Financials & FinTech research, Galliano’s Financials Research

Victor Galliano

Financials & FinTech research

Financials & FinTech, EM & Developed Markets

Galliano’s Financials Research

Galliano's Financials Research provides fundamental research in Emerging Markets financials, including FinTech, as well as financials in select Developed Markets.

The investment style applied is generally value oriented, although Growth At Reasonable Price (GARP) strategies can also be used where appropriate. 

Our investment research approach aim is often contrarian, looking to capitalise on overly sceptical or optimistic consensus views. In terms of valuation techniques, the focus is on PBV ratio to ROE, PE multiples and dividend yield, as well as the application of PEG ratios and, where appropriate, Sum of the Parts (SOTP) valuations.

Equity Bottom-Up

Bank Negara Indonesia Persero / Equity Bottom-Up

<ul>
<li>We downgrade <a href="https://www.smartkarma.com/entities/bank-negara-indonesia-persero" target="_blank" data-smartkarma-citation="entities:8285:1" rel="noopener">Bank Negara</a> , our former top pick in Indonesian banks, to a neutral from a buy due to the more concerning credit quality outlook, despite its undemanding valuations</li>
<li>The sacking of the technocratic finance minister increased investor concerns, and the economy’s lacklustre GDP growth – reflected in the surprise rate cut - adds to the banks’ NPL headwinds</li>
<li>Negara’s headline NPL ratio and NPL coverage seem to be reasonable, but these metrics mask more concerning broader credit quality ratios, coupled with the challenge of its low interest margins</li>
</ul>


We downgrade Bank Negara , our former top pick in Indonesian banks, to a neutral from a buy due to the more concerning credit quality outlook, despite its undemanding valuations
The sacking of the technocratic finance minister increased investor concerns, and the economy’s lacklustre GDP growth – reflected in the surprise rate cut - adds to the banks’ NPL headwinds
Negara’s headline NPL ratio and NPL coverage seem to be reasonable, but these metrics mask more concerning broader credit quality ratios, coupled with the challenge of its low interest margins


Bank Negara (BBNI IJ) – Downgrading to Neutral Due to Worsening Bad Loan and Interest Margin Outlook

<ul>
<li>Negara is our top pick in the Indonesian banks, based on our proprietary scorecard; it scores well based on attractive valuations, sound credit quality metrics and potential for improved returns</li>
<li>The PB value in Negara is especially apparent relative to Permata; Negara trades at a 50%+ PBV ratio discount to Permata, which we believe is not warranted by the fundamentals</li>
<li>We downgrade Mandiri from a buy to a neutral rating; it is no longer, in our view, compelling based on PBV ratio and now looks expensive in PEG ratio terms</li>
</ul>


Negara is our top pick in the Indonesian banks, based on our proprietary scorecard; it scores well based on attractive valuations, sound credit quality metrics and potential for improved returns
The PB value in Negara is especially apparent relative to Permata; Negara trades at a 50%+ PBV ratio discount to Permata, which we believe is not warranted by the fundamentals
We downgrade Mandiri from a buy to a neutral rating; it is no longer, in our view, compelling based on PBV ratio and now looks expensive in PEG ratio terms


Indonesian Banks; We Stick with Our Key Pick Bank Negara (BBNI IJ)

Equity Research Analyst - Long-Short

Raj S, CA, CFA

Artoval Advisors

Art’o’val stands for Art of Valuation. Artoval Advisors LLP is a professionally run advisory firm catering to various financial advisory services including Valuation, Investment Research, Training, Accounting, CFO Services and other ancillary services.

We are passionate about what we do and strongly believe in working with our clients as their extended teams. With Artoval Advisors as their trusted partner, our clients find it easy to achieve efficiency in service delivery without compromising on quality.

True Art of Valuation

<ul>
<li>
<a href="https://www.smartkarma.com/entities/bank-negara-indonesia-persero" target="_blank" data-smartkarma-citation="entities:8285:1" rel="noopener">Bank Negara Indonesia Persero (BBNI IJ)</a> has stated its target of achieving an FY28e ROE of 20%, with ambition to join the other three big Indonesian Banks already doing it. </li>
<li>Although the current results are not on par with the other three, the bank has outlined its strategy to reach the target (1% credit cost; 37% CIR by 2028 exit)</li>
<li>Projecting a gradual re-rating to align with peers by 2028 and extrapolating book value growth over the 5-year period provides a shareholder return of 30% CAGR</li>
</ul>



Bank Negara Indonesia Persero (BBNI IJ) has stated its target of achieving an FY28e ROE of 20%, with ambition to join the other three big Indonesian Banks already doing it. 
Although the current results are not on par with the other three, the bank has outlined its strategy to reach the target (1% credit cost; 37% CIR by 2028 exit)
Projecting a gradual re-rating to align with peers by 2028 and extrapolating book value growth over the 5-year period provides a shareholder return of 30% CAGR


BBNI IJ Initiation: On a Rewarding Journey to 20% ROE

<ul>
<li>Negara’s attractive valuations, its low PEG ratio and efficiency ratio should drive the share re-rating; pre- and post-provision were flat QoQ, but profitability ratios edged higher over the medium term</li>
<li>We like Mandiri for its attractive PE multiples and its robust credit quality, despite the 4Q24 returns blip; Mandiri has the second-best efficiency ratio and with further scope for gains</li>
<li>Rakyat’s high structural cost of risk remains a drag on its post-provision returns, with eroded further in 4Q24; although declining, returns are high but Rakyat valuations are not yet compelling</li>
</ul>


Negara’s attractive valuations, its low PEG ratio and efficiency ratio should drive the share re-rating; pre- and post-provision were flat QoQ, but profitability ratios edged higher over the medium term
We like Mandiri for its attractive PE multiples and its robust credit quality, despite the 4Q24 returns blip; Mandiri has the second-best efficiency ratio and with further scope for gains
Rakyat’s high structural cost of risk remains a drag on its post-provision returns, with eroded further in 4Q24; although declining, returns are high but Rakyat valuations are not yet compelling


Indonesian Banks Screener; Bank Negara (BBNI IJ) Stands Out

ASEAN Insight Provider, CrossASEAN Research

Angus Mackintosh

ASEAN Insight Provider

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

<ul>
<li>
<a href="https://www.smartkarma.com/entities/bank-negara-indonesia-persero" target="_blank" data-smartkarma-citation="entities:8285:1" rel="noopener">Bank Negara Indonesia</a> came good in 4Q2024 with a strong finish to the year due to higher loan growth from corporates and consumers, alongside higher CASA growth cementing higher NIMs</li>
<li>The bank also saw improving asset quality, with falling loans-at-risk, and although there was an uptick in provisions in 4Q due to Sritex, the outlook for credit costs looks stable.</li>
<li>
<a href="https://www.smartkarma.com/entities/bank-negara-indonesia-persero" target="_blank" data-smartkarma-citation="entities:8285:1" rel="noopener">Bank Negara Indonesia</a> will grow its focus on becoming a transactional bank, with CASA as a key focus, providing liquidity to grow its loan book. Valuations remain attractive. </li>
</ul>



Bank Negara Indonesia came good in 4Q2024 with a strong finish to the year due to higher loan growth from corporates and consumers, alongside higher CASA growth cementing higher NIMs
The bank also saw improving asset quality, with falling loans-at-risk, and although there was an uptick in provisions in 4Q due to Sritex, the outlook for credit costs looks stable.

Bank Negara Indonesia will grow its focus on becoming a transactional bank, with CASA as a key focus, providing liquidity to grow its loan book. Valuations remain attractive. 


Bank Negara Indonesia (BBNI IJ) - Honing in on Transactions and CASA

Indonesia

PT Bank Negara Indonesia (Persero) Tbk is a state-owned bank that conducts commercial and consumer banking services.

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Bank Negara Indonesia Persero (BBNI IJ)

Bank Negara (BBNI IJ) – Downgrading to Neutral Due to Worsening Bad Loan and Interest Margin Outlook

We downgrade Bank Negara to a neutral from buy due to the poor macro-economic outlook; it is vulnerable to the worsening credit quality outlook...

Victor Galliano

Indonesian Banks; We Stick with Our Key Pick Bank Negara (BBNI IJ)

We rank Indonesian banks based on our proprietary scorecard; Negara is top due to good value, credit quality, return potential and at a deep PBV...

Victor Galliano

BBNI IJ Initiation: On a Rewarding Journey to 20% ROE

BBNI IJ has stated its target of achieving an FY28e ROE of 20%, just like peers do now. Being involved in the journey can be very rewarding for...

Raj S, CA, CFA

Indonesian Banks Screener; Bank Negara (BBNI IJ) Stands Out

Negara's modest valuations, improving returns and efficiency ratio over the medium term to drive share re-rating; Mandiri is attractive on...

Victor Galliano

Bank Negara Indonesia (BBNI IJ) - Honing in on Transactions and CASA

Bank Negara Indonesia will grow its focus on becoming a transactional bank, with CASA as a key focus, providing liquidity to grow its loan book....

Angus Mackintosh

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Bank Negara (BBNI IJ) – Downgrading to Neutral Due to Worsening Bad Loan and Interest Margin Outlook

We downgrade ​Bank Negara to a neutral from buy due to the poor macro-economic outlook; it is vulnerable to the worsening credit quality outlook...

Victor Galliano

Indonesian Banks; We Stick with Our Key Pick Bank Negara (BBNI IJ)

We rank Indonesian banks based on our proprietary scorecard; ​Negara is top due to good value, credit quality, return potential and at a deep PBV...

Victor Galliano

BBNI IJ Initiation: On a Rewarding Journey to 20% ROE

BBNI IJ has stated its target of achieving an FY28e ROE of 20%, just like peers do now. Being involved in the journey can be very rewarding for...

Raj S, CA, CFA

Indonesian Banks Screener; Bank Negara (BBNI IJ) Stands Out

​Negara's modest valuations, improving returns and efficiency ratio over the medium term to drive share re-rating; Mandiri is attractive on...

Victor Galliano

Bank Negara Indonesia (BBNI IJ) - Honing in on Transactions and CASA

Bank Negara Indonesia will grow its focus on becoming a transactional bank, with CASA as a key focus, providing liquidity to grow its loan book....

Angus Mackintosh

We downgrade Bank Negara to a neutral from buy due to the poor macro-economic outlook; it is vulnerable to the worsening credit quality outlook...

We rank Indonesian banks based on our proprietary scorecard; Negara is top due to good value, credit quality, return potential and at a deep PBV...

Negara's modest valuations, improving returns and efficiency ratio over the medium term to drive share re-rating; Mandiri is attractive on...