CIMB Bank Danamon Result note - Moving on to the next cycle

Result note - Moving on to the next cycle - by Mulya Chandra CFA
(BDMN IJ / BDMN.JK, OUTPERFORM - Maintained, Rp4,750 - Tgt. Rp6,700, Financial Services)

We raise our DDM-based target price for Danamon to Rp6,700 (from Rp 5,900) while maintaining our Outperform rating, as we roll forward to CY10. Danamon's 3Q09 results were in line, indicating that its NPL cycle could be ending. Although overall cost of credit rose, cost of credit at its core businesses, DSP and Adira Finance, fell in 3Q09. We believe the next thing could be recoveries of previously written-off loans. 3Q09 NIM shot up to the highest ever, at 13%, on an improving deposit franchise.