CIMB Bank Mandiri Result note - Advancing towards '25'

(BMRI IJ / BMRI.JK, OUTPERFORM - Maintained, Rp5,000 - Tgt. Rp6,700, Financial Services)

Maintain Outperform on Mandiri. FY09 results beat consensus and our forecasts, with net and core profits at 116% and 110% of our forecasts, respectively. The difference came about as gross NPL ratio dropped to 2.8% on the back of NPL upgrades and repayments, much lower than our assumption of 3.8%. Even without the impact of provisioning, Mandiri's fundamentals have been improving, particularly its deposit franchise and fee income. We raise our FY10-11 EPS estimates by 9-11%, on adjusting fee-income assumptions and asset quality (beginning balance), which lifts our DDM-based target price to Rp6,700 from Rp6,200 (discount rate 16.1%). Mandiri remains one of our top banking picks for its excellent FY09 performance, which brings the bank closer to its 25% ROE target by 2014.