Daily Brief Financials: Bank Rakyat Indonesia, Hang Seng Index, Ethereum, Coinshares International and more

• Bank Rakyat Indonesia booked flat earnings in 1H2024 despite healthy loan and fee income growth, with a shift towards corporate loans, as it sought to address its problem microloans.
• The bank front-loaded provisions in 1H2024 but recoveries have seen a steep improvement, with 2H2024 to see lower credit costs. Strong loan corporate loan growth is offsetting slower micro.
• Bank Rakyat Indonesia remains a unique proxy for micro-lending in Indonesia, with a depositor base of 176m and the skillset to manage risk in this space. Valuations remain attractive. 

• We have correctly forecasted a August rally for the Hang Seng Index in previous insights, here and then here – the rally is on, but a pullback is coming.
• The pullback may come in this week or the next, but it’s probably behind the corner, the index can continue higher after the pullback.
• In this insight we want to expose what are the levels to buy LONG to benefit from a highly probable continuation of the rally in September.

• The summer of 2020 marked a pivotal moment for decentralized finance (DeFi), as it gained significant momentum, reflected by the surge in Total Value Locked (TVL) across DeFi protocols.
• Chart 1: Total Value Locked (TVL) in 2019 and 2020While DeFi continued to grow through 2021, it was the rapid expansion during the summer of 2020 that left a lasting impression on the community, earning the period the moniker ‘DeFi Summer.’Chart 2: Total Value Locked (TVL), All TimeAlthough the actual season may be shifting towards winter, ‘DeFi Summer’ is making a comeback, but the Total Value Locked is still quite far from its 2021 peak.
• However, it is likely only a matter of time before we surpass that all-time high – potentially as soon as the first half of 2025.

CoinShares International (CS) posted a strong adjusted EBITDA in Q224 of £26.6m (vs £11.4m in Q223), which included two one-off factors: the £21.8m full write-down of its holdings in FlowBank and a £28.8m impairment reversal, following the successful sale of CS’s FTX claim. Management highlighted that CS’s operations have not been disrupted in any way by the recent turmoil across financial markets (including the digital assets market). CS recently paid the first two instalments of its £9.3m dividend (£0.13 per share) from FY23 earnings, with the full-year payment now implying a c 2.6% dividend yield. Furthermore, it declared a special dividend of US$31.4m (c £24.3m), representing 86% of the consideration it received for the FTX claim, to be paid in October 2024.