Bank Danamon's micro lending growth dragged by slow growth in Java

The bank’s loan growth slowed to 14.4% in FY12.

According to Nomura, the bank’s loan growth slowed to 14.4% y-y in FY12 (vs. industry growth of 23%) as the LTV regulations slowed its automotive financing business, while its micro lending growth of 14.3% y-y was dragged by slow growth in Java due to competition despite the still robust growth outside of Java.

Here's more from Nomura:

Danamon’s NIM improved to 9.55% in FY12 (+12bps), but we forecast its NIMs will trend down due to rising competition for deposits and a potential trend reversal in rates.

We keep our earnings forecasts largely unchanged as lower NIMs should be offset by lower credit cost, which declined to 240bps in 4Q12 (-50bps y-y), due to improving asset quality.