Mandiri Sekuritas Bank Mandiri: FY09 results 18% above our expectation and 12% above consensus estimates (BMRI, Rp5,000, Not Rated)

􀂄 Bank Mandiri recorded a net profit of Rp7.2tn (+34.7% yoy) in FY09, which was better than our expectation and consensus estimates.

􀂄 The bank recorded lower than expected provision expenses as the bank managed to reduce its NPL substantially to 2.6% at end 2009. Such decline in NPL was possible due to upgrade and some repayments on the troubled loans. Bank Mandiri recorded Rp1.6tn upgrades in its corporate loans, representing 74% of the total upgrades during the year.

􀂄 During the analyst meeting yesterday, the bank highlighted its success in strengthening its deposit franchise value. The bank managed to enhance its transaction capabilities as reflected on a significant increase in the transaction volume through its electronic channels as well as an increase in the number of cash management users. In 2010, the bank aims to have 15- 18% yoy loan growth (vs. 13.6% yoy in 2009) and managed its NPL below 4%. The bank also targets its coverage ratio of above 140% (at end 2009, coverage ratio was recorded at 229%).

􀂄 At present, Bank Mandiri is trading at 2009F P/BV of 2.6x and PER of 14.6x. We have no rating on this bank.