Two good quarters in a row
Above expectations; target price raised to Rp1,900. At 30% of our full-year forecast, BBTN’s 1Q10 core net profit was ahead of our expectations, thanks to a recovery in the NIM to 5.8% and strong loan growth that again outdid the sector’s pace, this time by three times. 1Q reported net profit formed 33% of our FY10 estimate and 26% of consensus. Quarterly ROA strengthened to 1.3% from 0.9% in 1Q09 while cost-income plummeted to 58% as the management fulfilled its pledge for better cost controls. We upgrade our CY10-12 EPS by 21-30% as we raise our NIM assumption and lower our cost-income estimates. Our target price rises from Rp1,450 to Rp1,900, based on the DDM method with a 16% discount rate. We maintain our OUTPERFORM call on BBTN, which is one of our top banking picks.
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