CIMB Bank Negara Indonesia Result note - Upside surprise, but sustainable?

(BBNI IJ / BBNI.JK, NEUTRAL - Downgraded, Rp1,210 - Tgt. Rp1,300, Financial Services)

We downgrade BNI to Neutral from Outperform, as we believe most of the positives have been priced, even after raising our DDM-based target price to Rp1,300 from Rp1,080 on trimming the cost-to-income ratio. BNI's 1Q09 results surprised on the upside, mainly due to a significantly lower CIR. However, we believe CIR will d rise in the coming quarters, to around 48%. The bank's gross NPL ratio rose to 5.6% from 5.0%, but this was still within control as provisioning coverage was kept above 100%. Further write-offs are expected, and we have factored in Rp4.4tr of provisioning.