BBCA - Solid 11M23 earnings

KBVS update
Tuesday, 9 Jan 2024

Solid 11M23 earnings
(Maintain BUY; TP: IDR10,520)

-    BBCA recorded another solid monthly performance in Nov ‘23. Bank only earnings reported grew by 21.1% yoy, mainly driven by solid growth from top to bottom. In all, 11M23 bank only earnings reached 94.8% of our ‘23F consolidated earnings for BBCA of IDR 46.6tn or above expectation vs. 5yr hist. run-rate of 91%.

-    Loan grew by 11.5% yoy (KBVS ‘23F: 10.5% yoy), better compared to previous month of 10.3% yoy (10M23) and surpassing banking industry loan growth by 173bps (9.74% yoy). Ceteris paribus, ‘24F loan growth likely to record better vs ‘23F growth which will be driven by corporate and consumer segments.

-    NIM inched up by 40bps to 5.5% and arrives within management guidance. 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% (see our previous report). We also like BBCA ability to managed its cost to income (CIR improves 90bps yoy to 33.6% in 9M23).

-    We believe ‘24F will be another solid year for BBCA. We expect earnings to record stronger growth at 15.3% yoy vs ‘23F at 14.3% yoy, on the back of stable NIM, manageable cost to income and steady soft provisions. We also expect BBCA to get benefit from a potential peaking interest rate in ‘24F. Manageable cost of fund and carefully selected loan repricing are another two key components which will assist solid earnings growth to continue standstill.

-    Maintain BUY with TP of IDR10,520. Despite premium, BBCA remain look attractive. Our GGM intrinsic value for BBCA is pegged at 4.8x ‘24F P/B while currently trading at 4.3x ‘24F P/B, or slightly above +1SD of 4.2x.

Regards,
Akhmad Nurcahyadi - KBVS Research team