1Q15
Bank Internasional Indonesia (BII) posted 1Q15 earnings growth of 34% YoY.
No dividends were declared.
1Q15 vs. 1Q14, YoY
The spike in earnings (+34%) came on the back of higher: (i) interest income (+9%) and (ii) fee-based income (+21%).
Net interest margin (NIM) widened 27bpts, thanks to better price discipline in lending and deposit taking.
Loan-to-deposit ratio (LDR) jumped 4ppts to 95% as loans (+5%) grew faster vs. deposits (flat).
Cost-to-income ratio (CIR) fell 2ppts to 64%, resulting from strict cost control.
Asset quality deteriorated slightly as: (i) gross impaired loans ratio (GIL) increased to 2.8% (+74bpts) and (ii) credit charge ratio ticked up 23bpts to 1.7%.
Annualised ROE improved 1ppts to 8% and similarly, regulatory capital ratios were enhanced by 2-3ppts. 1Q15 vs. 4Q14, QoQ
Contrary to the above, earnings dipped 29% due to higher: (i) opex (+14%) and (ii) loan loss provision (+30%).
NIM fell 12bpts as Bank Indonesia cut the benchmark interest rate by 25bpts to 7.5% in February.
LDR stood at 95% (-1ppts) as loans and deposits grew 1% and 3%, respectively.
CIR rose 5ppts to 64% as opex grew 14%, while income expanded at a slower pace of 5%.
Asset quality dipped given that: (i) GIL increased 57bpts to 2.8% and (ii) credit charge ratio nudged up 39bpts to 1.7%.
NIM compression likely to stay due to: (i) heightened competition for deposits and (ii) shift towards higher quality credit.
Asset quality issues should continue to linger – gross NPL ratio to stay at elevated levels, since commodity prices remain soft.
Forecasts left unchanged as BII’s contribution to overall Group’s PBT is immaterial (~3%).
Maintain OUTPERFORM
Our GGM-TP of RM10.26 is kept. This is based on 1.66x FY15 P/B, where we utilised: (i) COE of 8.5%, (ii) FY15 ROE of 12.2%, and (iii) terminal growth of 3%.
All in, we continue to like Maybank for its: (i) superior yield offerings of 6%, and (ii) extensive regional exposure in ASEAN 5.
Steeper margin squeeze.
Slower-than-expected loans and deposits growth.
Worse-than-expected deterioration in asset quality.
Adverse currency fluctuations.
Source: Kenanga Research - 30 Apr 2015
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