Bank Central Asia (BBCA IJ)

The place to shelter from the storm

• Supported by 17% yoy loans growth and a relatively steady NIM, BBCA booked net profit of Rp12.9tr in 1Q24 (+12% yoy, +5% qoq), inline.
• Credit quality was in check with NPL at 1.9% in 1Q24 (+9bps yoy, +13bps qoq) but with a lower LaR ratio of 6.3% (-29bps yoy, -314bps qoq).
• We maintain our forecasts, TP and Buy rating; BBCA remains as our top pick in the banking sector.

1Q24: Robust NP supported by a stable NIM…

BBCA booked net profit of 12.9tr (+12% yoy, +5% qoq) with strong PPOP of 16.9tr (+8% yoy, + 12% qoq) and provisions of Rp1.0tr (-30% yoy, from a reversal in 4Q23). The 1Q24 NP is 24% of both our FY24F and the consensus, hence, in-line. The bank maintained a relatively stable NIM of 6.3% in 1Q24, demonstrating the effective management of its interest income and expenses. This was achieved through a relatively stable EA yield and CoF qoq. In comparison to 1Q23, NIM remained surprisingly flat, with a higher EA yield (from a higher portion of loans) offsetting the higher CoF.

…and high loans growth driven by the corporate segment

Supported by its ample liquidity, BBCA recorded loans growth of 17% yoy in 1Q24. The growth was mainly driven by corporate loans, which grew by 22% with the slowest growth seen in the commercial segment at 9% yoy. The management has kept its loans growth guidance unchanged at 8-10% as it opted to remain prudent on asset quality. TPF recorded 8% yoy growth, resulting in a higher LDR of 74%. TD were flat qoq as the bank gradually cut its TD rate (100bps) starting in Aug23, while CASA rose 2% yoy, bringing the CASA ratio slightly higher to 79.6% in 1Q24 from 79.2% in 4Q23. 

Asset quality remained under control

BBCA’s asset quality remained robust with an NPL ratio of 1.9% (+9bps yoy, +13bps qoq) in 1Q24 and an improving LAR ratio of 6.3% (vs 6.6% in 4Q23 and 9.5% in 1Q23). However, we note that the <7days SML portion is getting smaller while the >60days SML portion is getting larger. The bank’s CoC remained manageable at 0.5%, though slightly above the 30-40bps guidance.

Maintain BUY; robust loans growth, NIM, and credit quality as key catalysts

We maintain our FY24-25F forecasts and Buy rating on BBCA with an unchanged TP of Rp11,300 based on the GGM with 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 higher-than-expected CoF, a stagnant LDR, and deterioration in credit quality.

… Read More 20240423 BBCA