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Indonesia’s Bank Danamon expected to hit $245m profits in 2023: analyst

Synergy with parent company MUFG will help grow its corporate and SME loans.

Indonesia’s Bank Danamon (BDMN) is expected to report a net profit to approximately $206m (IDR3.2t) in 2022, double from the previous year, then rise a further 16% to $245m (IDR3.8t) in 2023, according to estimates released by UOB Kay Hian.

The bank’s synergy with its parent company MUFG will support growth of Bank Danamon’s corporate and SME loans, said UOB Kay Hian analyst Posmarito Pakpahan. Bank Danamon is expected to achieve 8.5% and 8.3% loan growths in 2022 and 2023, respectively.

“Based on its relationship with MUFG, its parent company, Bank Danamon (BDMN) is building synergy which will support BDMN’s balance sheet growth this year and going forward. Leveraging its relationship with MUFG, BDMN provides financing to MUFG’s corporate clients in Indonesia like property developers and automobile companies which will support the corporate segment’s mid-teen loan growth in 2022 and low-teens growth in 2023,” Pakpahan noted in a report. 

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The bank also has plans to provide financing to SMEs. This should result in SME loans growing 5% in 2023 from contracting 3% in 2022. Auto financing will also grow moderately, Pakpahan noted.

Lower credit costs also led UOB Kay Hian to raise net profit estimates by 35% and 29% for 2022 and 2023, respectively. However, the net profit for the next two years still won’t hit the pre-pandemic high of $258m (IDR4t) in 2019.

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