DBS Bank Rakyat Indonesia: Buy; Rp9,550; TP Rp11,100; BBRI IJ

Stock split plan and expansion in wet market in the pipeline

BBRI’s CEO, Sofyan Basir, stated that the bank plans to do the stock split if the share price reach Rp10,000/share by the end of this year. Basir reaffirmed the plan to increase the liquidity with ratio 1:2 or 1:4. The decision is pending the approval of shareholders at EGM that will be held to obtain the approval on AGRO acquisition plan.

On another remark, Basir stated that BBRI is seriously expanding the business to wet-market by opening additional 400 unit of Teras BRI (BRI terrace) from exisiting 217 units since its first rollout in March 2009. By the end of 1H10, Teras BRI has raised Rp135.41bn of third party funds and disbursed credit of Rp333.61bn. This strategic plan has raised the bar for banks that compete in wet market mainly BDMN.

DBS Bank Rakyat Indonesia: Buy; Rp9,550; TP Rp11,100; BBRI IJ

Intensifying banking services in Ramadhan
Bank Rakyat Indonesia recorded an increase in remittance transactions from Indonesian migrant workers during the last two months approaching Ramadhan. Up to end of June, BBRI remittance business has reach record amount of IDR 1.3t with major sources from migrant workers in Saudi Arabia and Malaysia . BBRI hopes to secure IDR 2 - 3t from remittance which represent 67% growth from last year achievement of IDR 1.8t. SME loans are also seeing double-digit growth of 20-22% equivalent with total credit of IDR 2 tr. Many SMEs are intensifying their businesses during fasting month up to end of the year. In anticipation of holiday weeks, BBRI has topped up cash of additional IDR 13.6tr, up 20% from last year sum. BBRI anticipated total cash required for this month is IDR 28.6tr, thus BBRI plans to deploy more ATMs to reach 5,100 units until mid of September 2010.