Bank Central Asia - 4Q10A - earnings up 38% YoY - Credit Suisse

● BBCA’s 4Q10A PPOP up by 38%YoY. FY10A net income up by 25%YoY, in line with our and consensus’ forecasts.

● BBCA has met the central bank’s requirement for 1% provisioning for undisbursed loans by FY10A despite the regulation needing to be met only by end FY11E. BBCA is also looking to cut 25 bp on
interest rate offered for saving deposits, translating to Rp273 bn interest expense saving. We increase our FY11E-FY12E earning forecasts for BBCA by 6.9%-5.2%.

● BBCA is trading at a premium to peers and historical average. However, we like BBCA given its low LDR and high CASA, implying potential for strong ROA expansion ahead. We also see upward bias in BBCA’s lending rate and its stickier funding costs than lending rate; BBCA is beneficiary of higher policy rates.

● We maintain our OUTPERFORM rating on BBCA and increase our target price from Rp7,400 to Rp8,200 given higher earnings estimates. Our target price implies 5.1x 2011E P/B, 4.2x 2012E
P/B, 20x 2011E P/E and 16.5x 2012E P/E.