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Bahana Securities downgraded lender PT Bank Danamon Tbk to "reduce" from "hold", citing earnings pressure dueto lower margins and additional provisioning and delay in anacquisition deal. "Going forward, we believe that margin pressure will persiston the back of higher blended cost of funds and intensifyingcompetition in mass market loans," analyst Teguh Hartanto saidin a note on Friday. The research house also said the delay in an acquisition dealdue to pending approval from the central bank has resulted inuncertainties in the outlook on Danamon. Last month, DBS Group Holdings Ltd said it couldreview its planned acquisition of a stake in Danamon if theSingapore lender was allowed to buy only a 40 percent share. "Unfortunately, this has become a controversy issue as BIrecently revamped regulation on acquisition, limiting ownershipof financial institutions in a bank up to 40 percent, implyingshare acquisitions of more than 40 percent must be transactedthrough several stages, subject to BI's reviews on healthinessand GCG rating," Hartanto said. Bahana also slashed its target price on Danamon's shares to4,500 rupiah from 5,800 and said the company's weaksecond-quarter earnings prompted the research house to lower itsmass-market loan growth estimates for 2013 and 2014 by 13 and 17percent, respectively. The lender's shares dropped 1.75 percent to 5,600 rupiah. Thebroader index was up 0.37 percent. 1111 (0411 GMT) (Reporting by Andjarsari Paramaditha, Editing by AnupamaDwivedi)
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