CIMB Sector Update – Banks

Maintain Overweight on the sector with Mandiri, Danamon and BTN remaining our top
picks. 1Q10 results were extremely strong, with more banks surpassing than merely
meeting consensus and our expectations. Provisioning upside drove the bulk of the
outperformance, followed to a lesser extent by operational growth. We now expect
accelerating loan growth to take over the engine, starting 2Q10 and further escalating
in 3Q10. We remain bullish on Mandiri, Danamon and BTN, but still have our doubts
on BNI, unless there is a rights issue coming to its rescue. We maintain Underperform
on BCA after seeing its weak 1Q10 performance, if one-off provisioning reversals are
stripped off.