BNI Tbk (BBNI)’s strategy focusing on credit distribution to the infrastructure sector will be a catalyst for its share movement. The infrastructure credit segment gives a higher yield than the average credit and low non performing loan (NPL).
BBNI is targeting the infrastructure loan growth by 35% to 89,3 trillion this year. Until June 2016, the infrastructure credit distribution reached 77,2 trillion IDR. This segment will give a yield around 10%-12%.
Alexander Margaronis, an Analyst from UOB Kay Hian, said that high yield from infrastructure credit would offset the decreasing margin to approximately 7% caused by the restructurisation of BBNI’s credit. The company restructured the credit worth 29,87 trillion IDR by extending the term maturity of loan, lowering the interest rates, and auctioning the collateral.
The company’s income growth from loan interest to the projects that have been running has strengthened. The BBNI’s credit cost on the first term of 2016 increased to 3,7% but the provision fell by 21% yoy. Bank Mandiri Tbk (BMRI), which is BBNI’s competitor, had the credit cost of 3,4% on the first term of 2016 but the provision surged by 147% yoy.
UOB Kay Hian recommended BUY for BBNI with a target price of 6.800 IDR. (*)
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