BBRI - Robust 4M24 earnings, expect healthy 1H24 result

KBVS Update
Thursday, 13 June 2024

BBRI - Robust 4M24 earnings, expect healthy 1H24 result
(Maintain BUY; TP: IDR6,830)

* BBRI’s April 24 earnings of IDR4.0tn grew very strongly by 22.7% yoy, driven by solid topline growth of 10.2% yoy and a sharp drop in provisions of 15.2% yoy. In all, BBRI’s bank-only 4M24 earnings came in line with our ‘24F consolidated PATMI for BBRI and street forecast at a run-rate of 27%/28% vs. 28.4% last year.

* With the 4M24 earnings continuing to arrive within our consensus expectation of ‘24F consolidated net profit for BBRI, we expect the bank to continue managing its earnings performance in the 1H24 period. On a consolidated level, the 1H24F earnings growth looks more appealing, assuming a 2Q 5-year historical run-rate of 22.4% yoy and a much lower vs. the pre-Covid historical average of 26.3%.

* As of 4M24, BBRI has seen an improvement in CoC to 3.6%. Yet, despite it remaining above the ‘24F target, we expect a much softer uncertainty and proven consumer confidence (May24) expectation on the domestic economy resilience will overall support our expectation on BBRI’s 1H24F earning growth.

* Our eye is on BBRI’s CoC, while the remaining of BBRI’s revised down ‘24F guidance is still within our forecast (loan growth, NIM, and NPL). Following the stock sell-off (YTD/YoY: -21.9%/-18.0%) ceteris paribus, we think the stock remains attractive, even assuming flat earnings growth on the back of: (1) all +25bps 7DRR increased fully transmitted; (2) ‘24F CoC reached BBRI guidance, resulting in a GGM value of around IDR5,760/share (2.6x ‘24F P/B) and offering 32.4% upside potential

* Maintain BUY. Our GGM-based TP for BBRI of IDR6,830 is pegged at 3.0x ’24F P/B, while it’s currently trading at 2.0x ‘24F P/B or below its average historical mean.

Regards,
Akhmad Nurcahyadi - KBVS Research team