BBCA - Steady growth trajectory; raising our ‘24F EPS

KBVS Update
Monday, 23 Oct 2023

BBCA: Steady growth trajectory; raising our ‘24F EPS
(Maintain BUY; TP: IDR10,520)

•    BBCA 9M23 earnings at IDR36.4 tn, grew 25.8% yoy, came above ours and consensus expectations at 79.5%/78.5% (vs 5yrs average of 72.7%). Net interest income grew 21.3% yoy, amidst mounting interest expenses (46.3% yoy).  Provisions dropped by 41.5% yoy, also helping 9M23 earnings grow higher than PPOP (19.1% yoy).

•    Loans grew 12.3% yoy in 9M23, beating our forecast and outperforming BI and OJK forecasts for the industry, backed by strong growth from corporate segment (+12.2% yoy) at IDR343.5 tn. On the liquidity side, TPF grew 6.2% yoy in Sep ‘23 and gradually improved qoq (vs. 1H23 of +6.0% yoy) and +4.1% yoy in 1Q23.

•    NIM inched up by 40bps to 5.5% and arrives within management guidance, while NPL recorded 20bps yoy better to 2.0%. Asset quality continue to improve with Sep ’23 CoC recorded 40bps healthier to 0.4%. The bank revised down its CoC guidance from 0.7%-0.8% to 0.5%-0.6%.

•    We revisit our model and adjusting our loan growth forecast for BBCA, as we see stronger ‘24F outlook. We cut ‘23F/‘24F CoC assumptions as we believe asset quality will continue to improve while raising loan growth assumptions by 10bps/50bps, which mainly driven by corporate and consumer segments. Our new assumption resulting higher ‘23F/’24F earnings estimates of 1.7%/2.3% vs our previous.

•    Maintain BUY with higher TP of IDR10,520. Our new GGM intrinsic value for BBCA is pegged at 4.8x ‘24F P/B while currently trading at 4.5x ‘24F P/B, or slightly above +1SD of 4.2x.

Regards,
Akhmad Nurcahyadi - KBVS Research