BBRI - Inline 10M24 bank only earnings

KBVS Update
Thursday, 5 Dec 2024

BBRI - Inline 10M24 bank only earnings
(Maintain BUY; TP: IDR5,960)

* Following its inline 9M24 earnings, the bank recorded another inline 10M24 bank only earnings. PATMI growth of 5.3% yoy was driven by a combination of steady double-digit top line and consistent declining blended funding cost. In all our 10M24F bank only earnings for BBRI of IDR 45,974bn was in line with 10M24 net income results of IDR 45,725bn.

* Total loan grew 6.4%, reaching IDR1,226.48 tn. While the YTD loan growth has moderated as anticipated, the bank's strategic focus on selective lending to maintain asset quality amid rising credit cost concerns is commendable. We expect that the 10M24 and our ‘25F loan growth for the bank should resulting to a healthier CoC and thus will drive ‘25F earnings to grow stronger yoy.

* BBRI reported a 6.6% YoY increase in total deposits. This positive trend was primarily driven by a robust 10.7% YoY growth in demand deposits, which elevated the CASA ratio to 6.8% YoY, representing a 20bps improvement over the prior month.

* Key ratio performance largely recorded an improvement. CASA ratio reached a YTD high of 64.5%, representing a substantial 275bps increase from Jan24. Better NIM remained intact, expanding by approximately 10bps compared to June 2024. BBRI’s CoC continues to trend favorably, approaching the company's 2024 target of 3.1%.

* We anticipate that BBRI's stronger PATMI growth in 2025 will be primarily driven by improved asset quality and lower CoF. The bank's shorter-term time deposits is expected to benefit it by enabling a quicker response to declining borrowing costs compared to its peers. Additionally, a potential decline in the SRBI yield could stimulate deposit growth in the banking sector, including BBRI, leading to higher yoy liquidity in ‘25F.

* Maintain BUY. GGM-TP of IDR5,960. Our GGM-based TP for BBRI pegged at 2.6x ’25F P/B while currently trading at 1.9x ‘25F P/B, or slightly below average historical mean of 2.1x.

Regards,
Akhmad Nurcahyadi - KBVS Research team