Research

BDMN: Beneficiary Of MUFG Expansion

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Algo Research Team

Company | Jul 05, 2023 | Views: 158

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Key Summary:

  • MUFG aggressive expansion in Indonesia
  • Benefits from MUFG ecosystem (i.e. Loan)
  • BDMN is a laggard, fundamental underappreciated

As market could become more conducive in 2H23, one name that can provide upside is Bank Danamon (BDMN). The last time we wrote about the banking industry (Banks: Flashing Downside Risk), we outlined potential risks for the sector such as cybersecurity, waning industry loan growth and elevated provision going forward.


However, BDMN benefits from MUFG expanding ecosystem where 1Q23 loan growth was highest among peers (including big banks). Provision expense is also expected to decline next year, unlike some competitors, as management decides to be prudent and conservative this year with 254% coverage ratio (highest among small-mid banks). Lower interest rate environment may alleviate funding cost to sustain NIM (8.4%) as well.

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