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BBNI: Mitigating Bad Debt Risk - An Attractive Valuation
30 Jan 2020

Mitigating Bad Debt Risk - An Attractive Valuation

BBNI has allocated higher than expected provision cost in 4Q19 by 2┬┐fold which was aimed to mitigate deteriorating NPL risk in 2020. We forecast that the company will maintain its NPL at the level of 2.3% in 2020F due to the PSAK 71 implementation in January 2020. Currently, BBNI share price traded slightly below its average 5 years forward PBV - 1 stdev of 1.04x which translated into an attractive valuation. Hence, we kept BUY rating on the counter with 27% upside potential.

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