Samuel Sekuritas Indonesia

Banking Sector – Neutral

Margin pressure from Bank Indonesia

• Bank Indonesia pushes banks to lower margin, particularly at overhead cost level.
• If the decline of NIM does not boost third party funds, loan growth will still be moderate due to tight liquidity.
• Banks will be increasing capital as loan expand. There will be more right issues and lower payout ratio in the future.
• We like BBNI and BMRI, because of their low NIM and strong CAR. BBRI will be at a disadvantage because of low CAR and high NIM.

Bank Rakyat Indonesia (BBRI) – Maintain Buy
Price: Rp6,800 – Target Price: Rp8,100

9M11 Results – Beat Estimates

• BBRI posted net profit of Rp3.6 trillion at 3Q11, up 3.4% QoQ and brought 9M11 net profit Rp10.4 trillion, up 57%, above our estimate and the market.
• We downgrade our assumption for loan growth and dividend payout as CAR slightly above BI standart.
• NPL was booked 3.3% with Rp977 Bn write off in 3Q11 and recovery rate 59.6%.
• Maintain Buy recommendation and upgrade target price with new Target Price of Rp8,100.

Bank BJB (BJBR) – Maintain Buy
Price: Rp1,020 – Target Price: Rp1,450

Attempting to Improve

• BJBR posted net profit of Rp250 billion in 3Q11, which declined 12.3% QoQ, but still in line with our and market estimates.
• In 3Q11, time deposits rose significantly by 19.1% QoQ and brought CASA position to 38% in 9M11.
• In our opinion, the excess liquidity difficult to be converted to loan.
• Maintain Buy recommendation and upgrade target price with new Target Price of Rp1,450.