>> Despite the suggested adoption of IFRS starting in 1Q10, Indo banks are still reluctant to write-back general provisions to boost their book value per share or net income. They have all chosen the prudent approach. Some banks are not even ready with their accounting systems.
>> But......Indo banks should see better-than-ever correlation between loan growth and net profit growth, sequentially. Because of the IFRS, they will likely make less bad debt provisioning on new loans.
>> JPMorgan is forecasting BBCA to post a loan growth of 2% qoq and 18% yoy. BDMN to post 1.4%/flat. BMRI to post 1.6%/13%. BBRI to post 1.2%/27%.
>> For state banks, CEO changes will happen in May, potentially affecting BMRI, BBRI, and BBNI. The state banks CEO may be incentivized to show as good as possible performance ahead of the change.
>> BBRI may post strongest yoy and qoq loan growth, so 1Q10 may still act as a positive driver for the stock (JPMorgan research rates U/W). For this bank, 1Q10 results will be a balancing act between higher provision need for new NPL creation, against lower provision need for new loan creation. I think the balance will tilt towards the latter for 1Q10 (Sales call: Trading Buy).
>> BMRI will also post strong yoy loan growth, while provision will (almost) certainly decline from the high base last year. Our contrarian view on the bank is that (1) there will be no rights issue in 2010, (2) less than 50% chance of rights issue in 2011, and (3) more than 50% chance that Agus Marto will stay as CEO.
>> Sales call - buy state banks BBRI, BMRI, and BBNI.
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