CLSA Bank Rakyat (BBRI IJ) update from Bret

Sofyan Basir (President Director of BRI) reportedly stated that BRI will pay approximately Rp200bn for an 80% stake in Bank Agro.

If this is the case, the deal would be very attractive to BRI per our computation of metrics below.

ROE and ROA indicate this asset is relatively unprofitable as is.

BRI's lower cost of funds could help the bank, as by our calculations, time deposit rates in 2009 at AGRO IJ were 10.60% vs. BRI's rate of approximately 6.75%. This 400bp funding improvement could drive pre tax earnings at AGRO up by Rp70bn.