Corporate Result Flash Bank Central Asia - Bahana

4Q10 performance
§ Supported by strong interest income (+10.8% q-q to IDR3.9t), less provisioning charges (IDR189b vis-à-vis IDR410b in 3Q10) and lower corporate tax rate, BBCA reported 4Q10 net profit of IDR2.4t (+11.4% q-q), bringing FY10 net profit to IDR8.5 (+24.6% y-y), accounting for 96% of our forecast and 102% consensus estimate.
§ Loans grew 10.6% q-q with net additions of IDR14.8t, bringing y-y loan growth to IDR153.9t (+24.2%), comprised of corporate loans (+8.2% q-q to IDR4.3t), SME/commercial (16.4% q-q to IDR8.6t) and consumer (+6.2% q-q to IDR2.2t). Gross NPL improved to 0.6% from 0.8% in 3Q10.
§ Third party funding expanded 5.6% to IDR14.8t and brought LDR to 55.5% from 53.0% in 3Q10. CASA accounted for 75.5% of total deposit with the remaining 24.5% coming from time deposits.

Outlook
Despite having outpaced industry loan growth of 22.1% in 2010, BBCA conservatively targets 2011 loan growth of 15%. However, this could be exceeded should the need arise. The management plans to continue growing its loans across all segments while further enhancing its asset quality.

Recommendation and valuation
BBCA plans to cut 25 bps interest rate on its savings accounts to compensate the negative impact on lower yield of government variable rate bonds, which will be tied to 3-month T-bills (SPN) with 5.19% yield (vis-à-vis 3-month SBI with 6.36% yield previously). As of 2010, BBCA’s government variable rate bonds stood at IDR16t, but should come down to IDR11t given IDR5t maturity in April 2011. Hence, we maintain our earnings forecast and re-iterate our HOLD rating on the stock with TP of IDR7,250.