BBRI - Soft 1Q24 earnings growth, yet overall in-line

KBVS Update
Tuesday, 30 April 2024

BBRI - Soft 1Q24 earnings growth, yet overall in-line
(Maintain BUY; TP: IDR6,830)

* BBRI 1Q24 earnings grew flat by 2.5% yoy to IDR15.8 tn, amid mounting interest expenses (+45.9% yoy). Yet, we view 1Q24 earnings growth is acceptable since it arrives in-line with ours and street expectation at run-rate of 23.2%/23.0% vs. 5yr hist. avg of 23.8% (excluding Covid).

* Total loan grew by 10.9% yoy (3.3% qoq) and arrives within BBRI’s ‘24F management guidance and our ‘24F total loan for BBRI, thanks to strong corporate segment growth of 15.1% yoy. On the liabilities side, total TPF grew strong by 12.8% yoy with better CASA growth of 7.8% yoy.

* NIM was standstill at 7.84% amid the continuing uncertainty and came in at ‘24F management expectation (7.6%-8.0%). On risk metrics, NPL was slightly higher (+30bps) to 3.11%, while CoC around 140bps higher. The management revised down ‘24F guidance to capture the latest situation despite remain intact with our expectation such as higher NPL target of below 3% vs. previous range of 2.7-2.9% (ours: 2.9%).

* In all, we like BBRI’s earnings asset position and portfolio rebalancing. We expect loan yield to continue arrives within FY23 and 1Q24 figures. Worth noting that the bank is planning to re-price its yield. We expect there will be a better room for loan re-pricing (unlike without the increasing benchmark rate) and at the same time we expect its continuing CASA growth to overall managed cost of deposits to increase softer.

* 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 2.1x ‘24F P/B or slightly below its historical mean of 2.2x.

Regards,
Akhmad Nurcahyadi - KBVS Research team