Bank Rakyat Indonesia's profit up 10.5% to US$1b in 1H17

Thanks to micro, consumer, and SME lending.

Bank Rakyat Indonesia's (BBRI) 1H17 profit rose 10.5% YoY to IDR13.4t (US$1b), driven by micro, consumer, and SME lending. BBRI also booked IDR1.3t reversal of employee benefit.

"With 1H17 earnings largely in line with our estimate, we made no change in our FY17F profit of IDR27.7t (+5.9% YoY). The progress in corporate loan quality, however, prompts us to be more cautious for FY18-19F," said Maybank Kim Eng.

Here's more from the brokerage firm:

After seven successful years of keeping its SOE corporate NPL at 0%, BBRI had to downgrade one account with a loan amount of ~IDR471b which drove the segment’s 2Q17 NPLs up to 0.55%.

On the non-SOE corporates, the SML inched closer to 10%, driven by a IDR3.5t loan to one cement company. These downgrades, combined with the slow acceleration in economic growth prompt us to raise our FY18-19F NPL assumptions by 10-20bps to 2.4-2.5%, respectively.

Nonetheless, the impact to earnings is relatively benign due to BBRI’s high LLC. Overall, our FY18-19F profits are reduced by 1.6% and 2.3%, to IDR30.5t and IDR34.3t, respectively.