BBNI released its 1Q25 results on 28 April; the results were broadly in-line with our 1Q25 preview estimates and tracking our FY25F projections. The bank booked 1Q25 profit of IDR5.4tn (+1% y-y), which represents ~25% of our FY25F estimates. At the operating level (NII and PPOP), the bank posted better growth trajectories than FY2024’s. This reaffirms our investment thesis for the Indonesia banking sector that despite tight liquidity, margins will likely stabilize further (y-y). Though the macroeconomy remains challenging combined with a tight liquidity scenario, we think BBNI overall has delivered better earnings in 1Q25 vs. FY24. Specifically, with slower loan growth, we see better y-y growth trends for NII and PPOP as depicted in Fig. 1.

In the remaining part of 2025, we do not anticipate room for flattening or declining funding costs as highlighted in our previous reports. During the earnings call, management also highlighted the potential for upward lending repricing on its loan portfolio as the bank has begun conveying the message to its borrowers. We think room for potential lending rate upward repricing could come from consumers (specifically mortgages when the fixed rate period is expiring) as well as the commercial/SME segments. Better operating profiles should support management’s CoC guidance of ~100bp for FY25E (vs. ~80bp in 1Q25). These should limit earnings risks on the stock, in our view.

1Q25 results summary

• Net interest income (NII) reached IDR10.2tn (-12% q-q; +4% y-y), accounting for ~23% of our FY25F projections. NIM was at 3.9% (-60bp q-q / flat y-y), largely due to higher funding costs, reflecting the tight liquidity in the banking system.

• PPOP reached IDR8.1tn (-13% q-q; flat y-y), accounting for ~22% of our FY25F projections. During 1Q25, the bank reported CoC of 0.8% (-60bp q-q; -20bp y-y) as the bank focused on quality borrowers. Indeed, in 1Q25 NPL reached 2.0% (flat q-q and y-y), while the loans-at-risk (LAR) ratio was at 10.9% (+60bp q-q; -240bp y-y). This brought LAR coverage to 46.8% (-150bp q-q; -320bp y-y) in 1Q25. Risk-adjusted NIM stood at 3.3% (-20bp q-q; +10bp y-y).

• At the bottom line, profit reached IDR5.4tn (+5% q-q; +1% y-y), accounting for ~25% of our FY25F projections.

• On the balance sheet, BBNI booked loan growth and deposit growth of 10% and 5% y-y, respectively. Loan growth was predominantly from corporates (+16% y-y) and consumers (+13% y-y), while deposits growth mostly came from saving accounts (+10% y-y) and current accounts (+3% y-y). Given these, the bank reported an elevated CASA ratio of 70.5% (+80bp y-y), and a loans-to-deposits ratio (LDR) of 93.4% (+430bp y-y).

Valuation and risks

Our TP of IDR6,250 is based on a DuPont analysis, assuming a risk-free rate of 6.5%, an equity risk premium of 7.8%, growth rate of 8.5%, beta of 1.0x and a CAR-adjusted ROAE of 16.5%. We also use 2025F book value as a reference. Our TP implies a 2025F P/B of 1.3x and a 2025F P/E of 10.6x, compared to its current trading multiples of 1.0x and 8.1x, respectively. Key downside risks to our view include worsening macroeconomic trends, unfavorable regulatory changes, increased competition for liquidity (which would increase funding costs), worsening credit quality (which would raise credit costs) and higher opex.

Fig. 1: BBNI - Better earnings profile y-y %

Fig. 2: BBNI – quarterly results

Fig. 5: BBNI – LLR vs 12MMA WO %

Fig. 6: BBNI – 12MMA CoC vs 12MMA WO %

INVESTMENT RATINGS
A rating of ‘Buy’, indicates that the analyst expects the stock to outperform the Benchmark over the next 12 months. A rating of ‘Neutral’, indicates that the analyst expects the stock to perform in line with the Benchmark over the next 12 months. A rating of ‘Reduce’, indicates that the analyst expects the stock to underperform the Benchmark over the next 12 months. A rating of ‘Suspended’, indicates that the rating, target price, and estimates have been suspended temporarily to comply with applicable regulations and/or firm policies. Securities and/or companies that are labelled as ‘Not Rated’ or ‘No Rating’ are not in regular research coverage. Benchmark is Indonesia Composite Index (‘IDX Composite’). A ‘Target Price’, if discussed, indicates the analyst’s forecast for the share price with a 12-month time horizon, reflecting in part of the analyst’s estimates for the company’s earnings, and may be impeded by general market and macroeconomic trends, and by other risks related to the company or the market in general. 

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Erwin Wijaya (erwin.wijaya@verdhana.id)