BRIS has released its YTD Aug-25 results with headline profit of IDR4.8tn (+8% y-y) – making it one of the two top five banks under our coverage to report satisfactory rofit growth in Indonesia. However, we believe that even at the current pace of profit growth, BRIS’ FY25 earnings projections would still be behind our and consensus estimates. We attribute this to its persistently elevated funding as well as credit costs. We think this will persist in the remainder of 2025F, which would potentially lead to consensus earnings downgrades for FY25 earnings.

At the operating level, YTD Aug-25 NII and PPOP reached IDR13.5tn (+14% y-y) and IDR7.9tn (+9% y-y), respectively. We attribute the lower profit growth than PPOP to the increase in YTD Aug-25 credit costs to 0.90% of loans from 0.89% a year ago. In our view, this reflects its strong loan growth of 13% y-y (+6% YTD) and/or elevated write-off rates of ~0.6%. We also think the bank might have anticipated a potential increase in NPL formations at its retail loan portfolio. Given this elevated CoC on YTD Y-Y basis, this resulted into stable loan-loss-reserves (LLR) of 3.6% (-20bp on YTD basis). Refer to charts inside for details.

We believe liquidity will gradually improve in the remaining 2025F; we note YTD Aug-25 funding costs rose slightly to 2.8% (a slight uptick from 2.6% a year ago). However, the bank has seen a slight upward increase in broad asset yields, resulting in a YTD Aug-25 net financing margin (equivalent to net income margin for conventional banks) of 5.2% (+10bp y-y).

On balance sheet, the bank reported financing and deposit growth of 13% y-y (+6% YTD) and 11% y-y (+1% YTD), respectively, resulting in a loan-to-funding ration of 88.4% (+180bp y-y / +450bp YTD). We think financing growth could settle around 10% at the end of the year.

Post results, we retain BRIS as one of our long-term preferred banking stocks in Indonesia. Its strong market positioning in shariah banking space remains remarkable, in our view, where we estimate its market share stands at >50%.

Valuation and risks

We derive our TP of IDR3,500 using DuPont analysis, with key parameters including: a risk-free rate of 6.5%, an equity risk premium of 7.8%, beta of 1.2x and a CAR-adjusted ROAE of 18.0%. Our TP implies 3.2x FY25F P/B (vs 2.3x currently) and 21.3 FY25F P/E (vs 15.2x currently). Risks are worsening economic trends, tighter liquidity competition, and/or higher credit cost and opex growth.

Fig. 1: BRIS YTD Y-Y Performance %

Fig. 3: BRIS - 12MMA CoC vs 12MMA WO %

Fig. 4: BRIS - LLR 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)