2017F 2016F 2017F 2016F 2017F 2016F 2017F 2016F 2017F 2016F 2017F

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1 Equity Research BANKING SECTOR Sector Updates Financials Sector 3Q16 synopsis Solid PPOP ROA & vast liquidity 3Q16 operational beat led to solid earnings growth Stronger improvement in earnings growth was witnessed in large banks (+31.6%) vs small banks drop (-4.9%). The 3Q16 s PPOP beat (vs ours and street) led earnings to grow strongly (+26.8% ; +9.6% ), slightly ahead of our 2016F (78%), but in-line with the street (74%). We view 1) better NIM (partly on one-off), 2) soft opex, 3) higher non-interest income, and 4) healthier CoC as the culprits to offset tepid loan growth (+1.6% ). Risky loans stabilizing with restructured loan s peak-out nigh The risky loans growth (classified + current restructured loan) seems to have stabilized in 3Q16 (+3.2% ; +23% ) vs 1Q16 s peak (+13.3% ; +32% ). With 3Q16 classified loan ratio trending lower (-0.2ppt ), risky loans ratio stabilized (+0.1ppt ) vs 1Q16 s highest (+1.7ppt ). We expect 4Q16F as the peak for restructured loans given banks pipeline points to a lower additional net restructured loans, relative to past quarters. Solid PPOP ROA to build up loan buffers; normalizing write-offs The 3Q16 s PPOP ROA uptrend to 4.6% (+0.3ppt & ) constantly allowed banks to build up loan buffers; loans-loss reserves and risky loan coverage respectively rose 0.2ppt (+0.6ppt ) and 2ppt (+3ppt ). Yet large banks, with coverage ratios higher, are more prudent vs small banks (coverage ratios fell ). The high NIM (on TD rate cuts and partly one-offs), better non-int. income, and benign opex (on efficiency and lower capex) would fortify 2017F PPOP for loan buffers. Write-offs of loan narrowed in 3Q16 (+0.2ppt ) vs +0.3ppt to +0.5ppt in past quarters. Debunking the shrinking excess liquidity Most say liquidity is tight; we do not think so and view excess liquidity is rising in fact. The 3Q16 LDR is slightly up +1ppt for large banks, but down for small banks (chiefly responding to weaker loan growth). Asset mix consistently saw loan portion sinking to 68% (3Q16) vs 70% (4Q15), implying excess liquidity being deployed into non-loan interest-earnings asset (i.e. gov t bond). Albeit vast access in wholesale funding, liquidity imbalances continued with large banks (lower LDR; higher deposit and CASA growth) outperforming small banks, and this should linger going into 2017F. Outlook: accelerating loan and stabilizing CoC to drive earnings Post-3Q16 s increased tax amnesty focus and steady FX, business buoyancy should improve and eventually lead 4Q16F loan growth to rebound. Given 3Q16 s stronger growth for those exposed with retail loan mix, we expect retail loan growth to beat other segments in 4Q16-1H17F before the latter catching up in 2H17F. Beside healthier risky loan, a lower CoC in 4Q F would help drive earnings. We revise 2016F-18F ( 0.1% to +3.3%) on better 9M16, leading to new TPs (-6% to +10%). Ratings are unchanged with a new pecking order: BMRI, BBNI, BBRI, and BBTN. Banks valuations are attractive and undemanding with 2017F P/B and P/E at respectively 1.7x (9% below mean) and 13x (2% below STD+1). Reiterate OVERWEIGHT. PRICE PERFORMANCE OVERWEIGHT Source: Bloomberg, BCA Sekuritas MARKET DATA Igor Nyoman Putra igor.putra@bcasekuritas.co.id ext 178 YTD 1M 3M 12M Absolute 18.5% 0.1% 7.8% 25.7% JCI Return 18.1% 1.1% 4.0% 21.7% Relative 0.4% -1.0% 3.9% 4.0% Source: Bloomberg, BCA Sekuritas 31 Oct Oct-15 Jan-16 Apr-16 Jul-16 Oct-16.BCASBANK JCI Rebase as of 31-Oct-16 Exhibit 1. Indonesia banks valuation table Ticker Rating TP CP Mkt cap. Net profit (IDRbn) EPS gr. P/E (x) P/B (x) ROE Yield (IDR) (IDR) (USDm) 2016F 2017F 2016F 2017F 2016F 2017F 2016F 2017F 2016F 2017F 2016F 2017F BBCA NR na 15,550 28,847 19,780 21, BBRI BUY 14,200 12,200 22,915 25,484 27, BMRI BUY 13,550 11,575 20,564 15,667 18,274 (23.0) BBNI BUY 6,600 5,600 7,951 10,165 11, BDMN HOLD 4,050 3,860 2,817 3,383 3, BBTN BUY 2,250 1,910 1,539 2,115 2, BNGA BUY 1, ,827 1,788 1, BJBR HOLD 1,575 1,595 1,178 1,578 1, Sector Overweight 87,638 79,960 88, Source: Bloomberg, BCA Sekuritas estimates * BBCA is not rated ** Closing prices as of 31 October 2016

2 Contents 3Q16 results synopsis Underlying and bottom-line profitability. 3 Margins spread... 3 Top-line and non-interest income trend.. 4 Cost and efficiency measures.. 6 Balance sheet. 8 Liquidity.. 10 Asset quality and risky loan buffers. 11 Profitability metrics.. 17 NPL formation vs credit cost. 18 Company section Individual bank results summary Indonesia banks results summary 25 Forecasts revisions. 27 Forecasts tables.. 30 Links to related recent reports BBNI IJ (BUY): BUY on bottoming signs BJBR IJ (HOLD): Higher credit cost as a negative surprise BBTN IJ (BUY): Expecting two positives in 4Q16F BMRI IJ (BUY): 3Q16 - debunking RGM-led proposition 2

3 3Q16 results synopsis Underlying and bottom-line profitability Exhibit 2. Pre-provision operating profit summary PPOP 9M/16F 3Q14 4Q14 9M15 9M16 BCAS Street BBCA BBRI (1.7) BMRI BBNI L4 banks BDMN (3.7) BBTN BNGA BJBR S4 banks Aggregate Source: Companies data, Bloomberg consensus, BCA Sekuritas estimates * Pre-revised 2016F Exhibit 3. Net profit summary Net profit 9M/16F 3Q14 4Q14 9M15 9M16 BCAS Street BBCA BBRI BMRI (17.6) BBNI (0.3) (6.2) L4 banks BDMN (15.0) BBTN BNGA BJBR (24.5) S4 banks (4.9) Aggregate Source: Companies data, Bloomberg consensus, BCA Sekuritas estimates * Pre-revised 2016F Margins spread Exhibit 4. NIMs reached the highest level since 4Q10, expecting 3Q16 as the peak NIM BBCA (0.2) 0.1 BBRI (0.3) (0.1) BMRI BBNI L4 banks BDMN BBTN (0.2) (0.4) BNGA BJBR S4 banks Aggregate One-off FX interest income (on borrower Raja Garuda Mas/ RGM) benefited BMRI and BBNI in 3Q16 vs BBRI s 2Q16 accrued KUR payment Of small banks, BBTN was the only one seeing a drop on late subsidized housing liquidity program (FLPP) settlement, seeing a 4Q16F NIM surge Exhibit 5. Yield still expanding regardless low-rate milieu Asset yield BBCA (0.2) (0.2) BBRI (0.4) (0.6) BMRI BBNI L4 banks BDMN BBTN (0.3) (0.8) BNGA (0.3) BJBR S4 banks (0.2) Aggregate (0.0) Anticipating 3Q16 as the asset yield peak-out with NIM would have been lower and had the oneevent items been absent 3

4 Exhibit 6. Small banks cut high-cost deposits (TD) higher than large banks CoF BBCA (0.0) (0.3) BBRI (0.2) (0.4) BMRI (0.1) (0.5) BBNI (0.1) (0.1) L4 banks (0.1) (0.3) BDMN (0.1) (0.3) BBTN (0.1) (0.5) BNGA (0.7) BJBR (0.7) S4 banks (0.5) Aggregate (0.1) (0.4) Recently BNGA and BJBR saw CoF upticks, indicating potentially tighter liquidity than expected Top-line and non-interest income trends Exhibit 7. Net interest income still grew 16.6% strongly Net int inc BBCA BBRI (0.4) 13.2 BMRI BBNI L4 banks BDMN (0.4) BBTN (0.3) 7.4 BNGA BJBR S4 banks Aggregate Exhibit 8. Large banks generated better core non-interest income vs small banks Fee income BBCA BBRI BMRI (6.6) 8.8 BBNI (8.5) L4 banks BDMN (1.2) 5.0 BBTN (5.5) 7.6 BNGA (1.0) 6.4 BJBR (45.9) (21.6) S4 banks (2.3) 5.6 Aggregate (0.3) 11.2 Exhibit 9. Supported by recoveries and less-fx exposure, small banks fared better Non-interest inc BBCA BBRI (22.3) 22.9 BMRI (0.6) (5.6) BBNI L4 banks (3.4) 8.5 BDMN (8.9) 2.6 BBTN BNGA BJBR (6.3) 7.3 S4 banks (3.4) 13.8 Aggregate (3.4) 9.2 4

5 Exhibit 10. Fee-based income of revenue Fee inc/rev BBCA (0.0) (0.5) BBRI BMRI (4.0) (2.3) BBNI (2.0) L4 banks (0.4) BDMN (1.8) 0.3 BBTN (0.4) (0.1) BNGA (0.6) (0.3) BJBR (0.6) (0.4) S4 banks (0.4) (0.2) Aggregate (0.3) We estimate fee-based income to improve next year following better business activity. BMRI should be most leveraged for its most diversified business units BDMN will likely continue to register weak trend on consolidation in DSP Exhibit 11. Non-interest income of revenue Non-int inc/rev BBCA (0.0) 1.8 BBRI (3.7) 1.1 BMRI (4.2) (6.6) BBNI (2.9) L4 banks (2.0) (1.7) BDMN (2.0) 0.5 BBTN BNGA (0.1) 3.9 BJBR (1.0) (1.5) S4 banks (0.9) 1.1 Aggregate (1.8) (1.2) Exhibit 12. Recovery items Recovery 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 (IDRbn) BBCA (538) 68 na BBRI BMRI , BBNI L4 banks 1,520 1,707 2,648 1,473 1,044 2, BDMN (7.2) (2.3) BBTN BNGA (22.5) 4.3 BJBR (12.8) S4 banks (7.4) 14.9 Aggregate 1,807 2,011 3,036 1,747 1,422 2, Recovery is likely to continue to help bottomline in 2017F on ongoing NPL recovery BJBR will likely continue to obtain the most on current cooperation with insurance agencies and special units to accelerate the recovery process 5

6 Cost and efficiency measures Exhibit 13. Banks opex summary Opex BBCA (6.9) 13.9 BBRI (8.4) 21.5 BMRI (5.0) 8.1 BBNI L4 banks (4.4) 14.3 BDMN (5.1) BBTN (8.8) 14.4 BNGA (12.7) BJBR (1.2) 18.3 S4 banks (1.4) (1.6) Aggregate (3.8) 10.8 Exhibit 14. 1Q-3Q16 opex growth on average lower vs past quarters Opex growth 3Q14 4Q14 BBCA BBRI BMRI BBNI (1.0) (14.5) L4 banks BDMN (1.1) (2.2) (6.4) (6.3) (5.9) (25.0) (7.3) (5.3) (5.1) BBTN BNGA (12.7) BJBR S4 banks (1.7) (1.6) Aggregate Benign opex trends ahead is likely to cushion bottomline from tapering top-line Exhibit 15. Cost-efficiency improved in general followed by Cost-to-inc BBCA (3.9) (0.3) BBRI (1.7) 2.5 BMRI (7.5) (2.8) BBNI (2.1) (4.0) L4 banks (4.0) (0.8) BDMN (2.9) BBTN (5.4) 2.7 BNGA (1.1) (12.4) BJBR (3.1) (3.6) S4 banks (1.3) (4.8) Aggregate (3.6) (1.6) Exhibit 16. benign cost/avg asset Cost-toavg asset BBCA (0.4) 0.1 BBRI (0.5) 0.2 BMRI (0.2) 0.1 BBNI (0.4) L4 banks (0.3) 0.0 BDMN BBTN (0.4) (0.1) BNGA (0.0) (0.4) BJBR (0.2) 0.5 S4 banks (0.1) (0.1) Aggregate (0.3) 0.0 NIM will be inevitably receding and hence, we advise look at cost/ avg asset to measure costefficiency better 6

7 Exhibit 17. Banks fee-income ability to cover costs Feeinc/opex BBCA (1.0) BBRI BMRI (1.2) (2.5) BBNI (2.8) (7.3) L4 banks (0.1) BDMN (4.5) 2.9 BBTN (0.8) BNGA (0.6) 5.3 BJBR (0.8) (0.5) S4 banks (0.2) 1.4 Aggregate Exhibit 18. Improving trend for large banks vs small banks deteriorating Provision /revenue BBCA BBRI BMRI BBNI (19.1) 11.2 L4 banks (2.2) 3.6 BDMN (2.7) BBTN (11.3) BNGA (2.7) (3.8) BJBR (7.7) S4 banks (3.5) Aggregate (1.6) 2.3 BBNI has the most encouraging trend Validating our thesis of ROE risk, BJBR saw the highest jump on its underprovisioned 7

8 Balance sheet Exhibit 19. Unexpectedly weak 3Q16 loan growth led us to cut 2016F loan growth Loan YTD BBCA (0.2) BBRI BMRI BBNI L4 banks 1,640 1,722 1,782 1,900 1,869 1,981 2, BDMN (5.7) BBTN BNGA (5.4) BJBR S4 banks Aggregate 2,132 2,228 2,291 2,411 2,374 2,501 2, BBCA is focused on highquality growth instead of high growth BBNI, BBRI, BBTN, and BJBR saw the strongest loan growth which should continue to accelerate in 1H17F, confirming our better-growth retail loan mix thesis Exhibit 20. Banks loan growth summary Loan growth 3Q14 4Q14 BBCA BBRI BMRI BBNI L4 banks BDMN (0.3) (3.2) (3.6) (6.8) (7.0) (8.0) (8.6) BBTN BNGA (3.1) (3.0) (6.1) BJBR S4 banks Aggregate In general, the current double-digit loan growth may seem to be strong. Yet, last year was 4Q15- loaded and therefore, we see a lower trend in 4Q16F Negative trends: BDMN and BNGA are still on ongoing consolidation Exhibit 21. Seasonally 4Q experienced higher loan growth than other quarters Loan growth 3Q14 4Q14 BBCA (2.9) (3.5) 3.6 (0.2) BBRI (3.4) BMRI (3.5) BBNI (2.9) L4 banks (2.0) (1.6) BDMN (1.5) 0.2 (2.4) 0.5 (1.9) (3.1) (2.6) (0.6) (2.5) BBTN BNGA (0.2) 2.3 (1.1) (0.7) (3.6) 2.5 (4.3) BJBR (0.3) S4 banks (1.2) 3.0 (0.6) Aggregate (1.5) (1.5) Tax amnesty focus and early loan repayment were the major culprit to soft loan growth Exhibit 22. Mixed trends of deposit growth Deposit YTD BBCA BBRI BMRI BBNI L4 banks 1,993 2,036 2,105 2,193 2,159 2,260 2, BDMN (11.2) BBTN BNGA BJBR S4 banks Aggregate 2,469 2,538 2,611 2,675 2,652 2,753 2, BBCA continued to accumulate fundings regardless of its negative loan growth YTD BBNI being aggressive to keep up with its infrafocused loan growth BBTN raised funding aggressively in light of the late FLPP settlement, while BJBR was helped by regional funds transfers 8

9 Exhibit 23. Lower growth in 1Q-3Q16 vs past quarters to support NIM Deposit growth 3Q14 4Q14 BBCA BBRI BMRI BBNI L4 banks BDMN (0.2) (1.2) (3.9) (12.0) (10.4) BBTN BNGA (1.8) (4.9) (3.6) (3.8) BJBR (10.6) (4.6) S4 banks (2.0) 0.1 Aggregate Exhibit 24. A lower growth following surprisingly weak loan demand in 3Q16 Deposit growth 3Q14 4Q14 BBCA (0.6) (0.7) BBRI (1.8) (2.4) (1.5) BMRI (1.2) 4.2 (0.0) 3.3 (3.2) 5.5 (0.1) BBNI (1.9) 1.8 (2.6) L4 banks (1.5) (1.5) BDMN (2.2) 4.1 (3.9) 0.9 (4.9) (4.6) (2.2) BBTN BNGA (0.2) (7.6) (0.3) BJBR 3.4 (10.6) (0.9) (17.5) 18.2 (7.5) 5.7 S4 banks (4.7) 2.3 (0.2) 2.9 Aggregate (0.4) (0.8) Exhibit 25. Improving trend to bolster NIM but CASA ratio BBCA BBRI BMRI (0.2) (0.2) BBNI (0.7) (1.4) L4 banks BDMN (1.3) BBTN (0.5) (1.3) BNGA BJBR (1.0) 3.0 S4 banks Aggregate Exhibit 26. in general CASA growth still soft on mild GDP environment CASA growth 3Q14 4Q14 BBCA BBRI BMRI BBNI L4 banks BDMN (14.1) (13.2) (18.1) (13.1) BBTN BNGA (3.3) BJBR (2.3) S4 banks Aggregate BBRI and BBTN have consistently recorded strong CASA growth, indicating their improvement in CASA franchise BJBR fared the worst 9

10 Exhibit 27. Small banks have more room to slash TD for weaker deposit franchise TD growth 3Q14 4Q14 BBCA (0.7) BBRI (4.2) (1.7) BMRI (9.1) (3.2) BBNI (0.4) L4 banks BDMN (4.5) 6.4 (4.4) (7.2) (8.3) BBTN BNGA (0.6) (0.6) (17.9) (10.1) (11.5) BJBR (0.5) (22.5) (10.2) S4 banks (1.5) (4.5) (2.5) Aggregate Liquidity Exhibit 28. Stable loan-to-deposit ratio shows ample liquidity LDR BBCA (0.6) (0.6) BBRI BMRI BBNI L4 banks BDMN (0.5) 2.3 BBTN (6.7) (1.4) BNGA (4.0) (2.4) BJBR (0.9) 14.9 S4 banks (3.6) 1.6 Aggregate Excluding the usual outlier (BBCA), BMRI is best positioned Small banks saw lower LDR, mostly on weaker loan growth in 3Q16 prompting them to roll deposits off the book Exhibit 29. Large banks better-funded vs small banks Loan-to-CASA * BBCA (1.3) (3.0) BBRI (0.7) 6.6 BMRI BBNI L4 banks BDMN (11.7) 5.5 BBTN (11.6) 2.0 BNGA (3.2) (25.5) BJBR S4 banks (9.3) (2.9) Aggregate * Bank-only Excluding the usual outlier (BBCA), BMRI is best positioned Most small banks saw improvements Exhibit 30. Declining portion of loan/int-earnings asset implies over-liquidity Loan/intearnings asset BBCA (4.1) (4.1) BBRI (0.8) 0.7 BMRI BBNI (2.1) (1.5) L4 banks (1.4) 0.0 BDMN (2.7) 0.5 BBTN (0.9) 0.1 BNGA (1.4) (2.3) BJBR (0.1) 6.5 S4 banks (1.4) 0.5 Aggregate (1.5) (0.0) Banks are attempting to optimize their asset-liability spread in light of weak loan demand, by shifting excess funds into higher non-loan interest-earnings asset (i.e. government bonds) This exhibits an overliquidity condition 10

11 Asset quality and risky loan buffers Exhibit 31. 3Q16 improving (negative growth); Negative 9M16 for small banks on speedier AQ recovery Provisions 3Q14 4Q14 9M15 9M16 (IDRbn) BBCA , ,017 1, ,537 3, BBRI 1, ,565 2,431 3,098 1,798 3,607 3,924 3,892 (0.8) ,094 11, BMRI 904 1,928 1,547 2,449 4,497 3,528 4,585 5,284 6, ,493 15, BBNI 1, ,237 4, ,048 1,377 3,355 1,744 (48.0) 311 6,285 6, L4 banks 4,609 3,772 4,444 9,983 8,982 8,341 10,557 13,579 12,806 (5.7) ,408 36, BDMN 1,055 1,010 1,132 1,192 1,301 1,457 1,158 1,082 1, (9.3) 3,625 3,421 (5.6) BBTN (55.5) (27.1) BNGA 930 1,949 1,449 1,331 1,185 1,387 1,211 1,204 1,135 (5.7) (4.3) 3,966 3,549 (10.5) BJBR (119) S4 banks 2,360 3,385 2,832 2,673 2,999 2,969 2,535 2,531 2, (7.6) 8,504 7,839 (7.8) Aggregate 6,969 7,158 7,276 12,656 11,981 11,310 13,093 16,111 15,579 (3.3) ,913 44, Exhibit 32. Better 3Q16 CoC tells 1) 2Q16 as the peak-out and 2) stabilizing NPL Credit cost BBCA BBRI (0.1) 0.2 BMRI BBNI (2.0) 1.3 L4 banks (0.3) 0.5 BDMN (0.0) BBTN (0.0) (0.7) BNGA (0.1) 0.0 BJBR (0.8) S4 banks (0.2) Aggregate (0.2) 0.4 Confirming our HOLD thesis: BJBR booked the highest jump in 3Q16 for its under-provisioned state and less-prudent move during this challenging time Exhibit 33. Stabilizing NPL ratio as well as NPL ratio BBCA BBRI (0.1) (0.0) BMRI (0.0) 1.0 BBNI L4 banks BDMN BBTN (0.8) BNGA BJBR (0.8) (1.5) S4 banks Aggregate Exhibit 34. SML ratio SML ratio BBCA BBRI (0.9) (1.2) BMRI (0.0) (0.2) BBNI (0.1) (0.4) L4 banks (0.1) (0.4) BDMN (0.6) (0.1) BBTN (0.3) (2.1) BNGA (1.2) (1.1) BJBR (0.5) S4 banks (0.5) (1.0) Aggregate (0.3) (0.7) BBCA attributes SML ratio uptick to 1) massive new mortgage borrowers additions (who typically miss their first payment) and 2) auto AQ deterioration 11

12 Exhibit 35. Broader NPL ratio shows a healthier trend partially helped by Classified loan BBCA BBRI (1.0) (1.2) BMRI (0.1) 0.8 BBNI (0.1) L4 banks (0.1) 0.2 BDMN (0.2) 0.7 BBTN (0.2) (2.9) BNGA (0.9) (0.1) BJBR (0.6) (2.0) S4 banks (0.3) (0.8) Aggregate (0.2) (0.2) Exhibit 36. rising current restructured loan ratio, however, Current restruct BBCA (0.2) 0.5 BBRI BMRI BBNI (0.4) 2.7 L4 banks BDMN BBTN BNGA BJBR (0.08) (0.0) S4 banks Aggregate With firmer GDP growth next year, we expect AQ to recuperate faster and thus, potentially upgrade in restructured loan Exhibit 37. fundamentally AQ getting better as indicated by stabilizing risky loan Risky loan ratio * BBCA BBRI (0.2) (0.3) BMRI BBNI (0.2) 2.6 L4 banks BDMN (0.1) 0.8 BBTN (1.8) BNGA BJBR (0.6) (2.0) S4 banks Aggregate * Classified + current restructured loan BBNI commands the highest risky loan ratio in large banks Within small banks, BBTN commands the highest risky loan ratio Exhibit 38. Restructured loan ratio for all collectability Restruct loan ratio BBCA BBRI BMRI BBNI (1.0) 2.4 L4 banks BDMN (0.2) (0.1) BBTN BNGA BJBR (0.0) S4 banks Aggregate

13 Exhibit 39. The rise pace has decelerated, supporting the stabilizing NPL ratio NPLs quantum BBCA BBRI (1.7) 15.1 BMRI BBNI L4 banks BDMN BBTN (3.2) BNGA BJBR (21.1) (26.8) S4 banks Aggregate Exhibit 40. The declines confirm the lower SML ratio SMLs quantum BBCA BBRI (12.2) (4.2) BMRI BBNI L4 banks (1.8) 2.9 BDMN (10.0) (11.7) BBTN (0.3) BNGA (15.8) (17.1) BJBR (6.9) S4 banks (6.6) (8.2) Aggregate (3.4) (1.0) Exhibit 41. The healthier in quantum trend validates the classified loan ratio Classified loan BBCA BBRI (9.5) 0.5 BMRI BBNI L4 banks (0.0) 16.3 BDMN (4.7) (5.0) BBTN (1.0) BNGA (8.7) (4.2) BJBR (9.3) (18.8) S4 banks (3.6) (4.0) Aggregate (1.1) 9.3 BBRI commands the best trend among large banks while BJBR among small banks, but with lessprudent move for the latter Exhibit 42. Banks current restructured loan trend Current restruct BBCA (26.5) BBRI BMRI BBNI (2.2) L4 banks BDMN BBTN BNGA BJBR (0.0) (1.2) (3.5) S4 banks Aggregate

14 Exhibit 43. Banks risky loan trend Risky loan 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 * BBCA BBRI BMRI BBNI L4 banks BDMN (3.9) (4.3) BBTN BNGA BJBR (9.0) (18.4) S4 banks Aggregate * Classified + current restructured loan Exhibit 44. Banks total restructured loan trend Total restructured BBCA BBRI BMRI BBNI (8.6) 80.5 L4 banks BDMN (8.0) (13.4) BBTN BNGA BJBR (8.9) S4 banks Aggregate Most large banks still expect more restructured loan to come in 4Q16F Exhibit 45. The peak appears to have been past, which is also witnessed in Classified loan gr 3Q14 4Q14 BBCA BBRI (2.7) BMRI BBNI L4 banks BDMN (5.0) BBTN (3.9) (1.0) BNGA (4.2) BJBR (5.4) (19.0) (22.4) (16.8) (18.8) S4 banks (4.0) Aggregate Exhibit 46. risky loan growth trend as the broadest AQ measures Risky loan 3Q14 4Q14 gr BBCA BBRI BMRI BBNI L4 banks BDMN (4.3) BBTN BNGA BJBR (3.0) (16.6) (19.2) (16.5) (18.4) S4 banks Aggregate

15 Exhibit 47. Banks classified loan growth progressing Classified loan gr 3Q14 4Q14 BBCA (6.0) BBRI (11.5) (20.1) (9.5) BMRI 8.2 (1.7) (4.5) BBNI 6.7 (18.1) (6.2) L4 banks (1.8) (1.4) (11.6) (0.04) BDMN 1.1 (1.0) (7.6) 10.7 (2.5) (4.7) BBTN 5.2 (5.7) (1.0) (10.0) 12.8 (4.5) 2.0 BNGA 0.8 (7.0) (12.7) (8.7) BJBR 3.5 (2.0) (7.1) (16.1) (1.2) 8.0 (9.3) S4 banks 2.9 (4.9) (5.4) 12.5 (6.5) (3.6) Aggregate (0.1) (2.7) (9.4) (1.1) Exhibit 48. Banks risky loan growth continued to progress to 3.2% Risky loan gr 3Q14 4Q14 BBCA BBRI (5.8) (12.3) BMRI BBNI 4.4 (10.5) L4 banks (0.8) (1.2) BDMN (5.0) 7.5 (2.5) (3.9) BBTN 5.2 (5.0) (7.5) 13.4 (3.8) 5.1 BNGA 3.0 (5.0) (1.7) 3.2 BJBR 3.4 (2.0) (7.0) (15.7) (1.3) 7.8 (9.0) S4 banks 3.4 (3.5) (3.0) 11.3 (2.2) 1.9 Aggregate 0.6 (0.7) (1.7) Exhibit 49. Large banks more prudent vs small banks NPL coverage BBCA (82.7) BBRI BMRI (10.0) BBNI L4 banks (10.4) BDMN (9.0) (6.8) BBTN (1.6) 5.2 BNGA (9.3) (9.6) BJBR (6.9) S4 banks (4.9) (1.1) Aggregate (2.7) Large banks guide for ~130% for 2016F BNGA willing to operate under 100% of coverage ratio when NPL things turn better Exhibit 50. Large banks more prudent vs small banks Loans-loss reserves BBCA BBRI BMRI BBNI L4 banks BDMN BBTN (0.1) BNGA (0.1) 0.7 BJBR (1.2) S4 banks (0.0) 0.1 Aggregate

16 Exhibit 51. Large banks more prudent vs small banks Classified loan coverage BBCA (10.3) 1.6 BBRI BMRI BBNI L4 banks BDMN BBTN BNGA BJBR (7.9) S4 banks Aggregate Exhibit 52. Large banks more prudent vs small banks Risky loan coverage BBCA (1.2) (5.3) BBRI BMRI BBNI (4.8) L4 banks BDMN BBTN (0.0) 0.4 BNGA (2.0) (1.5) BJBR (7.9) S4 banks (0.7) 0.2 Aggregate Apart from the usual outlier (BBCA), BMRI commands the highest risky loan coverage among large banks Exhibit 53. Write-offs Write-off BBCA (0.8) BBRI BMRI BBNI L4 banks BDMN BBTN BNGA (0.4) BJBR (0.7) 0.2 S4 banks Aggregate Exhibit 54. Write-offs normalized with +0.2% in 3Q16 against 0.5% and 0.3% in previous quarters Writeoff/loan BBCA (0.2) BBRI (0.1) BMRI BBNI L4 banks (0.0) BDMN BBTN (0.01) 0.05 BNGA (0.1) BJBR (1.2) (0.2) S4 banks (0.01) Aggregate (0.02) Over the longer term, BJBR s sustainably high contribution from recovery income is questionable, since it is the most aggressive on writing-off loans. 16

17 Profitability metrics Exhibit 55. The profitability gap widened in favor of large banks PPOP ROA BBCA BBRI (0.3) (0.3) BMRI BBNI L4 banks BDMN (0.1) 0.9 BBTN (0.3) BNGA BJBR S4 banks Aggregate One reason of why large banks higher multiples should be appreciated is on continuous widening profitability gap Exhibit 56. ROA ROA BBCA BBRI (0.3) BMRI BBNI 2.7 (0.3) (0.8) L4 banks (0.2) BDMN (0.3) 0.7 BBTN (0.0) 0.2 BNGA BJBR (0.5) 0.1 S4 banks (0.1) 0.5 Aggregate (0.0) Exhibit 57. ROE ROE BBCA (2.1) BBRI (4.9) BMRI (3.7) BBNI 19.1 (2.1) (8.0) L4 banks (4.5) BDMN (1.7) 2.2 BBTN (0.8) 0.9 BNGA BJBR (6.6) (2.8) S4 banks (0.9) 2.9 Aggregate (3.0) 17

18 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q Company section NPL formation vs credit cost Exhibit 58. BBCA NPL formation vs credit cost New NPL formation (LHS) Credit cost (LHS) NPL coverage (RHS) (40) (90) 4Q16F CoC should normalize post 3Q16 s jump and higher coverage ratio Source: Bank Central Asia, BCA Sekuritas Exhibit 59. BBRI NPL formation vs credit cost New NPL formation (LHS) Credit cost (LHS) NPL coverage (RHS) (50) 0.0 (100) We should see a 4Q16F dip in CoC given prudent moves in the past 3 quarters Source: Bank Rakyat Indonesia, BCA Sekuritas Exhibit 60. BMRI NPL formation vs credit cost New NPL formation (LHS) Credit cost (LHS) NPL coverage (RHS) (50) (100) (150) A lower CoC in 4Q16F is anticipated, but to remain elevated on still high NPL ratio Source: Bank Mandiri, BCA Sekuritas 18

19 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q Exhibit 61. BBNI NPL formation vs credit cost New NPL formation (LHS) Credit cost (LHS) NPL coverage (RHS) We expect a normalized 4Q16F CoC since BBNI has been building up coverage ratio consistently Source: Bank Negara Indonesia, BCA Sekuritas Exhibit 62. BDMN NPL formation vs credit cost New NPL formation (LHS) Credit cost (LHS) NPL coverage (RHS) (50) (100) 4Q16F CoC is going to stay high and higher in order to maintain coverage ratio at 100% Source: Bank Danamon, BCA Sekuritas Exhibit 63. BBTN NPL formation vs credit cost New NPL formation (LHS) Credit cost (LHS) NPL coverage (RHS) (10) (20) (1) (30) (2) (40) (3) (50) Seasonality suggests higher in 4Q16F CoC for hefty write-offs Source: Bank Tabungan Negara, BCA Sekuritas 19

20 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 (0.3) (0.2) (0.8) (2.0) Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 (0.1) 4Q15 1Q16 2Q16 3Q Exhibit 64. BNGA NPL formation vs credit cost New NPL formation (LHS) Credit cost (LHS) NPL coverage (RHS) (1) (50) (100) Expecting either higher CoC in 4Q16F or sacrificing coverage ratio, since NPL ratio remains high Source: Bank CIMB Niaga, BCA Sekuritas Exhibit 65. BJBR NPL formation vs credit cost New NPL formation (LHS) Credit cost (LHS) NPL coverage (RHS) (10) (30) (1) (50) (2) (70) (3) (90) 4Q16F CoC should normalize but is to stay elevated, unless BJBR sacrifices coverage ratio Source: Bank Jabar Banten, BCA Sekuritas 20

21 Exhibit 66. BBCA results summary (9M16) BBCA (IDRbn) 3Q15 2Q16 3Q16 Chg 9M/16F 9M15 9M F () () () BCAS Cons. Int income 11,798 12,489 12, ,900 37, , Int expense (2,709) (2,500) (2,610) 4.4 (3.7) (8,627) (7,700) (10.7) (11,081) 69 Net int income 9,089 9,990 10, ,274 29, , Non-int income 2,736 3,322 3, ,192 9, , Total income 11,826 13,311 13, ,466 39, , Total opex (4,824) (5,900) (5,496) (6.9) 13.9 (16,091) (17,587) 9.3 (22,558) PPOP 7,002 7,411 8, ,375 22, , Provisions (963) (1,017) (1,132) (1,537) (3,138) (3,333) Opt profit 6,039 6,394 6, ,837 19, , Non-opt income Net profit 4,827 5,069 5, ,368 15, , Balance sheet Gross loans 364, , , , , , Deposits 464, , , , , , Growth Loan () (0.2) 5.0 (0.2) Loan () Loan (ytd) 5.3 (0.0) (0.2) 5.3 (0.2) Deposit () Deposit () Deposit (ytd) Ratios NIM (0.2) Cost-to-income (3.9) (0.3) (2.4) 44.5 Credit cost (bp) ROE (2.1) (2.3) 20.3 LDR (0.6) (0.6) (0.6) 82.2 Coverage ratio (82.7) (82.7) NPL Tier-1 CAR Source: Bank Central Asia, Bloomberg Consensus, BCA Sekuritas estimates * 2016F is our pre-revised forecasts Exhibit 67. BBRI s results summary (9M16) BBRI (IDRbn) 3Q15 2Q16 3Q16 Chg 9M/16F 9M15 9M F () () () BCAS Cons. Int income 21,729 23,997 23,828 (0.7) ,300 70, , Int expense (6,647) (6,857) (6,754) (1.5) 1.6 (20,436) (20,520) 0.4 (25,471) 81 Net int income 15,082 17,140 17,074 (0.4) ,864 50, , Non-int income 2,750 4,350 3,380 (22.3) ,509 11, , Total income 17,832 21,490 20,454 (4.8) ,372 61, , Total opex (7,498) (9,947) (9,113) (8.4) 21.5 (22,886) (27,538) 20.3 (35,490) PPOP 10,334 11,543 11,341 (1.7) ,486 33, , Provisions (3,098) (3,924) (3,892) (0.8) 25.6 (7,094) (11,423) 61.0 (14,300) Opt profit 7,236 7,620 7,449 (2.2) ,393 22, , Non-opt income (50.2) 1,228 1,091 (11.2) 1, Net profit 6,471 5,930 6, ,417 18, , Balance sheet Gross loans 524, , , , , , Deposits 635, , , , , , Growth Loan () Loan () Loan (ytd) Deposit () Deposit () Deposit (ytd) Ratios NIM (0.3) (0.1) Cost-to-income (1.7) Credit cost (bp) (11.8) ROE (2.5) (2.8) 20.5 LDR Coverage ratio NPL (0.09) (0.05) (0.1) 2.4 Tier-1 CAR Source: Bank Rakyat Indonesia, Bloomberg Consensus, BCA Sekuritas estimates * 2016F is our pre-revised forecasts 21