Indonesian Banking Sector: Slow-going

Although we believe the banking sector remains promising over the long term, short-term hiccups have emerged as banks struggle to grow loan portfolios in the midst of the present economic slowdown. § Continued weak mortgage lending on income tax enforcement: At a meeting last month with a tax consultant regarding the government’s sunset tax policy, we learned that tax officers…

Indonesian Banking Sector: SOE banks: Worse-than-expected NPLs

§ Asset-quality assessment based on three areas: Based on Banking Regulation number 14/15/PBI/2012, there are three main factors utilized to evaluate loan quality: (1) Business prospects, which cover sector performance, including corporate governance and competitive industrial-related rivalries; (2) Financial standing, consisting of earnings quality, capital adequacy, cash flow and market-sensitivity risks; and (3) Ability to service debt, including interest and…

BANKING SECTOR : New LFR regulation

From LDR to LFR Bank Indonesia, through new regulation of No. 17/11/ PBI/2015 states that banks can push their lending disbursement higher to reach 94% of their total funding (implementation will start in 1 August) before incurring a penalty of additional reserve requirement, an increase from the current benchmark of 92 % under the loan-to-deposit ratio (LDR) formula. Thus, the…

McDonald’s Indonesia to enlarges its cashless payment service to support higher sales transaction

McDonald’s Indonesia to enlarges its cashless payment service to support higher sales transaction. Previously, McDonald’s has cashless transaction service only with Visa and Mastercard, BCA, BRIZZI Card (BRI). As of May 2015, McDonald’s adds more partnership with T-Cash Telkomsel, and Gift Card from Kartuku (EDC from PT Multi Adiprakasa). Currently, McDonald’s has 159 outlets in Indonesia, 45% of which are…

Ten Indonesian big banks’ 5M15 net profit declined 4.2% YoY to Rp32.6tn (US$2.4bn)

Ten Indonesian big banks’ 5M15 net profit declined 4.2% YoY to Rp32.6tn (US$2.4bn). Among 10 banks, 4 banks generated negative 5M15 net profit growth. Those banks are Bank Rakyat Indonesia (BBRI -6.9% YoY NP growth), Bank CIMB Niaga (BNGA -91.7% YoY NP growth), Bank Danamon Indonesia (BDMN -62.1% YoY NP growth), and Bank Panin (PNBN -13.4% YoY NP growth). Yet,…

KUR revision preliminary update

Although not yet final, BRI has received a preliminary update regarding the govt’s proposed KUR lending rate reductions. For reference, the government proposes KUR lending rate of 12%. It will also provide an interest rate subsidy of 7% for micro (previously not available) and 3% for retail. This should bring effective LUR lending rates for the disbursing banks (such as…

Indonesia Bank update: Growth & policy risks

Worsening loans quality + growth = lower earnings Given worse-than-expected slowdown in GDP performance, we lower our overall loan-growth target to 10.9% y-y from 12.7% y-y, in line with most banks’ reductions in their 2015 loan growth targets to 12-14% y-y from 16-18% y-y. As of end-April, loans grew by 10.3% y-y to IDR3,735tn, translating to 1.0% growth ytd (vis-à-vis…

BBRI: Waiting for Government’s Remedy

 We cut our earnings on BBRI by 8% for 2015 and 2016 in view of lower loan growth and lower rate on KUR (22% to 21%). There is still a potential downside if the government will not give interest subsidy, which will lower NIM by up to 18bps. Trading at 2.1x P/BV 2015 we keep our Buy rating with…

Government to lower SME & micro loan

The government plans to lower SME & micro loans from previously ~21% to 17% by 1 July 2015. Chief Staff Presidency Luhut Binsar Panjaitan stated that SME & micro loans has been charging a higher interest rate compared to consumer loans eventhough it has lower NPL compared to consumer loans. He expects the government to lower SME & micro loans…

Banks – Hopeful Of Stability In 3Q15

Our recent meetings with the management teams of Indonesian banks suggest that two key issues (tax deduction for written-off loans and lower lending rate for KUR loans) that triggered the sharp sell-down of bank stocks in mid-June may not be as negative as feared. Still, banks agree that such regulatory risks would unnerve investors and are signalling a downward revision…

BANKING: Intip cuplikan berita bank hari ini

Hari ini, setidaknya ada tiga berita layak simak dari industri perbankan nasional. Berita utama yakni perlambatan aktivitas ekonomi sepanjang tahun 2015 memaksa para bankir merevisi target pertumbuhan kredit tahun ini. Rata-rata pemangkasan berada di kisaran 200 basis poin dari target awal. Paling anyar, tiga bank BUMN yakni Bank Rakyat Indonesia (BRI), Bank Mandiri,  dan Bank Negara Indonesia (BNI) akan menurunkan…

BBRI to distribute all of Rp30tr KUR at 12% pa in 2015

 According to Detik.com, the government has just decided in today’s cabinet meeting that BBRI will be the only bank to distribute the government-sponsored people credit (KUR) for this year, totaling Rp30tr, at 12% lending rate. The maximum credit for KUR is now set at Rp25m, up from Rp20m previously. This falls under micro loans, while the retail KUR (Rp25-500m…

e-toll opens to other banks

Starting 19 June 2015, Bank Mandiri (BMRI) will invite BBRI, BBNI and BBTN to participate in the electronic money, e-toll, which is used for the payment in toll roads and Jakarta public transportation

Banking system in Indonesia not in a critical stage

Banking system in Indonesia not in a critical stage. Banking stats published show the system has 20.98% capital adequacy ratio, 5.3% NIM and 87.6% LDR. NPLs are expected to increase but not reach 2009 levels. Currently NPLs are at 2.4%, below 4%. The acting head of the Deposit Insurance Corp (LPS) and Head of the National bankers Association expressed their…

Lowering KUR rate

Govt’s KUR loan program lending rate reduction Bloomberg reported that Indo govt and SOE banks have agreed to lower lending rates for KUR loan program. For reference, KUR loans are the govt’s lending program to provide funding for those that are not bankable. There are two types of these KUR loans – retail (from Rp100-500m / US$7,500-37,500 in ticket size)…

More on Government cutting lending rates for small business

News on the government cutting lending rates for small business reemerge yesterday afternoon, causing banks’ stock price to collapse after a short revival in the morning. Based on our talks with BBRI, our view remains that the rate cut is limited to micro KUR, which is a government lending program for the low income people. We have highlighted this on…

Indonesia banking: Kredit Usaha Rakyat new scheme to be set

BBRI NIM is expected to be cut 15 bps in our calculation· Wakil Presiden Jusuf Kalla mengatakan bahwa pemerintah berencana untuk meluncurkan skema baru untuk pinjaman kecil (KUR – Kredit Usaha Rakyat), yang berhenti di November 2015 setelah melayani segmen berpenghasilan rendah dari bulan November 2007. Rincian skema baru belum tersedia tetapi kami berharap: · Penurunan suku bunga dari 12%,…

BI limit interbank transfer fee, lower income for banks 

Effective June 2015 interbank transfer fee is capped at IDR5,000 and IDR15,000 for RTGS, implying 50% cut. We are looking at 1% negative impact to earnings from this cut. And this will also slowdown the pace towards a higher fee-based income vs. net interest income for Indonesia banking sector. Among the big four banks, BBCA has the highest portion of…

Kredit Usaha Rakyat – New Scheme to be Introduced

The government is preparing a new ruling on the small loans with interest rate to be set at 12% pa. While currently details are still limited, this may impact BBRI’s margin in the future as they are the largest player in this kind of market. Given the share price performance of late, we keep our Neutral stance on the sector….

Banks: Cutting targets

· Sustained macro weakness prompt banks to cut targets; we trim FY15-17F earnings by 5-7%; infra boost may be the only silver lining but with timing risk · Smaller banks at higher risk while BBRI worst hit among big banks based on our sensitivity analysis · BUY BMRI – attractive valuations after recent price weakness; BDMN’s 2016 turnaround story intact….

BBRI: Low impact from KUR rate cut

 Government and BBRI are in talks to cut micro lending rates.  Limited risk to earnings as micro KUR only covers 4% of loans.  Current price looks attractive for a high ROE bank, BUY with 12M-TP of IDR15,000 (FY15F: 13.6x PER & 3.2x P/BV). What’s New After removing retail KUR (loan size IDR25-500m) from the government’s lending program…

Indonesian Banking Sector: Pressured by tax rulings

Banks are currently under pressure, not only from a deceleration in loan growth and worsening asset quality, but also from two issues stemming from corporate tax rates: (1) the ongoing tax dispute on loan write-offs and (2) the upcoming proposed tax deductibility only being applicable to written-off loans of more than IDR50mn (USD3,800) with tax IDs (NPWPs). §2010 tax dispute…

Appealing on Potential Tax on Written Off Bad Debts

Banks have the potential to pay more tax on the previously written of bad loans which is considered as income to the borrowers as well as those bad debts with no tax identity numbers (NPWP). Most banks have prepaid all or part of the potential liabilities but the recent success of BTN on the tax court gives optimism to others….

Indo Banks – Positive April for BBRI and BJBR

Indo Banks · Overall April data promises a weak top line growth in Q215 – our coverage saw loan growth of 9% YoY vs 10% in Q115 and net interest income (NII) growth at a median 1% QoQ. Individual results: o BRI is the big bank exception: it appears to have cut its expensive time deposits MoM (meaning BMRI is…

New tax issue for banking sector?

A letter from the tax office stating that loan write-offs on customers without tax ID (NPWP) is non-tax-deductible raise a concern on how this might affect banks’ earnings. This and weak 2Q15 earnings expectation has put banks’ shares under selling pressure. We cross check with several banks on the tax-related issue, and we conclude that the risk to earnings should…

BBRI: BRI Raih Pinjaman Dari ECA Untuk Beli Satelit

PT Bank Rakyat Indonesia (Persero) Tbk menyatakan akan mendapat pinjaman dari Export Credit Agency, lembaga pembiayaan ekspor Amerika Serikat untuk mendanai pembelian satelit BRI Sat. Haru Koesmahargyo, Direktur Keuangan BRI, mengatakan jumlah pinjaman yang akan diperoleh bank tertua di Indonesia itu mencapai 70%-80% dari nilai satelit sebesar US$250 juta. “Pinjaman tahun ini juga, kami nunggu izin keluar dari Bank Indonesia,”…

BBRI: Margin Recovery

 Expect NIM to recover to ~8% in 2H15 on less exposure to high-cost deposits.  YE15 NPL should be maintained at par with the sector, with help from loan restructuring.  Reiterate BUY with TP of IDR15,000 (FY15F: 13.6x PER & 3.2x P/BV). NIM inching closer to 8% We expect BBRI’s 2Q15 loan growth to remain slow on weaker…

Banking: NPL in Details – Expect to Get Worse in 2Q15

 Data from 12 banks still shows that banks that went into their “non-traditional” industries and coal-related ventures suffer from rising NPL. The weak economy is likely to increase NPL in 2Q15, especially in certain sectors: construction, trading, transportation and mining. Maintain Neutral with BBRI as our top pick.  Data on 24 industries simplified into 11 industries. Bank Indonesia…

Banking – major lenders set eyes on infrastructure projects

Bank besar yaitu PT Bank Negara Indonesia Tbk (BBNI), PT Bank Mandiri Tbk (BMRI), dan PT Bank Central Asia Tbk (BBCA) membidik proyek infrastruktur tahun ini untuk mendorong kinerjanya. BNI CEO Achmad Baiquni mengatakan bahwa persuahaan berencana meningkatkan jumlah kredit infrastruktur antara Rp14 triliun (US$1,08 miliar) dan Rp15 triliun untuk mencapai Rp50 triliun pada 2015. Pada saat yang bersamaan, eksposur…

BBRI: New Board of Directors indicates continuity – less probability of kitchen-sinking?

● Of BBRI‘s new Board of Directors, six out of eleven members are new and five of those are from within BBRI. The new President Director Mr. Asmawi Syam has been with BBRI since 1980 and was the Director of Institutional and SOE business. The only external entrant is Deputy President Director Mr. Sunarso who was Mandiri’s Director of Commercial…

Indonesia Monthly Wrap March 2015: March Forward

· Key market drivers: After trading sideways most of the month, JCI rallied by 2.8% in last 4 days, closing March at 5519, +1.25% m/m, another record high. After pouring in over $800m in February, Foreign investors pulled out $413m in the month, but flows reversed right at the end. Bond yields rose 38bps bps to 7.44% in March. Rupiah…

BBRI: Meeting with new management: Key takeaways

Strong new team, led by Asmawi Syam We met with BBRI’s new board of directors on 1 April. Asmawi Syam, BBRI’s new CEO, has laid down a solid strategic plan to achieve earnings growth by maximizing internal resources, focusing on the micro-loan segment and improving cost efficiencies. Of the 11 board members, 5 directors are continuing their second term, 5…

BBRI / BBCA : Bank pangkas bunga kredit kendaraan bermotor

Lagi-lagi, bank menawarkan bunga menarik bagi debitur untuk pinjaman kredit konsumsi. Kali ini, perbankan memangkas bunga kredit untuk kredit kendaraan bermotor (KKB), setelah bank menggunting bunga kredit untuk kredit pemilikan rumah (KPR) sebesar 25 bps – 1 bps menjadi single digit. Henry Koenaifi, Direktur Konsumer Bank Central Asia (BCA), mengatakan, pihaknya memangkas bunga untuk kredit otomotif sebesar 100 bps atau…

Planned change to pension payments

The government aims to change pension payments to retired civil servants from monthly to one lump sum payments. This is aimed to make more efficient payments. From government perspective, the lump sum payments will also make for easier monitoring and as well as potentially minimising pension costs which have been ballooning to Rp92tr in 2015 (from Rp86tr in 2014). And…

BBCA: Tailwinds to headwinds

Falling interest rates will likely pressure margins for BBCA. Given the bank’s lackluster CASA generation and position of surplus liquidity pre-committed to borrowers, there is less room to move aggressively on time deposits than in prior cycles. Since interest rates were raised after 1H13, we estimate 35% of BBCA’s net interest income growth was due to NIM expansion, and as…

BBRI is targeting 16% profit growth for 2015

BBRI targets 2015 profit of IDR28t, implying 16% YoY growth. The bank is optimistic they can balance this goal by maintaining NPL below 1.5%. Our forecast are more conservative than the management’s guidance, with net profit 3% below the bank’s internal target. Nonetheless, BBRI will still offer more attractive ROE compared to peers. Maintain BUY with TP at IDR14,000 (FY14F:…

Investors Positive, but Lots of Questions on Rp and Infrastructure

> Still cautiously optimistic — We met with more than 40 investors in Hong Kong and Singapore over the past four days. Their main questions were primarily on 1) the weak rupiah and aggressive tax target, 2) infrastructure spending and 3) government intervention. Overall, most investors were still neutral to positive on Indonesia, having seen the implementation of several reforms…

BBRI membagikan dividen sebesar Rp7,27 triliun dari laba bersih perseroan tahun 2014 yang sebesar Rp24,24 triliun

PT Bank Rakyat Indonesia Tbk (BBRI) membagikan dividen sebesar Rp7,27 triliun dari laba bersih perseroan tahun 2014 yang sebesar Rp24,24 triliun. Dividen ditetapkan 30% dari laba sebesar Rp7,27 triliun dan sisanya untuk menambah laba ditahan. Pembagian dividen ini tidak terlepas dari kinerja perseroan tahun 2014 yang meningkat signifikan di semua aspek keuangan.

BBRI: new members of BoC and BoD and 30% dividend payout ratio

 BBRI just appointed their Board of Director and Board of Commissioner members in the AGM. Similar to BBNI, the members of BoD has been reduced to nine from ten and all of the four new members come from BRI itself. More changes is seen in the BoC members, which consists of eight people, five of them are newly appointed….

BBRI to run branchless banking project

Bank Rakyat management states its readiness to run branchless banking program with agent recruitment target of 35,000 for this year (although the company is optimist it can go beyond that to 50,000 BRIlink agents). People can access micro credit, deposit, and insurance through these agents. BBRI targets 17-18% micro credit growth this year.

BBRI: Pelemahan Rupiah Tak Berdampak Signifikan Bagi BRI

Pelemahan nilai tukar rupiah terhadap dolar AS diklaim tak berdampak signifikan bagi bank wong cilik yakni PT Bank Rakyat Indonesia (Persero) Tbk.  Mengapa? Corporate Secretary PT Bank Rakyat Indonesia (Persero) Tbk. Budi Satria pun meyakini perseroan tak terpengaruh dengan kondisi kian menguatnya Dolar Amerika. Pasalnya, dia menuturkan hanya 10% dari total pinjaman yang disalurkan perseroan dalam valuta asing. “Yang terpengaruh…

Banks plan for 50-100bps of interest rate reductions in lending rates in business plans

Banks plan for 50-100bps of interest rate reductions in lending rates in business plans, says Financial Services Authority (OJK). BBTN is lowering mortgage rates by 50-75bps this year. BBCA has lowered lending and deposit rates in March following the rate cut. BBRI has lowered deposit rates by 75bps and non-micro segment rates by 25bps (micro was not raised during the…

Government guided a single digit lending rates, no deadline

In addition to targeting below 5% inflation, Indonesian government expects banks to also lower lending rates to a single digit without specifying the timeline for the target. We think the lower rates will be more applicable to corporate credit and could be limited to government-related projects. Currently the base lending rates (BLR) for corporate loans stood at 10.5-11% for banks…

BBRI: BRI perkirakan margin bunga tahun ini turun

Bank Rakyat Indonesia (BBRI) memprediksi Net Interest Margin (NIM) tahun ini mungkin lebih rendah dibanding margin bunga tahun lalu. Hal ini tak lepas dari kondisi ekonomi makro yang belum pulih pada tahun ini. Sekretaris Perusahaan BRI Budi Satria mengatakan, bank tidak menargetkan kenaikan NIM tahun ini. “Karena kondisi ekonomi indonesi tahun ini masih dipengaruhi oleh kondisi ekonomi makro dunia yg…

More bank rates to be cut

Starting March 2015, Bank Rakyat Indonesia (BBRI) will be the first bank to lower its deposit and lending rate as responds of lower BI rate and government’s call to lower lending rate. For deposit rate, BBRI will lower its rate by 75bps, down to 4.5%-7.25%. Meanwhile, lending rate will be cut by 25bps for all lending sector.

State banks asked to share ATM

The minister of state owned enterprises, Rini Sowmoarno, has asked the state banks to consolidate their ATMs in order to keep the operating costs low. This will in the end allow banks to lower their lending rates and hence margin. The government is contemplating to implement single ATM for state bank with BBRI, as the future communication satellite owner, will…

Indonesian Banking Update: Building up hope

§ Lower inflation rate in 2015F: In response to lower inflation rates, Bank Indonesia (BI) on 17 February cut its benchmark interest rate by 25bps to 7.50%, its first cut since 2012. BI expects 3-5% y-y inflation in 2015, and our economist now forecasts the CPI to hit 4.31% y-y over the period (see Unexpected 25 bps cut). That said,…

Perintah Jokowi ke Bank BUMN: Turunkan Bunga Kredit

Presiden Joko Widodo (Jokowi) mengumpulkan beberapa menteri ekonomi dan direktur utama (Dirut) dari bank-bank Badan Usaha Milik Negara (BUMN) di komplek Istana Negara. Jokowi meminta agar bank pelat merah segera menurunkan bunga kredit untuk mendorong rencana pembangunan pemerintah. Hadir dalam pertemuan ini adalah Menko Perekonomian Sofyan Djalil, Menteri BUMN Rini Soemarno dan Wakil Menteri Keuangan Mardiasmo. Kemudian hadir juga Dirut…

BBRI: People’s credit continues

People’s credit continues The high asset growth in 2014 resulted in lower NIM of 8.2% and we expect the trend to continue, compensated by higher volume. BBRI introduced the new Kupedes Rakyat, which will replace micro KUR. We are not concerned over the rising NPL and maintain our BUY call with TP of Rp13,500. FY2014 results review. BRI ‘s Rp24.24tr…

Ciptadana (KI)Daily Technical View  13 February 2015

We expect JCI to trade between 5,300 (support) – 5,375 (resistance) level today DILD: BUY at  Rp 570-Rp 580 Comment: Testing support level EXCL: Sell on Strength at  Rp 5,350-Rp 5,400 Comment: Testing resistance level APLN : Buy on Weakness at  Rp 420 – Rp 410 Comment: Easing bearish momentum BBNI: SELL at Rp 6,600 – Rp 6,575 Comment: Reversal…