BMRI - Stable earnings improvement continues

KBVS Update
Thursday, 7 Sept 2023

BMRI: Stable earnings improvement continues
(Maintain BUY; TP: IDR6,300)

•    Following its solid 1H23 result, BMRI recorded another solid monthly result. 7M23 bank only earnings grew 26.5% yoy to IDR27.4 tn driven by healthy growth from top to bottom. Net interest income booked 13.9% yoy higher despite mounting interest expenses (56.9% yoy) which largely being offset by solid interest income growth of 22.6% yoy at IDR55.84 tn.

•    Bank only total loan grew 10.2% yoy and arrives within management’s ’23 guidance at 10%-12%. All sectors still saw higher loan demand. Meanwhile, higher total deposits of 13.2% yoy was mainly helped by sturdy demand deposits growth of 28.3% yoy (*SA growth: 7.0% yoy*).

•    Key performance metrics improvement remains on track. NIM expansion successfully managed, reported around 3bps stronger to 5.55% in 7M23 and arrives within ‘23F guidance of 5.3%-5.6%. CoC also continue to note a better figure, improving by around 25bps yoy to 0.93% and within BMRI’s target of 1.1%-1.3%.

•    With its continuing solid 7M23 bank only earnings result and assuming flattish PATMI growth in Aug ‘23 and Sept ‘23, 9M23 earnings will reach IDR36.31 tn, or grew 18.5% yoy and slightly surpassing our 9M23F for BMRI by 2.5% (IDR35.42 tn), ceteris paribus. As such, we think ours and street ‘23F net profit forecasts for BMRI remain on track and likely to be achieved.

•    Maintain BUY with target price of IDR6,300. Our target price is based on Gordon Growth Model with fair 2023F P/B of 2.3x. BMRI is currently trading at 2.2x/2.1x ‘23F/’24F P/B, or around its +2SD of 10-yr hist mean of 2.1x.

Regards,
Akhmad Nurcahyadi - KBVS Research