Research On NHKSI Rekomendasi AMAR Dengan Buy Rating Dan Target Harga Rp392

Photo: Doc. Amar Bank

JAKARTA - PT Bank Amar Indonesia Tbk (Amar Bank), a digital bank that serves the retail and MSME segments, is looking at positive developments in its performance which focuses on improving and strengthening business after successfully turning losses in 2022 into profits in the first quarter of 2023.

The following are some important points based on the latest research report published by NH Korindo Sekuritas Indonesia (NHKSI):

Encouraging Growth through Collaborative Embedded Banking and Financing:

Amar Bank is committed to positioning himself as a leading digital bank that exclusively serves the MSME segment. To achieve this goal, Amar has implemented the Embeddd Banking & Financing "Plug-and-Play" pillar, which is attached by digital banking services into third-party applications. This strategic approach offers several advantages, including a seamless financial management experience for customers.

With this feature, users no longer need to switch between several applications or platforms to make financial transactions. In addition, this feature also allows the experience of personalized customers according to individual preferences, thus increasing the value given by AMAR. This feature has been launched through collaboration with AMAR's strategic partner, Investree.

Collaboration With Investree And Potential Segment SME

AMAR, in collaboration with Investree, is preparing to enter a new business segment. Investree as a minority shareholder is expected to increase Amar Bank's value and create significant expansion opportunities in the SME sector, which allows AMAR to expand its ecosystem and increase lending activity significantly.

In 2022, 49.38 percent of AMAR's total loans will be allocated to the Micro sector, while the SME segment will only contribute 0.04 percent and 4.44 percent of the total loans provided. This figure shows great potential for business development, especially in terms of lending to the SME segment.

AMAR's Superior Products As The Main Weapon

Tunaiku, as a digital loan platform, and Senyuku, a digital banking application that has now been integrated and changed its name to Amar Bank, continues to act as the driving force behind its penetration into the Indonesian market. In 2022, AMAR will focus on improving Tunaiku services and other products.

Despite the careful lending, this strategy has proven wise because it allows Amar Bank to prioritize efficiency. This approach has succeeded, by producing positive changes to net profit in the first quarter of 2023 and is expected to be sustainable and stable in the coming years.

The number of Tunaiku loan disbursements experienced an average annual growth of 84 percent from 2015-2022 and is expected to continue to grow.

Meanwhile, AMAR's digital banking, as of December 31, 2022, has recorded significant growth, with an increase in active users by 513 percent and an increase in downloads by 317 percent. In addition, the number of third party funds raised through digital channels from customers jumped by 89 percent compared to 2021.

AMAR's digital banking has also succeeded in increasing the proportion of low-cost funds, known as CASA (Current Account and Savings Account), compared to total savings. This increase in low-cost funds is expected to boost Amar's savings and the CASA ratio, thereby increasing bank liquidity. NHKSI projects CASA Ratio growth of 22.44 percent and the development of AMAR deposits by 2025.

Vishal Tulsian, President Director of Amar Bank said, in addition to achieving an impressive level of profitability, AMAR also managed to significantly increase its efficiency by lowering interest expense, especially from time deposits, which previously suppressed the decline in interest income.

We managed to reduce the interest expense by 61.4 percent YoY to Rp18,544 billion in the first quarter of 2023, while other operating income experienced significant growth of 61.8 percent YoY to Rp93,092 billion. With this positive achievement and our commitment to providing innovative digital financial solutions such as Tunaiku, digital banking services, as well as collaborative embedded banking and financing, we continue to believe in our ability to face greater challenges and empower individuals and MSMEs, especially those with limited access to financial services, "explained Vishan.

According to the NH Korindo Sekuritas Indonesia Initiation Report, AMAR's continued and stable growth, as well as increased implementation by Amar Bank through Tunaiku and Collaborative Embedding and Financing, can support and strengthen its price target assessment. The NHKSI research report recommends BELI for AMAR, with a target price of IDR 392 (which rose by 39 percent from the closing price of IDR 284 on July 6, 2023).

For more information, please refer to the accompanying research report from NH Korindo Sekuritas Indonesia dated July 6, 2023.