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Bank
Bukopin (BBKP IJ; Neutral; TP IDR700) Results Review: Largely Unexciting
Although
Bank Bukopin’s 1Q14 net earnings fell within expectations, the overall tone of
the results remains unexciting, in our view. The earnings were supported by
non-existent impairment and low operating costs growth but NIM remained below par
and credit growth was tepid. Bank Bukopin’s multiples are undemanding however
poor earnings outlook and modest lackluster growth cap our excitement.
¨ 1Q14 supported by
benign provision and lower costs. Bank Bukopin booked IDR246bn of net earnings
in 1Q14 (25% q-o-q; 10% y-o-y), supported by: 1) IDR22bn of impairment reversal
which fully offset its quarterly credit costs; and 2) lower operating costs
(-15% q-o-q; 5% y-o-y) which drove cost-to-income ratio (CIR) down to 62%
(FY13: 67%). 1Q14 net profit represents 26% and 28% of consensus’ and our full
year estimates respectively. We view overall 1Q14 earnings as unexciting as net
interest margin (NIM) remains below par while loans growth is lackluster. We
maintain our Neutral rating and our earnings estimates.
¨ Lackluster NIM
display. The
progress on NIM remained unexciting as net interest income growth was flat
q-o-q (7% y-o-y), keeping 1Q14 NIM subdued at 4.0% (FY13: 4.1%). Annualized
asset yields of 10.5% in 1Q14 inched up a mere 6bps q-o-q or 58bps higher than
FY13 level but cost of funds (CoF) rose to 6.6%, 26bps higher q-o-q or 81bps
higher than FY13 level. Loans growth was tepid at 1% q-o-q; 3% y-o-y while
deposit growth rose 6% q-o-q but contracted 4% on y-o-y basis. Current and savings
(CASA) ratio fell to 38% (4Q13: 42%). Asset quality was relatively stable with
gross NPL ratio at 2.6% and ex-Bulog gross NPL ratio at 2.8%. Tier-1 and CAR
ratio sat at 12.7% and 16.2% respectively.
¨ Maintain Neutral. PT Bosowa Corporindo
plans to increase its stake in Bank Bukopin from 18.6% to 30.0% by acquiring
shares from the Bank’s current largest shareholder, Kopelindo. The acquisition
is expected to be completed in 3Q14. The emergence of PT Bosowa as the Bank’s
majority holder opens up new opportunities but the strategic goals of PT Bosowa
remains unclear. Bank Bukopin is trading at undemanding valuation however poor
earnings outlook lackluster growth cap our excitement.
Best
regards,
RHB
OSK Indonesia Research Institute
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