CLSA Bank Negara Indonesia (BBNI IJ) Outperform Rated TP: Rp3,100

What to Expect:
• Strong results would be 45%+ of our 10CL estimate, implying Rp1,639 or Rp108 per share. Our 10CL forecast stands at Rp3,641 or Rp239. Our estimates are 3% below consensus.

• We expect good results out of BNI this quarter, as higher recoveries should positively impact earnings. That said, we anticipate loan growth(<10% YoY) could lag the industry average (+18.6%YoY).

• Lending growth will likely be driven by the consumer portfolio with over 1tn in mortgages booked in the quarter. On the funding side, we anticipate CASA funds will increase to the 58% range, although this is attributed to employee bonuses and is likely going to decrease in 3Q. Total deposit expansion since YoY estimated to be around 13%, or flat with FY09 figures.

• We do not believe the results reported in the newspaper this morning are accurate, as the article stated that loan growth was 30% in 2Q10.

• We are more conservative on BNI's 2010 growth prospects than the remainder of our coverage universe, leading us to believe that there is a greater chance we will increase our estimates if loan growth is strong and credit continues to improve.

• Shares currently trade at 1.9x 11CL BV and 10.2x 11CL PE. BNI is the only bank in our coverage universe under 2.0x our 11CL estimate. OWT the banks- top picks remain BMRI, BCA and BRI