CIMB Banks Sector Note - Time to differentiate

Banks' valuations have been realigned with their ROEs in the past three weeks, as we had expected. We believe banks with superior growth will outperform in the next phase. Mandiri stands out now that its NPL ratio target has been met and there is room for further NIM expansion. Our analysis shows that Mandiri's ROE could rise by 3% and P/BV valuations, by 0.5x. Upside from loan growth remains for Danamon and BRI, in our assessment. Maintain Overweight on the sector with our top picks being Mandiri, Danamon and BRI, in that order.