Three brokerages nominated Bank Rakyat Indonesia as their top pick for banking stocks due to strong profitability from its key businesses.
Among the strengths were the bank’s lending to micro-businesses and state-owned enterprises, and also operational efficiency that beat the industry average.
Andalan Artha Advisindo Sekuritas wrote in a note to clients on Friday that Bank Rakyat, a state controlled lender with Rp 402 trillion or $45 billion in assets, has the lowest cost-efficiency ratio among the top five lenders in Indonesia.
The brokerage said Bank Rakyat’s CER — which measures the cost of basic operational costs, including wages and building maintenance — stands at 39 percent, much lower than the industry average of 47 percent.
That ratio means Bank Rakyat is the most efficient local bank. “Note that in terms of number of employees, Bank Rakyat ranks second after Bank Danamon, and it ranks first in terms of the number of branches,” AAA Sekuritas said in a report prepared by A. G. Pahlevi.
Another brokerage, Batavia Prosperindo Sekuritas, highlighted the bank’s strong nine-month loan growth. Bank Rakyat booked Rp 276 trillion in total outstanding loans in the January-September period.
That figure represented a 21 percent growth in loans, of which about 60 percent was disbursed to micro- and small-to-medium enterprises. In corporate loans, Bank Rakyat offered 61 percent of its corporate credit to state-owned enterprises.
“SOE lending provides benefits to BBRI [Bank Rakyat] due to its lower risk. In the future, we believe BBRI will still focus on the micro and SME lending segment, even though its corporate lending is increasing significantly,” said Batavia Prosperindo in a report prepared by Ivan Hadinata and Andy Ferdinand.
State brokerage Danareksa Sekuritas also put a “buy” recommendation on Bank Rakyat, with a strong view that a stable net interest margin could overcome possible problems arising from loan growth, amid the uncertain global economic conditions. Danareksa put a target price on the stock of Rp 7,550.
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