● BMRI reported FY09 net income of Rp7,155 bn, +35% YoY, 8% above our estimates and 13% ahead of consensus' forecast. The 4Q09 earnings upside of 87% YoY (50% QoQ) was driven largely by lower-than-expected credit costs. BMRI’s PPOP was in line with our estimates of Rp12,430 bn, up 18% YoY, with 4Q09 PPOP up 13% QoQ to Rp3,218 bn.
● On asset quality, BMRI managed to decrease its gross NPL to an astounding 2.6% in FY09 from 4.7% in FY08. Provision coverage reached 231% in FY09 from 139% in FY08. BMRI's robust asset quality and provision position provide yet another evidence on the
bank's successful transformation.
● Despite its strong fundamentals, BMRI is trading at 21% and 52% discounts to MSCI Indonesia and MSCI NJA Banks, respectively. We see further rerating potential when BMRI provides more evidence on its ability to sustain its improved performance. We
maintain our OUTPERFORM rating and target price of Rp5,900.
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