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RETAIL BANKING | Tim Charlton, Indonesia

Bank Rakyat Indonesia profits from double-digit share price gains

Share price has risen 10%YTD which could translate to a 2019 net profit of $2.46b.

With Bank Rakyat Indonesia’s (BBRI) share price outperforming the Jakarta Stock Exchange Composite Index at 10% YTD compared to the latter’s 5% gains and the country’s other big banks, the bank could easily meet and even exceed its net profit target of $2.51b (RP35.6t) in 2019, according to UOB Kay Hian. 

Also read: Bank Rakyat Indonesia profit up $2.32b in 2018

The 10% price increase suggests a net profit of $2.46b (RP34.9t), equivalent to a $3.31b (RP46.9t) increase in market cap. “This implies a $1.44b (Rp20.4t) increase in its book value, based on its three-month average P/B of 2.3x. Assuming BBRI maintains a dividend payout ratio of 45%, the implied net profit is $2.46b (Rp34.9t) for 2019. This is nearly 98% of management’s guidance of $2.51b (Rp35.6t) net profit for the year. This is also 94.4% of our forecast of Rp37t,” analyst Raphon Prima said in a report.

The bank’s loans are also set to grow at a stable 14% in 2019 amidst robust expansion in micro and consumer loans which contributed to 52% of total loans in the previous year.

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