Bank Negara Indonesia's net profit could grow 23% to US$1.04b in FY17F

Thanks to the bank's healthy loan expansion in FY16.

Maybank Kim Eng analysts raised their FY17F net profit by 8% to IDR13.9t (US$1.04b) (+23% YoY), as we look for the strong growth Bank Negara Indonesia (BBNI) achieved in FY16 to continue due to healthy loan expansion. 

Here's more from Maybank Kim Eng:

We raised our loan growth forecast for BBNI by 1ppt to 19% YoY for FY17F on the assumption of stronger demand for infrastructure and agriculture loans. These are the segments that by YE16 already made up 57% of BBNI’s total loan portfolio and continue to be the main drivers of an estimated 23% YoY expansion in 1Q17.

The only segments that we might see contraction are in small business loans and mortgages, as management plans to focus on first improving asset quality.

As at YE16, loans generated under BBNI’s new management are in the performing category. And with much of the old NPLs already cleaned up in FY15 and FY16, we think BBNI will be able to lower 2017 provisions and maintain a stable NPL of 3%.

Hence, we cut our provisioning assumption by 9% to IDR7.6t, which has taken into account the impairment of the IDR300b Medium-Term Notes from Intan Baruprana Finance. This increases our FY17F net profit by 8% to IDR13.9t (US$1.04b), implying 23% YoY growth.