Trimegah Securities expects Bank Mandiri's net profit to reach IDR 23.6 trillion (approx. USD $1.8 billion) in 2016 from an earlier estimation of IDR 20.5 trillion. The bank's net profit totaled IDR 20.3 trillion in 2015. Meanwhile, net interest income of the lender is now expected to reach IDR 51.2 trillion (approx. USD $3.9 billion) this year. Trimegah Securities also sees Bank Mandiri's (gross) credit growth accelerate to 13.5 percent year-on-year (y/y) in 2016. Furthermore, the target price of its shares is now set at IDR 11,600 each. On Wednesday (23/03) shares of Bank Mandiri fell 0.49 percent to IDR 10,250 per share. So far this year, shares of the bank have risen 10.8 percent.

Several factors contribute to this more optimistic view. Firstly, Bank Indonesia's interest rate cut should give rise to accelerated credit growth in Southeast Asia's largest economy. Secondly, credit costs of Bank Mandiri have started to stabilize and should head to 'normal' territory in 2016. Thirdly, amid heightened expectation of acceleration of Indonesia's economic growth this year more businesses and households will demand credit from financial institutions. Fourthly, being a state-controlled entity Bank Mandiri can play its part in the government-led infrastructure projects. Lastly, the appointment of Kartika Wirjoatmodjo as new General Director of Bank Mandiri was well-received by markets.

Future Projection Bank Mandiri's Financial Highlights:

      2014    2015    2016F    2017F    2018F
Net Interest Income   39,132   45,363   51,248   56,004   62,880
Net Profit   19,872   20,335   23,648   27,782   32,090
PPOP   31,507   38,382   40,662   44,353   49,665
P/E Ratio (x)     11.9     11.6     10.0      8.5      7.4
PBV (x)      2.3      2.0      1.7      1.5      1.3

in billion IDR rupiah, except otherwise stated
Source: Trimegah Securities (23/03/2016)