BBNI - 9M24 below; expect better ‘25F performance

KBVS Update
Tuesday, 29 October 2024

BBNI: 9M24 below; expect better ‘25F performance
(Maintain BUY; TP: IDR6,560)

* BBNI's 9M24 earnings grew modestly by 3.5% yoy, primarily due to a significant 35.3% yoy increase in blended funding costs. This resulted in a 9M24 PATMI that fell short of both our and consensus expectations. However, a more positive trend emerged on a quarterly basis (4.7% qoq).

* Loan growth (9.5% yoy) arrive slightly below BBNI’s ‘24F range guidance of 10.0-12.0% yoy. While TPF grew modestly (3.0% yoy), reflecting the tight liquidity environment, BBNI's CASA deposits demonstrated healthy growth of 5.5% yoy. Additionally, the decline in TD is expected to continue, further strengthening the bank's deposit mix.

* NIM expanded to 4.4%, exceeding the previous quarter's 4.0% and aligning with the bank's ‘24F guidance of ≥ 4.0%. Risk metrics ratio continues to be well-managed (NPL & CoC: 2.0% & 1.0% ) and in line with BBNI's ‘24F guidance of ± 1.0% for CoC. We also note the improvement in the LAR, which declined to 11.8%, a decrease of 260 basis points from 14.4% in the same period last year.

* We have adjusted our ‘24F to account for BBNI's lower-than-expected 9M24 earnings and rolled-over our valuation to ‘25F. While it remains elevated at 35.3% yoy, they have been steadily declining from a peak of 47.5% in the 1Q24. We expect that the combination of a low-interest-rate environment and improved deposit mix will drive stronger earnings growth for BBNI.

* Maintain BUY. We have rolled-over our valuation to ‘25F. Our GGM TP for BBNI of IDR6,560 is pegged at 1.3x ‘25F P/B, while currently trades at 1.1x ‘25F P/B or slightly below the average historical mean of 1.2x.

Regards,
Akhmad Nurcahyadi - KBVS Research