Remaining very profitable
We trim our FY11-12E earnings estimates, taking account of the imminent bond issuance and the slightly lower 3-year loans growth to stay aligned with the deposits growth. This year’s forecast, however, is intact. The bank’s 1H results were not a surprise at all. Most of the gains are largely due to strong mass-market loans growth, aside from the absence of derivatives provisioning. The NIM stayed at an impressive 11.6% and is likely to increase in 2H, as efforts to tackle high cost funding shall reduce the COF. Meanwhile, the ROE improved to 19% despite the bank’s high capitalization. BDMN remains our top pick in the banking sector given its strong capital base, robust NIM in excess of 11% (post adjustment of PSAK 50/55), and sustainable loans growth. Its exposure to domestic consumption growth shall also ensure that our 38% 3-yr CAGR EPS growth estimate will be met. We set our 12-mth DDM TP at Rp6,850 or 3.0x FY11 PBV. BUY maintained.
The power of the mass market
Our loans growth estimate is still 21% for 2010, a figure that can easily be achieved. Thus far, BDMN’s loans have grown by about 12%, thanks to the bank’s staggering 28% YoY loans growth in the mass market. This segment has accounted for 56% of the total loans portfolio - and will likely stay at this level for the remainder of the year. Loans expansion is seen in all segments, with the exception of retail loans - which only contribute about 7% of the bank’s total loans portfolio. BDMN’s strategy, however, remains in place; that is to grow its consumer loans, a segment that could generate a very healthy NIM of 18-20% and an asset yield above 18% - allowing BDMN to compensate for its high COF and operating risks. Moreover, we do not exclude the possibility that the bank will also grow its corporate loans, as they are needed to boost the bank’s cross-selling activities.
Reducing its COF
The bank’s COF has continued to decline. It dropped to 5.4% in 2Q10, down from its peak of 8.39% in 1Q09, mainly due to a higher proportion of CASA – some 39%, aside from re-pricing of expensive time deposits. On a year-to-date basis, CASA has grown by as much as 16.5% thanks to the bank’s innovative products and infrastructure improvements. This includes expansion of its ATM network – around 250 ATMs this year – as well as adding new branches and transactional facilities. However, the overall deposits growth has been unexciting so far. This also suggests that the bank’s search for funding may potentially tilt towards high cost time deposits. Funding has become critical, as the LDR reached 99% in 1H10. Meanwhile, the bank’s imminent Rp5trn bond issuance will only secure next year’s loans growth. Hence, the proportion of CASA is likely to decline in 2H10. Our forecast assumes the proportion of CASA stays at 30% this year, before increasing to 35% next year.
Better loan quality
Our gross NPLs estimate remains at 3.1% at year-end. 1H10 NPLs reached 3.4%, down from 1Q10’s 4.0%, consistent with the economic upturn. The mass market still contributes the largest NPLs – some 48% of the total NPLs - or NPLs of 1.6% - yet lower than 1Q10’s 1.7%. This is not so much due to write-offs, the management believes, but more on the recovery of bad debts. Indeed, the proportion in the special mention category increased to 10.6% of total loans, suggesting loan upgrades were more likely than not. The cost of credit has been relatively unchanged on a QoQ basis, but is likely to see a reversal toward the end of the year.
1H10 Key highlights:
1H10 NPAT hit Rp1.4trn, +65% YoY thanks to higher fee based income aside from the absence of extraordinary items related to derivative transactions. On a QoQ basis, earnings actually grew by 4% QoQ, supported by a slight decline in the cost of credit and fees related to credit. Loans growth has picked up, reaching 10% QoQ.
The NIM eased to 11.6% from 4Q09’s 13.4%, largely due to reclassification of acquisition costs from previously “deducting fee income” to now “deducting interest income”. NPLs improved slightly to 3.4% from 1Q10’s 4.0%, with the micro lending business contributing most of the NPLs. Provisioning coverage is almost 100%.
CAR is strong at 19.5% as of 2Q10 prior to implementation of Basel II operational risk. With operational risk, CAR is about 18%. Meanwhile, ROAE improved to 19.3% from 1Q10’s 18.0%.
In short, no surprises. Worth noting, however, is reclassification related to implementation of IFRS. This has led to a decline in interest income, hence its asset yield. Indeed, the asset yield dropped by 150bps from 4Q09’s 18.3%, more than offsetting the 60bps decline in the quarterly COF. NIM therefore eased, although it was still higher than 2Q09’s 10.8%. As for the remainder of the year, the bank’s guidance is for an 11-12% NIM.
Profitability is strong, with the company posting its largest ever quarterly profits. Derivative-related provisioning is no longer an issue, with the company now seeing a huge jump in ROE, despite last year’s rights issue. All in all, the bank is looking for 20% ROE by the end of the year.
Higher profits were also thanks to the slightly lower cost of credit of Rp562bn in 2Q10, or down from 1Q10’s Rp578bn. This is despite a higher cost-to-income ratio of 50.8% compared to 1Q10’s 47.5%. Note that the cost of credit related to the mass-market business declined, even though the bank aggressively grew its mass-market business– an effective and efficient strategy.
Loans growth improved. Growth was seen in all segments, with the exception of retail loans. Mass market loans saw a 12% QoQ increase, backed by strong auto financing and micro lending. This segment now accounts for 56% of the bank’s total loans portfolio. The idea is that the bank sustains its high asset yields with longer duration.
Funding could still be a concern in the near term, we believe. Deposits have not grown as expected, despite their better structure. Yes, CASA now represents around 39% of the total deposits thanks to retirement of costly deposits amid improving liquidity. But this will not last, especially since the LDR has reached 99%. Hence, we expect the proportion of time deposits to increase in the next 1-2 quarters. Note that deposits account for 89% of BDMN’s total funding. The rest comes from bonds, REPO and other LT borrowings.
Tampilkan postingan dengan label Bank Danamon (BDMN IJ. Tampilkan semua postingan
Tampilkan postingan dengan label Bank Danamon (BDMN IJ. Tampilkan semua postingan
Rabu, 25 Agustus 2010
Kamis, 22 April 2010
Danareksa Bank Danamon (BDMN IJ, Rp5,500 BUY) Strong profits, loan growth still lacking
Headlines:
l 1Q10 NPAT rose 78% YoY to Rp701bn thanks to a 28% YoY increase in net interest income coupled with stringent and effective cost management. On a QoQ basis, the strong earnings are attributable to the absence of an extraordinary item related to derivative transactions –reaching Rp218bn in 4Q09 alone. Without derivative related provisions, NPAT grew 81% QoQ. Loans growth remains weak, however, with loans growing a mere 1% QoQ.
l The NIM eased to 12.6% from 4Q09’s 13.4%, largely due to reclassification of acquisition costs from previously deducting fee income to now deducting interest income. NPLs declined slightly to 4.0% from 4Q09’s 4.5%, with the largest NPLs still contributed by the micro lending business. Provisioning coverage remains above 100%.
l CAR is strong at 21.5% prior to implementation of the Basel II Accord on operational risk. With operational risk taken into account, the CAR declines by 1.76% to 19.7%. Meanwhile, the ROAE improved to 18.0% from 1Q09’s 14.4%.
Comments:
l In short, no surprises. Worth noting, however, is reclassification related to implementation of IFRS. This has led to a decline in interest income and hence the asset yield. Indeed, the asset yield dropped by 130bps from 4Q09’s 18.3%, more than offsetting the 60bps decline in quarterly COF. NIM therefore eased, although it is still higher than 1Q09’s 10%. As for the remainder of the year, the bank’s guidance is for NIM of around 11-12%.
l Profitability is strong, with the bank posting its largest ever quarterly profits. Derivative related provisions are no longer an issue and the bank posted a huge increase in ROE despite last year’s rights issue. All in all, the bank is looking for 20% ROE by the end of the year.
l Non-recurring items aside, higher profits are also attributable to a lower cost of credit of Rp578bn in 1Q10 compared to 4Q09’s Rp762bn besides better cost management that has led to a decline in the cost-to-income ratio to 48% from 4Q09’s 51%. Note that operating income related to the mass-market business increased by 2% YoY even though the bank aggressively grew its mass market business – an effective and efficient strategy.
l Loans growth is still lacking, but optimism remains. This year, the management is looking for 20% loans growth. Among the segments, growth was only seen in the mass market segment with the other segments showing a QoQ decline in loans growth. However, the prospects for further lending remain bright - especially for SME and commercial loans, according to the management. The mass-market business grew 5% QoQ, backed by strong auto financing and micro lending. It now accounts for 56% of the bank’s total loans portfolio. The idea is for the bank to sustain its high asset yields but with loans of a longer duration.
l Funding could be a concern in the near term, we believe. Deposits have not grown as expected, despite a better deposits structure. Yes, low cost CASA now represent around 35% of the total deposits thanks to retirement of costly deposits amidst improving liquidity. However, this may not last, especially since the LDR has reached 94%. As such we expect the proportion of time deposits to increase in the next 1-2 quarters before easing in the last quarters of the year. Note that deposits fund 89% of BDMN’s total lending. The remainder comes from bonds, REPO and other LT borrowings.
l We keep our forecast intact for now. BDMN remains our top pick in the sector given: 1) its strong capital base with the CAR expected to reach 19% by YE10, 2) a robust NIM in excess of 13% and 3) potentially solid loans growth post the clean-up of its balancesheet. Our DDM derived TP is Rp6,850, implying 3.3x-3.0x FY10-11E PBV.
l 1Q10 NPAT rose 78% YoY to Rp701bn thanks to a 28% YoY increase in net interest income coupled with stringent and effective cost management. On a QoQ basis, the strong earnings are attributable to the absence of an extraordinary item related to derivative transactions –reaching Rp218bn in 4Q09 alone. Without derivative related provisions, NPAT grew 81% QoQ. Loans growth remains weak, however, with loans growing a mere 1% QoQ.
l The NIM eased to 12.6% from 4Q09’s 13.4%, largely due to reclassification of acquisition costs from previously deducting fee income to now deducting interest income. NPLs declined slightly to 4.0% from 4Q09’s 4.5%, with the largest NPLs still contributed by the micro lending business. Provisioning coverage remains above 100%.
l CAR is strong at 21.5% prior to implementation of the Basel II Accord on operational risk. With operational risk taken into account, the CAR declines by 1.76% to 19.7%. Meanwhile, the ROAE improved to 18.0% from 1Q09’s 14.4%.
Comments:
l In short, no surprises. Worth noting, however, is reclassification related to implementation of IFRS. This has led to a decline in interest income and hence the asset yield. Indeed, the asset yield dropped by 130bps from 4Q09’s 18.3%, more than offsetting the 60bps decline in quarterly COF. NIM therefore eased, although it is still higher than 1Q09’s 10%. As for the remainder of the year, the bank’s guidance is for NIM of around 11-12%.
l Profitability is strong, with the bank posting its largest ever quarterly profits. Derivative related provisions are no longer an issue and the bank posted a huge increase in ROE despite last year’s rights issue. All in all, the bank is looking for 20% ROE by the end of the year.
l Non-recurring items aside, higher profits are also attributable to a lower cost of credit of Rp578bn in 1Q10 compared to 4Q09’s Rp762bn besides better cost management that has led to a decline in the cost-to-income ratio to 48% from 4Q09’s 51%. Note that operating income related to the mass-market business increased by 2% YoY even though the bank aggressively grew its mass market business – an effective and efficient strategy.
l Loans growth is still lacking, but optimism remains. This year, the management is looking for 20% loans growth. Among the segments, growth was only seen in the mass market segment with the other segments showing a QoQ decline in loans growth. However, the prospects for further lending remain bright - especially for SME and commercial loans, according to the management. The mass-market business grew 5% QoQ, backed by strong auto financing and micro lending. It now accounts for 56% of the bank’s total loans portfolio. The idea is for the bank to sustain its high asset yields but with loans of a longer duration.
l Funding could be a concern in the near term, we believe. Deposits have not grown as expected, despite a better deposits structure. Yes, low cost CASA now represent around 35% of the total deposits thanks to retirement of costly deposits amidst improving liquidity. However, this may not last, especially since the LDR has reached 94%. As such we expect the proportion of time deposits to increase in the next 1-2 quarters before easing in the last quarters of the year. Note that deposits fund 89% of BDMN’s total lending. The remainder comes from bonds, REPO and other LT borrowings.
l We keep our forecast intact for now. BDMN remains our top pick in the sector given: 1) its strong capital base with the CAR expected to reach 19% by YE10, 2) a robust NIM in excess of 13% and 3) potentially solid loans growth post the clean-up of its balancesheet. Our DDM derived TP is Rp6,850, implying 3.3x-3.0x FY10-11E PBV.
Selasa, 16 Maret 2010
Danareksa Bank Danamon (BDMN IJ, Rp5,300 BUY) A journey towards profitability
Bank Danamon
A journey towards profitability
FY10-11E EPS tweaked; TP of Rp6,850
We adjust our FY10-11E estimates following the release of the 2009 results. Our loan growth estimate is trimmed to 21% from 25% previously to align it with the company’s guidance. Despite this, the higher NIM will help to compensate, as the bank’s admirable efforts to tackle its high cost funding shall result in a lower COF. While we also raise our cost of credit estimates, they are still an impressive 36% lower than 2009’s Rp2.9trn (excluding the one-off derivative charges booked in 2009). With its strong capital base (the CAR is estimated to reach 19% by YE10), superlative NIM of above 13% and the potential for strong loans growth post the balance sheet clean-up, BDMN remains our top pick in the banking sector. Our DDM derived TP is Rp6,850, implying 3.3x-3.0x FY10-11E PBV.
Tackling its costly funding
With the BI rate expected to be stable at 6.5% this year, we estimate the bank’s COF to decline by 120 bps this year and a further 10 bps next year. The bank has acknowledged its high cost funding problem and is determined to do something about it by increasing its low cost CASA to 40-45% of its total deposits over the next 3 years - an attainable goal, in our view. This year, we expect the CASA to reach 35% of total deposits – an achievable target through: 1) the further launch of innovative products and 2) infrastructure improvements – the bank plans to add another 200 ATMs from the less-than-1,000 it currently has. Maximizing its DSP to increase its CASA shall also help. As for the total deposits, we forecast 22% growth this year. The LDR at around 89% is still on the high side. Nevertheless, deposits are only 80% of the total funding with the rest coming from bonds and SBI.
And pursuing high margin business opportunities
A focus on low cost deposits aside, the bank shall continue to pursue high margin business opportunities - a strategy that shall keep the asset yield above 18% over the next 2 years, in our estimates. This strategy also helps to compensate for high operating costs and high business risks. The bank will tilt the loan portfolio toward the mass-market segment where the NIM is an astonishing 18-20%. We expect this segment to account for around 56% of total lending by YE10, in our estimates. Additional human resources will be required - a net additional 5,000-6,000 employees, the management said, although the bank still aims to keep its cost to income ratio around 50% – an achievable target given that sales people of mass market loans have an agreement to leave in 3 months if the performance is bad. What’s more, BDMN is extending its mass-market products - such as pawn-broking - where 100% of the loans are collateralized, and also looking for inorganic growth that may come from synergy with existing businesses.
Clearer earnings visibility
In its 5-year transformation journey, BDMN has increased its retail banking sales force, established a DSP network of 1,300 units, undergone re-branding in 2002 and 2006, rationalized branches and launched new products. Such will yield good returns this year. The NPAT should grow a staggering 81% YoY this year, with a ROE of above 20% in 3Q10. The NIM will remain high and even expand from 12% to 13%, in our estimates, as the COF declines. In fact, the NIM has been expanding since 2005 as the bank has increasingly focused on high margin business. The cost of credit will normalize at 2-3% of earnings assets with the NPLs declining to 3.1%. With its excellent profitability and commitment to tackling its operational costs, the 3-year NPAT CAGR is expected to reach 43%.
A journey towards profitability
FY10-11E EPS tweaked; TP of Rp6,850
We adjust our FY10-11E estimates following the release of the 2009 results. Our loan growth estimate is trimmed to 21% from 25% previously to align it with the company’s guidance. Despite this, the higher NIM will help to compensate, as the bank’s admirable efforts to tackle its high cost funding shall result in a lower COF. While we also raise our cost of credit estimates, they are still an impressive 36% lower than 2009’s Rp2.9trn (excluding the one-off derivative charges booked in 2009). With its strong capital base (the CAR is estimated to reach 19% by YE10), superlative NIM of above 13% and the potential for strong loans growth post the balance sheet clean-up, BDMN remains our top pick in the banking sector. Our DDM derived TP is Rp6,850, implying 3.3x-3.0x FY10-11E PBV.
Tackling its costly funding
With the BI rate expected to be stable at 6.5% this year, we estimate the bank’s COF to decline by 120 bps this year and a further 10 bps next year. The bank has acknowledged its high cost funding problem and is determined to do something about it by increasing its low cost CASA to 40-45% of its total deposits over the next 3 years - an attainable goal, in our view. This year, we expect the CASA to reach 35% of total deposits – an achievable target through: 1) the further launch of innovative products and 2) infrastructure improvements – the bank plans to add another 200 ATMs from the less-than-1,000 it currently has. Maximizing its DSP to increase its CASA shall also help. As for the total deposits, we forecast 22% growth this year. The LDR at around 89% is still on the high side. Nevertheless, deposits are only 80% of the total funding with the rest coming from bonds and SBI.
And pursuing high margin business opportunities
A focus on low cost deposits aside, the bank shall continue to pursue high margin business opportunities - a strategy that shall keep the asset yield above 18% over the next 2 years, in our estimates. This strategy also helps to compensate for high operating costs and high business risks. The bank will tilt the loan portfolio toward the mass-market segment where the NIM is an astonishing 18-20%. We expect this segment to account for around 56% of total lending by YE10, in our estimates. Additional human resources will be required - a net additional 5,000-6,000 employees, the management said, although the bank still aims to keep its cost to income ratio around 50% – an achievable target given that sales people of mass market loans have an agreement to leave in 3 months if the performance is bad. What’s more, BDMN is extending its mass-market products - such as pawn-broking - where 100% of the loans are collateralized, and also looking for inorganic growth that may come from synergy with existing businesses.
Clearer earnings visibility
In its 5-year transformation journey, BDMN has increased its retail banking sales force, established a DSP network of 1,300 units, undergone re-branding in 2002 and 2006, rationalized branches and launched new products. Such will yield good returns this year. The NPAT should grow a staggering 81% YoY this year, with a ROE of above 20% in 3Q10. The NIM will remain high and even expand from 12% to 13%, in our estimates, as the COF declines. In fact, the NIM has been expanding since 2005 as the bank has increasingly focused on high margin business. The cost of credit will normalize at 2-3% of earnings assets with the NPLs declining to 3.1%. With its excellent profitability and commitment to tackling its operational costs, the 3-year NPAT CAGR is expected to reach 43%.
Sabtu, 13 Juni 2009
Danareksa Bank Danamon (BDMN IJ, Rp4,350 BUY) In the fast lane
TP raised to Rp6,600
We have raised our FY10-11E EPS estimates by 4-15% due to: 1) a lower COF stemming from BDMN’s plans to reduce its proportion of high cost deposits and 2) higher loans growth assumptions. For the bank to attain sustainable loans growth going forward, we believe the key lies in its ability to build up high yielding assets - be it through maximizing its DSP (Danamon Simpan Pinjam) network, channeling loans to Adira, or by offering innovative products. Accordingly, we have raised our TP to Rp6,600 from Rp3,600 previously, assuming a lower cost of equity of 16% from 20% previously. Our new TP implies 4.2-3.9x FY09-10E PBV. This is at the high end of its historical trading range. However, we believe it is justified given the bank’s robust NIM, strong loans growth, cost turnaround and large capital base.
A shift in strategy: reducing its COF
What really excites us is BDMN’s desire to reduce its proportion of high cost deposits. Low interest rates have already reduced BDMN’s COF by 50bps as of April 09. And a reduction in the proportion of time deposits will cut its COF further to about 7% by YE09 and to 6% in 2 years, in our estimate. This does not mean that we expect a decline in the amount placed in time deposits, but rather that there will be an increase in the amount placed in current and saving accounts (CASA). However, this will take time - most probably about 3 years. As for the increase in CASA, we expect it to come from: 1) the bank capitalizing on its DSP units, where lending (rather than taking deposits) has been the focus, and 2) the offering of more innovative products. The latest product launched is Danamon Lebih, a product which gives free insurance and 5% cash back to depositors. The results are highly encouraging and 500,000 customers have been added in 6 months (normally, we could expect the bank to add only 100,000 customers in a year!). Overall, we expect BDMN to reduce its proportion of time deposits by 5% over 3 years.
Strong loans growth ahead
Our 1-2% upward adjustment to FY10-11E loans growth reflects 4-6% consumption growth over the next 2 years, supported by a Rp50trn fiscal stimulus next year, of which 80% is for tax purposes. This, combined with benign inflation of 6-7% and lower interest rates, should boost consumer loan demand, in our view. Since 50% of the bank’s total loans are consumer loans, we are confident that total loans growth can be sustained at 20% p.a. over the next 3 years. Consumer loans alone are expected to grow 27% p.a. over the same period. In our opinion, the key lies in the bank’s ability to maximize its DSP network (some 1,000 units) and, more importantly, to channel loans through Adira. With high exposure to consumer loans, the bank’s NIM should be maintained above 10% over the next 2 years, or well above that of its local peers. This will translate into strong profits growth.
2Q09 preview: looking good
Total outstanding loans as of April were around Rp62trn, or 7% lower compared to Dec 08’s Rp67trn. Yet the indications for loans growth in 2H09 are much better. However, for now, we still stick with our 2009E loans growth assumption of 11%. In 2Q09, we expect the bank’s profitability to remain sound with an excellent NIM of at least 10% reflecting our expectation that BDMN’s lending rate remains unchanged at an average of 16% and in addition the fact that its COF has already declined by 50bps as of April 09 to 8%. Note that the lending rate tends to be sticky given that BDMN’s mass market loans typically have a tenor of around 3 years with an average duration of 18 months. In regard to provisioning, the amount booked YTD remains at 2.5% of average loans, or in line with our estimates so far.
We have raised our FY10-11E EPS estimates by 4-15% due to: 1) a lower COF stemming from BDMN’s plans to reduce its proportion of high cost deposits and 2) higher loans growth assumptions. For the bank to attain sustainable loans growth going forward, we believe the key lies in its ability to build up high yielding assets - be it through maximizing its DSP (Danamon Simpan Pinjam) network, channeling loans to Adira, or by offering innovative products. Accordingly, we have raised our TP to Rp6,600 from Rp3,600 previously, assuming a lower cost of equity of 16% from 20% previously. Our new TP implies 4.2-3.9x FY09-10E PBV. This is at the high end of its historical trading range. However, we believe it is justified given the bank’s robust NIM, strong loans growth, cost turnaround and large capital base.
A shift in strategy: reducing its COF
What really excites us is BDMN’s desire to reduce its proportion of high cost deposits. Low interest rates have already reduced BDMN’s COF by 50bps as of April 09. And a reduction in the proportion of time deposits will cut its COF further to about 7% by YE09 and to 6% in 2 years, in our estimate. This does not mean that we expect a decline in the amount placed in time deposits, but rather that there will be an increase in the amount placed in current and saving accounts (CASA). However, this will take time - most probably about 3 years. As for the increase in CASA, we expect it to come from: 1) the bank capitalizing on its DSP units, where lending (rather than taking deposits) has been the focus, and 2) the offering of more innovative products. The latest product launched is Danamon Lebih, a product which gives free insurance and 5% cash back to depositors. The results are highly encouraging and 500,000 customers have been added in 6 months (normally, we could expect the bank to add only 100,000 customers in a year!). Overall, we expect BDMN to reduce its proportion of time deposits by 5% over 3 years.
Strong loans growth ahead
Our 1-2% upward adjustment to FY10-11E loans growth reflects 4-6% consumption growth over the next 2 years, supported by a Rp50trn fiscal stimulus next year, of which 80% is for tax purposes. This, combined with benign inflation of 6-7% and lower interest rates, should boost consumer loan demand, in our view. Since 50% of the bank’s total loans are consumer loans, we are confident that total loans growth can be sustained at 20% p.a. over the next 3 years. Consumer loans alone are expected to grow 27% p.a. over the same period. In our opinion, the key lies in the bank’s ability to maximize its DSP network (some 1,000 units) and, more importantly, to channel loans through Adira. With high exposure to consumer loans, the bank’s NIM should be maintained above 10% over the next 2 years, or well above that of its local peers. This will translate into strong profits growth.
2Q09 preview: looking good
Total outstanding loans as of April were around Rp62trn, or 7% lower compared to Dec 08’s Rp67trn. Yet the indications for loans growth in 2H09 are much better. However, for now, we still stick with our 2009E loans growth assumption of 11%. In 2Q09, we expect the bank’s profitability to remain sound with an excellent NIM of at least 10% reflecting our expectation that BDMN’s lending rate remains unchanged at an average of 16% and in addition the fact that its COF has already declined by 50bps as of April 09 to 8%. Note that the lending rate tends to be sticky given that BDMN’s mass market loans typically have a tenor of around 3 years with an average duration of 18 months. In regard to provisioning, the amount booked YTD remains at 2.5% of average loans, or in line with our estimates so far.
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