Bank BJB (BJBR) - Disappointing 4Q12 results

Bank BJB (BJBR) – Downgrade to Hold

Price: Rp1,260 – Target Price: Rp1,300

Disappointing 4Q12 results

  • Net interest income fell 14% QoQ in 4Q12, while net income fell 28% QoQ.
  • However net interest income in FY12 reached Rp3.6 trillion (+19.4% YoY) and net profit Rp1.19 trillion (+24% YoY).
  • FY12 performance was below our estimates and the market, net income represents only 88% of our estimate and 95% of the market.
  • Weak performance in 4Q12 was a combination of lower interest income (-1%) and higher interest expense (+16%).
  • Lower interest income due to: 1) decrease in asset yields by 48 bps and 2) 40 bps increase in NPLs. Higher NPL made provision expenses rose 12% to Rp135 billion QoQ in 4Q12.
  • Higher interest expense in 4Q12 mainly due to deposits growth by 3.7% over the past 2 months since 9M12.
  • We downgrade our target price to Rp1,300 (down 10% from previous target price) reflecting the 1.9x PBV’13 and we also lowered our recommendation to Hold. Downgrade to Hold
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