Wednesday 20 February 2013

Malayan Banking Bhd - BII: A Record Profit


Period    FY12/4Q12

Actual vs.  Expectations  PT Bank Internasional Indonesia Tbk (“BII”) posted  a FY12 PAT of Rp1.2t.

Dividends   No dividend was proposed during the quarter.

Key Result Highlights    On a YoY comparison, the FY12 PAT of Rp1,208b was higher by 81.0% due to a strong balance sheet expansion. Loans growth increased strongly by 20.0% YoY to Rp80.9t, driven by SME (+41% YoY) and Corporate (+24% YoY).  

 Consequently, net interest income was up by 33% YoY to Rp2,005b. The NIM, meanwhile, widened by 51bps YoY to 5.73%. The higher-than-expected FY12 NIM expansion showed that the group did well in pricing discipline on its funding cost.  The high LDR of 93.0% contributed heavily to the NIM expansion in our view. 

 However, the Rp2,151.0b in Non-Interest Income fell 8.0% YoY due to the drop in two-wheeler business, which was impacted by the new LTV rule.

 The opex of Rp4,859.0b was up 12.0% YoY. Personnel cost added mostly to the higher opex. The higher revenues mentioned above led to a lower cost-toincome ratio of 65.1% (-3.61% YoY).

 The net impaired loans ratio was sustained at 1.26% (1.24% in 2011). As a result, the ROE also increased by 6.63% to 15.8%.

Outlook   BII’s outlook should remain positive in 2013 given its accelerating balance sheet growth strategy. During the briefing, management said it expects volume growth to remain strong and has set the headline KPI loan growth target at 22% YoY for the year with a preference on growing its SME, Corporate and four-wheeler loans as the drivers for 2013.  Meanwhile, the group also sees a narrower NIM in the range of 5.4-5.5%.  The group is now targeting a cost-to-income at below 60% and is also continuously improving its asset quality via a lower NPL ratio.  

 We remain confident of BII’s balance sheet growth story and do not discount the possibility of a capital injection by Maybank Group given that a USD150m equity injection should see BII’s Total Capital Ratio improve to 13.0%.  

Change to Forecasts  There are no changes to our earnings estimates on the overall Maybank Group.

Rating  Maintain OUTPERFORM
 Our OUTPERFORM rating is maintained as the current share price implies a 21% total upside (together with a 6.55% net div. yield) to our Target Price (TP).

Valuation    Our Target Price of RM10.40, based on 2.0x FY13 P/BV and implying a 14.9x FY13 PER, is retained.

Risks   Unexpected slowdown in fee incomes.  

Source: Kenanga

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