BRIS has continued to deliver strong performance, with 1H25 numbers coming in roughly in line with our FY25F projections. The bank reported net profit of IDR3.7tn (+10% y-y), the highest profit growth rate among major Indonesia banks in our coverage. Among major banks, we think BRIS has a higher proportion of fixed-yielding earnings assets than most conventional banks. Further, we estimate ~55-60% of total financings are fixed-yielding in nature. We expect BRIS to continue delivering higher financing growth than the sector average, and stabilized funding costs, which should ease the pressure on NFM (net financing margin). We believe these will be the key earnings drivers for the bank in the medium term. Meanwhile, we expect the bank’s asset quality to improve further, potentially keeping provision expenses (CoC) at <100bp.

2Q25 result summary

• Net financing/margin income (NFI) stood at IDR5.5tn (+15% q-q; +25% y-y), bringing 1H25 NFI to IDR10.3tn (+17% y-y) – accounting for ~51% of our FY25F projection. Year-on-year growth primarily came from: 1) higher-margin income of IDR7.8tn (+10% q-q; +23% y-y); and 2) stable funding costs (which resulted in one of the lowest funding costs among Indonesia banks under our coverage). We attribute BRIS’s low funding costs to the bank’s dominant position in syariah banking. It is also the main transactional bank in syariah banking space.

• Pre-provision operating profit (PPOP) rose to IDR3.2tn (+2% q-q; +13% y-y), bringing 1H25 PPOP to IDR6.3tn (+12% y-y) – accounting for ~48% of our FY25F projection. Combined with a low provision expense of 1.1%, the bank’s net profit reached IDR1.9tn (-1% q-q; +10% y-y), bringing 1H25 profit to IDR3.7tn (+10% y-y) – accounting for ~49% of our FY25F projection. Thus, we think BRIS is on track to deliver results that could meet if not exceed our FY25F projections. Overall, the implied ROAA stood at a strong 1.9% (flat y-y), with ROAE of 15.7% (-60bp q-q; -70bp y-y).

• On the balance sheet, BRIS booked financing growth of 13% y-y (+5% YTD), higher than sector growth. On funding, the bank reported funding (deposits) growth of -2% y-y (-1% YTD). This implies a loan-to-funding ratio (LFR) of 84.8% (+60bp q-q: +1,150bp y-y), still relatively high compared to the broader banking sector in Indonesia.

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 1H25 summary %

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)