Mansek Bank Negara Indonesia:1H10 results in line with our expectation and consensus estimates (BBNI,Rp2,975,Buy,TP: Rp3,500)

BNI reported net profit of Rp1.9 tn for 1H10 (+60.9%yoy),in line with our expectation and consensus estimates.

The bank recorded higher than expected provisioning expenses in 2Q09 despite lower NPL during the quarter.According to the management,the allocation was intended to increase the bank ’s coverage ratio.At end Jun10,coverage ratio recorded at 122.5%in Jun10 from 121.8%in Mar10.

Meanwhile,loans was quite strong at 9.1%qoq in 2Q10 (-4.3%qoq in 1Q10),bringing LDR to increase to 68.2%at end Jun10 from 67.7%at end Mar10.Consumer loans posted the highest growth of 16.9%qoq to Rp20.5tn,representing 16.2%of total loans at end Jun10.

At current price,BNI is trading at 2011F P/BV of 1.8x and PER of 8.2x,respectively..We maintained our buy recommendation.