Mandiri Sekuritas Bank Mandiri: cut in lending rate (BMRI, Rp4,700, Not Rated)

Mandiri will reduce its lending rate by 50bps, and with the latest cut, Mandiri has slashed its lending rate by 2.25% in 5 rounds of reduction. The cut will be effective from November 1, 2009. Mandiri first cut is 50bps in January 2009, followed by another 25bps cut in April 2009, 50bps in June 2009, and 50bps in August 2009. Mandiri’s average lending rate is currently 10-11% p.a. We expect Mandiri to book Rp16.4tn in net interest income, a NIM of 5.1% for FY09, and net income of Rp6.1tn. At Rp4.700/share, Mandiri is trading at 16.2x PER09F and 2.8x P/BV09F and 13.7x PER10F and 2.5x P/BV 10F, respectively. We have no recommendation for Mandiri, due to our status as its subsidiary.