Banking - Another Solid 5M24 Results

KBVS Update
Wednesday, 10 July 2024

Banking - Another Solid 5M24 Results
(Maintain Overweight)

* Steady yet solid 5M24 operational performance and in-line earnings growth from banks under our coverage should translates as proven resiliency amid the continuing uncertainty.

* The bank under our coverage continued to record another solid bank-only earnings result, with an average growth of 7.9% yoy and a growth of 8.3% yoy in terms of absolute sum up to IDR75.6 tn vs. IDR69.88 tn in 5M23. After pocketing solid 5M24 run-rate, 1H24 in-line earnings growth is likely intact.

* Total loan grew strong (14.8% yoy) to IDR4,492.4 tn, surpassing industry growth (12.15% yoy) as well as the OJK and BI forecasts for banking sector this year and far above our lower-range expectation (10% yoy) for ‘24F total loan growth.

* Total deposit recorded another solid growth (11.1% yoy) and arrived far above total industry growth (8.63% yoy). We like the overall growth as it was largely driven by demand deposits (18.4% yoy) and thus brought CASA recorded 134 bps yoy higher to 11.2% compared to 9.8% in April 24.

* We believe the softened appetite for banking stocks will continue as the market anticipates another solid half-year earnings result. We might also witness possible revised-up earnings post-1H24 results, assuming all key sector drawbacks will start to diminish. We expect better key risk metrics for manageable, steady asset quality. An additional catalyst should come from placement with Bank Indonesia relaxation and a well-managed, improving CIR. On foreign ownership, BRIS remain as the top pick, while appetite on BBRI is improving post the sell-off. Maintain Overweight, with BBRI and BBNI as our top picks.

Regards,
Akhmad Nurcahyadi - KBVS Research