CIMB Long-Short View Similar, but different

Despite some similarities, Mandiri and BNI are actually different. Although Mandiri's ROE is more than double that of BNI, both banks are trading at the same valuations, which we believe is unwarranted. We believe BNI has run ahead of its fundamentals, with its valuation gap with Mandiri narrowing to the smallest level. On our view that the gap will widen and revert to mean, we downgrade BNI to Underperform from Neutral, while maintaining our DDM target price of Rp1,300. Catalysts for Mandiri could be ROE upside on normalising write-offs. Long Mandiri, short BNI.