BMRI - Expect 9M24 earnings to continue inline

KBVS Update
Tuesday, 8 Oct 2024

BMRI - Expect 9M24 earnings to continue inline
(Maintain BUY; TP: IDR8,100)

* We remain optimistic about BMRI’s financial performance for the remainder of 2024. Despite recent fluctuations in deposit mix, we anticipate that the bank's overall funding cost will continue to decline due to lower benchmark interest rates. Both 8M24 and Aug24 bank only earnings came inline our expectation.

* Net interest margin (NIM) has remained stable within the management's projected range, indicating a healthy financial position. From a risk metrics perspective, credit costs remained within BMRI expected range (8M24: 0.74% vs guidance of 1.0-1.2%), demonstrating prudent lending practices and effective asset quality management.

* What next?. BMRI’s strong financial performance in the 8M24 positions the bank well to reach ours and consensus earnings projection. We anticipate that the bank's 3Q24F net profit will continue to exhibit significant growth. Our estimate for BMRI 3Q24F standalone net profit stands at IDR13.82tn (6.9% yoy) and aligns closely with the consensus forecast of IDR14.39tn. For the 9M24F, we project a total net profit of IDR38.47tn or 7.1% yoy (cons: IDR39.04tn).

* Despite a short-term decline in performance, the bank's shares remain a strong investment option, evidenced by their YTD (18.5%) and 1YR returns (19.0%). While BMRI stock has experienced a temporary setback in the past month (1M return: -5.2%), we believe this presents a favourable entry point for investors. Our target price of IDR8,100 per share is slightly higher than the consensus estimates of IDR7,950, suggesting that we anticipate strong performance from the bank in the coming months. We maintain a positive outlook on BMRI and believe that its shares are poised for further growth.

* The upcoming release of 9M24 earnings will be a significant event. Following the release of 9M24 results, we will reassess our valuation for 2025. We are sticking with our BUY recommendation with GGM target price of IDR8,100 (2.6x ‘24F P/B), while currently trading at 2.2x ‘24F P/B or below its +2SD.

Regards,
Akhmad Nurcahyadi - KBVS Research team