Banking - Big capitalization banks BOPO ratio is decreasing; who is the most efficient?

Banking - Big capitalization banks BOPO ratio is decreasing; who is the most efficient? A number of Jumbo Banks or groups of banks with core capital (KBMI) IV recorded a decrease in the ratio of operational costs to operating income (BOPO) throughout 2023. For your information, the smaller the BOPO, the more efficient the bank is in running its business. Based on its financial report, Bank Central Asia (BCA) recorded a decrease in the BOPO ratio to 43.76%, down 278bps compared to the BOPO ratio in the same period the previous year, which was at the level of 46.54%. Then, Bank Mandiri's BOPO ratio fell 547bps from 57.35% in 2022 to 51.88% in 2023. PT Bank Negara Indonesia (Persero) Tbk (BBNI) also recorded a decline in the BOPO ratio of 23 bps, from 68.63% in 2022 to 68.40% in 2023. In addition, Bank Rakyat Indonesia (BBRI) recorded a BOPO ratio of 68.21% at the end of 2023, down 89bps from the same period the previous year of 69.10%. (Source: Kontan) Comment: We like the FY23 BOPO results for big-cap banks and banks under our radar. Amid the continuing optimism, the ratio will play a significant role in the bank's earnings this year. Assuming NIM will grow steadily on cautiously optimistic loan demand and cuts in bet rates, asset quality improvement will remain intact, and BOPO will record a more efficient figure than banks earnings, which are likely to grow better than the ’23 figure.