BRI reported YTD09 EPS of Rp.439, which reflected 78% of our 09CL estimates , and 27% YoY increase. However, looking at 3Q09 results alone we were not impressed with this quarter. We are awaiting a call with management to discuss the adjusted methodology for computing Cost of Fund, Daily average versus previous monthly average which by our back of the envelope estimate fuelled an approximate +60bp to 6.27% increase in COF.
The loan growth was solid, but revenues decreased by 6% (lower fee income and the cost of funds issue). The LDR (Loan to deposit ratio) increased by 202bps to 87.35% as the banks loan growth continues to outpace its deposit growth.
ROA and ROE went in opposite directions, as ROA declined by 44bps to 3.47% and ROE increased by 71bps to 34.23%. Net profit increased to Rp1.8tn
Pre provision profit down 15%
We were expecting credit to deteriorate, as we modelled a relatively high provision for 2H09. However, BBRI managed to exceed our expectations, increasing YTD provision to Rp5.4tn, vs. our 09CL estimate of Rp4.7tn. NPL/Loans increased by 22bps to 3.92% as further deterioration in
The LLR increased by 21% QoQ to Rp13.5tn as the continued credit deterioration we were projecting remains in place. We believe this is a direct result of BRI growing its non-micro loan portfolio excessively over the last 2 years.
Deposit Growth
Deposits increased by1.7% QoQ fueled by demand deposit growth of 6% to Rp38.7tn. The other deposit categories reported very little growth.
Equity
CAR decreased by 118bps to 13.5%
The bank employed more leverage in the quarter as Equity/Assets decreased by 37bps to 9.41%.
Overall, our initial thoughts from this are that BCA looks more attractive and BRI looks less attractive. We will have a full analysis tomorrow AM.
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