NISP Bank Rakyat Indonesia posted strong net income in 2009 period (BBRI, Rp8,250)

• During 2009 BRI managed to post Rp7.3tn of net income, 22.7% YoY higher compared to Rp6.0tn a year earlier. The bank’s net income managed to surpass the consensus’ expectation of Rp6.9tn for the period. This was due to BRI’s ability to post robust growth on loans that reached Rp205.5tn last year, or increased by 27.6% YoY from Rp161.1tn a year earlier.

• The bank still maintains MSME’s loans composition as it gives better yields than the corporate loans segment. During 2009, total MSME loans reached 81.37% of the bank’s total loans, which was higher than 80.88% in 2008 period.

• In TPF side, total deposits grew by 26.1%, or relatively inline with loans growth
in the corresponding 2009. Most of the TPF are still dominated by low cost funding, which accounted for 60.6% of the bank’s total deposit account.

• The combination of favorable assets yield and low cost funding helped the bank
to post a higher net interest income of Rp22.9tn last year, 16.6% YoY higher from Rp19.6tn a year earlier. This was also added by stronger other operating income of Rp3.3tn (+30.7% YoY) from higher fee based income.

• Thus, despite BRI posted a two fold increase in provision, the bank still managed
to book a strong growth in its bottom line.

• On asset quality side, NPL edged higher to 3.5% in 2009 from 2.8% in 2008, however there was a significant improvement during 4Q09 where the bank’s NPL improved from 3.9% in 3Q09 to 3.5% in the end of 4Q09. The bad debt amount also decreased to Rp6.6tn in 4Q09 from Rp7.5tn in 3Q09. Thus the bank decided to lower its provision expenses to Rp407.8bn from Rp2.7tn in 3Q09. The bank felt comfortable with its NPL coverage ratio that reached 1.6x at the end of 2009 period.

• Going forward, BRI aims to maintain its loan growth at 20% YoY – 25% YoY and
aims it NIM to range between 8.5% - 9.5%.

• BBRI is trading at 2010F consensus PER of 11.7x and PBV of 3.1x.