In today’s briefing:
- Bank Negara (BBNI IJ) – Downgrading to Neutral Due to Worsening Bad Loan and Interest Margin Outlook
Bank Negara (BBNI IJ) – Downgrading to Neutral Due to Worsening Bad Loan and Interest Margin Outlook
- 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
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