CIMB Bank Central Asia Result note - Mending leaks with provisioning coverage

(BBCA IJ / BBCA.JK, NEUTRAL - Maintained, Rp3,325 - Tgt. Rp3,600, Financial Services)

We remain Neutral on BCA, despite slightly better-than-expected 1Q09 results, attributable to low costs and a sustained NIM. The bank was burdened by two huge loans turning sour in 1Q09. Provisioning coverage dropped from 408% to 192% as the bank attempted to minimise the damage to its P/L. NIM was kept above 7%, but we believe it should come down to 6% level. Cost-to-income ratio was 41%, but is very likely to revert to its historical mean of around 45%. Maintain Neutral and DDM-based target price of Rp3,600.