BMRI - LAR to drop further as credit restructured improved

Bank Mandiri (BMRI) noted that LAR has decreased significantly from 17.8% in Nov21 to 12.6% in Nov22, mainly driven by improving Covid credit restructured collectability. The bank expect the trend to continue and targeting LAR to arrive within the range of 10%-12% in 2023. (Source : Kontan). Comment: We believe the reopening economy and recovery momentum will overall continue and help the LAR figures to be improve further in 2023. Despite our expectation on soften earnings growth on high base effect, we still view that continuing loan demand and ample liquidity coupled with manageable provisions will become as a solid fundamental based for key risk metrics to continue improving. Maintain BUY for BMRI with a target price of IDR11,250.