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Global Bank Equity Specialist, Creative Portfolios

Paul Hollingworth

Global Bank Equity Specialist

Creative Portfolios

Equity Bottom-Up

<a href="https://www.smartkarma.com/entities/bank-mandiri-persero-tbk-pt" target="_blank" data-smartkarma-citation="entities:441:1" rel="noopener">Bank Mandiri Persero (BMRI IJ)</a> is dedicated to overwhelmingly to corporate lending and to a much lesser extent the consumer segment, backed by CASA funding (68%) and by time deposits (32%).The bank is an expensive well-capitalised EM lender, supported by the promise of future growth in Indonesia’s budding financial services space.FY20/19 results show adverse fundamental momentum and trends with erosion in Profitability, in Efficiency, in NIM, Asset Yield, and Spread, in Asset Quality, and in Capitalisation while Provisioning and Liquidity showed some improvement as robust Deposits expansion stood in contrast to falling credit. “Core Income” showed a moderate contraction, especially in Net Interest Income, impacted by the aforementioned decrease in credit growth, while the Insurance Revenue stream deteriorated, margin and spread narrowed, and inefficiencies deepened. Comprehensive Income decreased by 41% YoY.While Efficiencies in Thailand, with the exception of BBL, and elsewhere were a standout last year, trends were adverse on this front in Indonesia.We are mindful too of the underlying Asset Quality picture which is more fragile than the NPL ratio.<div class="content-highlight">
BMRI shares appear rich. A FV of 29%, a PBV of 1.62x, an Earnings Yield of 5.79%, and a Total Return Ratio of 0.2x, while less expensive than BBRI, are unappealing nonetheless. An elevated Dividend Payout Ratio is not a signal of a high growth stock implied by punchy valuation metrics.
The bank commands a low PH Score™ (3.9) and sits along with BBRI in the bottom quartile globally.
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Bank Mandiri Persero (BMRI IJ) is dedicated to overwhelmingly to corporate lending and to a much lesser extent the consumer segment, backed by CASA funding (68%) and by time deposits (32%).The bank is an expensive well-capitalised EM lender, supported by the promise of future growth in Indonesia’s budding financial services space.FY20/19 results show adverse fundamental momentum and trends with erosion in Profitability, in Efficiency, in NIM, Asset Yield, and Spread, in Asset Quality, and in Capitalisation while Provisioning and Liquidity showed some improvement as robust Deposits expansion stood in contrast to falling credit. “Core Income” showed a moderate contraction, especially in Net Interest Income, impacted by the aforementioned decrease in credit growth, while the Insurance Revenue stream deteriorated, margin and spread narrowed, and inefficiencies deepened. Comprehensive Income decreased by 41% YoY.While Efficiencies in Thailand, with the exception of BBL, and elsewhere were a standout last year, trends were adverse on this front in Indonesia.We are mindful too of the underlying Asset Quality picture which is more fragile than the NPL ratio.
BMRI shares appear rich. A FV of 29%, a PBV of 1.62x, an Earnings Yield of 5.79%, and a Total Return Ratio of 0.2x, while less expensive than BBRI, are unappealing nonetheless. An elevated Dividend Payout Ratio is not a signal of a high growth stock implied by punchy valuation metrics.
The bank commands a low PH Score™ (3.9) and sits along with BBRI in the bottom quartile globally.


Bank Mandiri Persero

BMRI: Subpar Trends and Rich