BCA (BBCA IJ), downgrading to OPF (from BUY) and lowering the TP to Rp7,500 (from Rp8k) - CLSA Indo

BCA is probably the only bank in that Indo banking space that is both defensive and offensive. They have the most well capitalized balance sheet and their continue investments in electronic banking system ensures deposits growing almost as fast as loan growth. Their variable rate bond portfolio gives them a nice cushion in a rising rate environment. At the same time their aggressive expansion in the SME segments ensures margin remain stable at times when margins in the overall banking sector is on a slow decline. Best of both worlds? You bet.

Key points from report
· Bank will focus on commercial / SME lending and increase its electronic banking platform
· Conservative mgmt guidance of 2011 16-20% loan growth is attainable with no margin contraction
· Additions in 2011: 1,500 ATMs, 60,000 EDC machines, up to 40 new branches
· Unaudited 2010 results solid at net income Rp8.3tn (23% increase) and loan growth was 24%, with CASA funding increased to 76% of total deposits
· Downgraded to Out-perform due to recent 8% share price appreciation, and reduce TP to Rp7,500 (9% upside), reflecting a 2011CL PE of 18.5x.