit quality remain key drivers

We maintain our FY24-25F forecasts and Buy rating on BBCA with an unchanged TP of Rp11,300 based on GGM with a CoE of 6.4% (5-year average) and FY24F ROE of 20.9%, implying FV PBV of 5.3x. Risks to our view include a lower-than-expected asset yield, rising benchmark rate, and a higher NPL ratio. BBCA remains our top pick in the banking sector.

… Read More 20240725 BBCA