Receh.in - Indonesia's four largest banks - Bank Central Asia (BCA), Bank Negara Indonesia (BNI), Bank Rakyat Indonesia (BRI), and Bank Mandiri - have reported solid net profits for the period ending November 2022 (11M22), reaching 95% of Indo Premier's projections.
Both BCA and BNI outperformed expectations. The strong net profits were supported by growth in pre-provision operating profits (PPOP), which rose 15% year-on-year (yoy) and 41% month-on-month (mom).
However, despite rising interest rates, net interest margins (NIM) fell 6 basis points yoy, creating opportunities for NIM increases this year. "We believe the performance of all banks will outperform," wrote Indo Premier Securities analysts Jovent Muliadi and Anthony in the conclusion of their research published on Tuesday.
In total, the net profits of the four large banks for 11M22 (up 48% yoy and 14% mom) exceeded the consolidation estimates of the Research Team by 95%, but were in line with consensus. "BCA and BNI have exceeded our expectations," they said.
The Research Team also noted that the strong PPOP growth (up 15% yoy and 41% mom) was supported by strong net interest income (NII, up 10% yoy and 8% mom) and moderate operational expenditure (opex, up 1% yoy and down 17% mom).
Provisions fell 32% yoy, bringing the 11M22 cost of capital (CoC) to 1.6% compared to 2.6% in 11M21 (flat mom), below the full-year guidance of 1.8-2%. "NIM slightly fell to 5.4% in 11M22 from 5.5% in 10M22/11M21. Loans and deposits grew 10% yoy (flat mom)," the Research Team added.
BCA 11M22 results: outperforming the market due to lower provisions
BCA's standalone net profit of IDR 36.5tn ($2.6bn) in 11M22 (up 21% yoy and 18% mom) was above the Research Team's and consensus estimates of 102% and 94%, respectively. PPOP growth of 11% yoy and 27% mom was supported by NII (up 12% yoy and 2% mom) and non-II (up 12% yoy and 54% mom). "Provisions fell 42% yoy, meaning CoC 11M22 was 0.7% (vs. 1.3%/0.7% in 11M21/10M22), below its target of 0.8-1%," added the Research Team.
BRI 11M22 results: normalising monthly PPOP and net profit
BRI's standalone net profit was IDR 44tn in 11M22 (up 58% yoy and 22% mom), relatively in line with the Research Team's and consensus estimates of 90% and 91%, respectively. Among the large banks, BRI recorded the strongest monthly growth in PPOP and profits. PPOP growth of 17% yoy and 131% mom was supported by higher NII (up 5% yoy and 28% mom) and a reduction in opex (down 7% yoy and 35% mom). Provisions fell 25% yoy, bringing the 11M22 CoC to 2.5% from 3.5% in 11M21, below its target of 2.7-2.9%. "BRI's loan growth was the highest among large banks at 16% yoy (flat mom)," the Research Team said.
BNI 11M22 results:
BNI's standalone net profit was IDR 24.2tn in 11M22 (up 32% yoy and 5% mom), slightly above the Research Team's and consensus estimates of 97% and 95%, respectively. PPOP growth of 7% yoy and 4% mom was supported by higher NII (up 9% yoy and 3% mom) and a reduction in opex (down 7% yoy and 5% mom). Provisions fell 27% yoy, bringing the 11M22 CoC to 1.7% from 2.6% in 11M21, below its target of 1.8-2%. "BNI's loan growth was the second highest among large banks at 13% yoy (flat mom)," the Research Team said.
Bank Mandiri 11M22 results: in line with expectations
Bank Mandiri's standalone net profit was IDR 32.5tn in 11M22 (up 28% yoy and 8% mom), in line with the Research Team's and consensus estimates of 92% and 90%, respectively. PPOP growth of 8% yoy and 14% mom was supported by higher NII (up 8% yoy and 6% mom) and a reduction in opex (down 3% yoy and 7% mom). Provisions fell 36% yoy, bringing the 11M22 CoC to 1.9% from 2.8% in 11M21, below its target of 2-2.2%. "Mandiri's loan growth was the lowest among large banks at 9% yoy (flat mom)," the Research Team said.
Overall, the Research Team expects the strong performance of Indonesia's four largest banks to continue in the coming months, supported by improving asset quality and healthy loan growth.
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