BNP Paribas BANK- NEW RR: MANAGEABLE EARNINGS' REDUCTION...

BI is increasing its reserve requirement (RR) to 8% fr 5% effective 1 Nov to absorb excess liquidity (around IDR 50t/USD5,6b/3% of total IDR deposits) after inflation accelerated in the past 5 months. * BI opted to keep its benchmark rate at 6.5% and Raising RR is in line with the govt and central bank’s intention to favour GROWTH vs inflation. * Most impact on BBCA IJ (-6% of 2011 earnings), BBNI IJ (-5% of 2011 earnings) and BMRI (-3% of 20011 earnings). But other banks with the likes of BBTN, BNII BDMN, BBRI, BTPN & PNBN is only 2 to 3%. That said, Tjandra's TOP picks remain: Bank Negara (BBNI IJ) and Bank Danamon (BBNI IJ) which offers more upside compared to other banks in his view. * I personally think that BBRI also is an ATTRACTIVE alternative as the bank has shown improvemnent in NIM and one the least impacted re the new ruling in terms of earnings (-2%) and offers better liquidity as well in term of tradinmg point of view.. BUY BBRI. * Attached is the table of banks' earning vis-a-vis new RR rulings.