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JAKARTA. A part of banking issuers have released their financial reports during the third quarter of 2016. Despite the reports reflect the slow performances of the banks, analysts estimated that the banks have performed as expected, and will have better prospects in 2017.
Some of state owned banks have released the financial reports, including Bank Rakyat Indonesia (BBRI), Bank Mandiri (BBMRI), Bank Negara Indonesia (BBNI), Bank Tabungan Negara (BBTN).
During the third quarter of this year, the net profits of BBRI slightly increased by 1.84% on year on year basis to IDR18.62 trillion. BBTN, which mainly focuses on property credit, even booked a 32.6% of increase in the net profit to IDR1.6 trillion on year on year (yoy) basis.
However, the performance of BBMRI was sluggish during the period due to the high ratio of non-performing loans (NPLs). As of September 2016, the net profits of BMRI dropped by 17.6% from IDR14.58 trillion in September 2015 to IDR12.01 trillion.
Analyst at Semesta Indovest Aditya Perdana Putra estimated that BBTN has performed higher than expected during the period. The bank managed significant credit growth and a stable net interest margin (NIM). “Bank credits tended to have a slow growth, but BBTN had a stable credit allocation”, he said.
Some of major banks or Commercial Banks Group of Business Activities 4 (BUKU 4) banks experienced slow performances in the nine months of 2016. According to Aditya, the major banks needed quite high credit and operational costs so that the performances of the major banks seemed to be slower compared with minor banks. During the period, BUKU 3 banks enjoyed more flexible equities than BUKU 4 banks.
In general, banks show stable net interest margin (NIM). Aditya said that the sluggish performance of banking issuers related to slow national economy. “Banks were able to reduce the ratio of NPL, despite of the slow economic growth,” Aditya said.
Analyst at Danareksa Sekuritas Lucky Bayu Purnomo also said that the banking issuers have performed as expected. He is optimistic that the banking issuers may speed up their performances in 2017 along with the improved domestic macro economy.
For an example, BMRI are still expecting to raise repatriated funds from tax amnesty at the end of 2016 and the beginning of 2017. “In a fundamental manner, the growth in banking issuers may be driven by credit allocations. The transactions in retail and micro credits are expected to grow better in th next year”, Lucky said. The analyst is also optimistic that the banks, which are mainly focuses on the segments of micro enterprise and corporate, such as BBRI and BMRI may have business recovery.
Aditya said that banking sector may have larger opportunities to have larger chances of gains, while the ratio of price to book value (PBV) of the banking issuers is moderate. He said that the PBV ratio of BUKU 4 banks have stood at above 1, while the PBV ratio of BUKU 3 banks have stood at below 1.
Aditya predicted that BUKU 4 banks may secure a 10% of credit growth in 2017, or higher than 8%-9% of prediction in 2016. Meanwhile, BUKU 3 is expected to have a 14% of credit growth in 2017. Corporate credit is expected to continue to grow and involve in infrastructure projects. Therefore, the banks, which mainly focus on the segment of corporate such as BMRI and BBCA will gain more stable margin. “BBRI will remain solid in the sector of micro, thanks to government programs, which drive small industries," he said.
Aditya favors BBTN shares with buy recommendation. He predicted that BBTN will set the price of IDR2,500 per a share with a 29% potential upside. Aditya also recommends ‘accumulate-buy’ on BBNI shares with the price target of IDR6,050 per a share.
Meanwhile Lucky recommends ‘buy’ on BMRI and BBRI shares with target of price in 2016 stand at IDR11,950 and IDR13,700, respectively per a share.
(Muhammad Farid/Translator)
