Bank Danamon reported after the market closed yesterday and they were ahead of our expectations and well ahead of consensus. Net profit of Rp701bn was 24% of our FY10 estimate of Rp2.97tn, whereas 1Q is seasonally the slowest quarter of the year. We will review our recommendation and earnings forecast in our follow up note, both are under review.
1Q10 earnings of Rp701bn were up 65% YoY fueled by a 12.6% NIM and YoY revenue expansion of 24%. The COF decreased to 5.4% as the longer maturity time deposits matured, we do not anticipate any more COF improvements in 2010.
Provisions decreased from 2H09 levels as we anticipated, and no extraordinary items were recorded.
Loan growth is starting to ramp up, the bank booked Rp1tn in loans in the month of march alone and the pipeline is robust. Overall QoQ loan growth was up 2%, a solid figure given seasonality impact.
From indications, it appears Henry Ho will be introduced as the new President Director on April 29. This is not confirmed.
ROA and ROE improved to 2.9% and 18% in the period while NPL's decreased to 4% from 4.5% in 4Q09.
Overall the results were solid and ahead of estimates. We expect slight upward revision to our forecast and we note that we were already 10% ahead of the street. We expect larger earnings revisions of street estimates.
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