Here's why you should switch from BRI to Mandiri

Mandiri had compelling expansion in micro and consumer lending.

Maybank Kim Eng recommends switching from BRI to Mandiri. The analyst thinks the market has fully valued BRI’s 6% YoY FY13F profit growth, while Mandiri could see FY13F earnings and TP upgrades following its FY12 financial result announcement in mid-March. These are not reflected in Mandiri’s current share price. 

Here's more from Maybank Kim Eng:

It is not until 2014 that we expect BRI’s net interest income growth, especially from the micro segment, to accelerate and serve as positive catalyst to its share price.

Until then, the high rate of loan writebacks will still play an important part in the bank’s net profit growth after a year of higher-than-expected reversals, which brought FY12 profit beyond all estimates to IDR18.7t. Therefore, despite our 9% upgrade of BRI’s FY13F profit to IDR19.8t, we make no changes to our TP.

For now, we prefer switching to Bank Mandiri given its compelling expansion in micro and consumer lending. By 9M12, both segments  had posted attractive net profit growth, with rising net interest income the main driver.

Overall, Mandiri’s 11M12 results also suggest that FY12 performance will be above market expectations. This could lead to a re-rating of the stock.