BASML BMRI: Resilient 2008

All good, it appears…… Bank Mandiri hinted it would post Tier 1 ROE of 22% for 2008 during analyst meeting last week. Assuming an average Tier 1 capital of Rp23.5tn, the bank will record a bottom line of ~Rp 5.1tn for 2008, in-line with Arief's forecast and consensus'. Solid FY08 driven by strong loan growth (+26% YoY to Rp 175tn) and rising NIM (>5.2%). Gross NPL ratio continued to trend downward, falling 20bp QoQ and 420bp YoY to 4.7% as at end-08. NPL coverage came in at above 120%, vs 138% as at Sept '08 and 105% at end-07. Management said the bank wrote off Rp 5.5tn worth of bad loans during 2008. They also indicated the bank has ample liquidity, in both Rp and US$. The improvement in the US$ liquidity resulted from BMRI's success in persuading some borrowers to convert their US$ loans to Rp loans. As at end-08, BMRI's US$ loan portfolio plunged 17% QoQ and 21% YoY to U$ 3.3bn. BMRI currently has excess US$ liquidity of ~US$1.6bn.