BMRI - Our comment on 5M25 bank only result

BMRI - Our comment on 5M25 bank only result Bank Mandiri (BMRI) reported flattish bank only earnings in 5M25 on high funding cost (29.9% yoy), despite recorded healthy top line growth (+12.3% yoy). NII grew by 13.0% yoy. Yet higher opex (22.2% yoy) has pur notably pressure to PPoP which inched down 1.0% yoy and steady healthy credit cost (-5.9% yoy) has overall help tick up PATMI (0.1% yoy). On monthly stand alone May25 earnings was declined by 2% yoy on CoF spike coupled with 7.3% yoy higher in CoC. However, earnings growth were very strong (25.6% mom) mainly driven by a sharp drop in provisions, despite small single digit top line growth. In all, 5M25 net income arrive in line with a run-rate of 35.0% (KBVs '25F) /32.3% (Cons. '25F) vs 35.2% in last year. On balance sheet side, total loan grew by 13.2% yoy, surpassing '25F management range guidance (10-12% yoy). Total TPF grew by 8.5% yoy, yet driven by 20.3% yoy higher in TD and thus has made CASA drop 2.7% yoy to 77.6%. (Source : Company) Comments : We expect PPoP to continue grew positive amid continuing challenges in NIM and funding cost pressure on tight liquidity and high TD growth. We believe credit cost continue to play its crucial role for BMRI earnings growth achievement. Of the total banks under our coverage, BMRI stock has the highest drop 13.5% ytd (BBT is the least: -2.6% ytd). Our inline run-rate suggest that BMRI likely to record another inline earnings in 1H25. Maintain BUY GGM-based TP of IDR6,240 (pegged at 1.9x ‘25F P/B), while currently trading at 1.5x ‘25F P/B or slightly above its -1SD of 1.4x.