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Fuck it, I will just come out and say it: BRI is as tight as Indonesian fried chicken. The bank is super profitable and has a rather attractive valuation of around 8 times earnings only. For the second quarter ended 2013, BRI generated annualized returns on assets and equity of 4.62% and 33.05% respectively which is awesome for a bank. BRI’s net interest margin of 8.08% is better than the net interest margins of U.S. banks in general, even after loan charge-offs over the past 5 years are taken into account. BRI’s non-performing loans ratio (NPL ratio) was between 1.80%-3.52% for the five year period of 2008-2012; the loans written off by the bank were lower than its non-performing loans in each of the five years. In comparison, Wells Fargo had a net interest margin of 3.46% for the second quarter ended 2013; Wells Fargo’s net charge-off rate was between 1.17%-2.30% for the five year period of 2008-2012.
BRI have also been achieving strong deposit growth; the bank grew deposits at a compounded annual growth rate of 17.44% for the five year period of 2008-2012. In my opinion, a growing deposit base is the best indicator that the bank is expanding its business.
BRI’s capital adequacy ratio is at a healthy 17.36% with the bulk of its capital being tier 1 capital. BRI’s strong profitability and comfortable level of capital ensures that the bank can absorb a significant amount of losses from adverse scenarios. BRI’s gross NPL ratio is currently at a manageable 1.81%.