Indonesia's 4 large banks' loan growth likely to reach 23%

Barclays says credit quality is stable.

Overall, Barclays expects PAT growth to be muted (12% y/y) at BBRI but strong (+30%) at the three other large banks (BBNI, BBCA and BMRI). Loan growth at the four large banks is likely to be close to system growth (~23%) and credit quality stable.

They expect NIM to drop sequentially at BBRI, remain broadly stable at BBNI and BMRI and tick up at BBCA. BBNI should also benefit from moderating cost growth.

Here's more from Barclays:

Overall system loan growth remains robust and credit quality stable: Bank Indonesia data released shows system loan growth was strong (23% y/y till Feb 13). GNPAs also remained stable at 2%.

BBRI: NIMs to remain under pressure: Loan growth pick-up seen in 4Q12 should be sustained (21% y/y loan growth expected). NIMs, however, will remain under pressure as yields are under pressure in the corporate segment (~15 bps sequential drop in NIM expected). Softer revenues are unlikely to be offset by cost control as network investment remains high.

BBNI: Operating leverage gains to become evident: BNI's operating cost growth should slow down (to ~12% y/y) even as it sustains strong revenue growth (23% y/y). Operating cost growth is likely to slow as BNI moderates network investments. Revenue growth is expected to remain strong as loan growth remains robust (23%) and NIMs broadly stable sequentially (but still up ~15 bps on a y/y basis).

BMRI: Stable margins and asset quality: We expect BMRI to deliver 22% y/y loan growth. Margins should remain stable on a sequential basis (and up ~50 bps on y/y basis) as it shifts its loan mix towards higher yielding segments. Opex growth is likely to remain high (20%) as the bank continues to invest in network expansion and transaction banking capabilities.

BBCA: Strong NII growth to drive ~ 40% y/y PAT growth: BCA may deliver the strongest (25% y/y) loan growth among the four large banks. Its NIMs should tick up on a sequential basis as it deploys surplus liquidity translating to 30% NII growth. Opex growth (~18%) and credit costs (~130bps) should hold steady at 2012 levels.

BBTN: Good balance sheet growth, but asset quality under pressure: Credit quality remains under pressure and GNPAs are expected to rise to ~4.4% (from 4.1% in Dec 12). Installment payments for loans under the IOPP scheme are going up sharply as they complete 2 years maturity (rates are reset and principal repayments commence). Loan and deposit growth should be strong (in particular LDR should drop below 100%).