Bank Syariah Indonesia (BRIS IJ) (Buy) - Solid 9M25 results; earnings adjustments

Solid 9M25 results; earnings adjustments

2026-27F earnings cut by ~7%; TP -8% to IDR3,250

BRIS has continued to deliver strong performance, with 9M25 numbers coming in roughly in line with our FY25F projections. The bank reported net profit of IDR5.7tn (+9% y-y), the highest profit growth rate among major Indonesia banks under 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 stable 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.

During the company’s earnings call on 29 October, management highlighted that the bank’s gold business is doing very well due to BRIS being the only licensed bullion bank in the nation. Since obtaining its bullion licence in March 2025, BRIS has gained ~200K new customers solely for its digital gold services (~+95% YTD), with total gold purchases of ~1,153kg (~+159.8% YTD). As a result, the bank’s fee-based income has shown a significant increase of +851% y-y (from IDR7.2tn in Sep-24 to IDR68.9tn in Sep-25).

Please refer to page 4 for a 3Q25 results summary.

Although BRIS has consistently delivered solid performance, we take a more conservative view for 2026-27F, in which we adjust our earnings forecasts by ~-7.3% and ~-7.4%, respectively, mainly derived from a lower PPOP of ~-5.2-5.4%. These translate into a slower earnings growth trajectory for 2026-27F. Hence, we lower our TP to IDR3,250. Nevertheless, despite these downgrades, BRIS would still have one of the highest 3-yr 24-27F earnings CAGR of 7.2% among the major banks.

Valuation and risks

We derive our new TP of IDR3,250 (previously IDR3,500) using DuPont analysis, with key parameters including: a risk-free rate of 6.5% (unchanged), an equity risk premium of 7.8% (unchanged), growth of 15.0% (down from 15.1%), beta of 1.2x (unchanged) and a CAR-adjusted ROAE of 18.0% (unchanged). Our TP implies 2.9x FY25F P/B (vs 2.4x currently) and 19.4x FY25F P/E (vs 16.2x currently). Risks are worsening economic trends, tighter liquidity competition, and/or higher credit cost and opex growth.

Year-end 31 Dec	FY24		FY25F		FY26F		FY27F
Currency (IDR)	Actual	Old	New	Old	New	Old	New
PPOP (bn)	11,172	13,224	13,224	15,591	14,747	17,689	16,775
Reported net profit (bn)	7,006	7,667	7,667	8,712	8,075	9,318	8,628
Normalised net profit (bn)	7,006	7,667	7,667	8,712	8,075	9,318	8,628
FD normalised EPS	151.88	166.21	166.21	188.86	175.06	226.55	209.78
FD norm. EPS growth (%)	22.8	9.4	9.4	13.6	5.3	20.0	19.8
FD normalised P/E (x)	17.1	–	15.6	–	14.9	–	12.4
Price/adj. book (x)	2.7	–	2.4	–	1.8	–	1.6
Price/book (x)	2.7	–	2.4	–	1.8	–	1.6
Dividend yield (%)	–	–	–	–	–	–	–
ROE (%)	16.7	16.0	16.0	15.9	14.8	14.9	14.0
ROA (%)	1.8	1.8	1.8	1.8	1.7	1.8	1.7

Source: Company data, Verdhana estimates

Key data on Bank Syariah Indonesia

Profit and loss (IDRbn)
Year-end 31 Dec	FY23	FY24	FY25F	FY26F	FY27F
Interest income	22,252	25,298	28,210	31,853	35,297
Interest expense	-5,993	-7,889	-8,080	-8,888	-9,777
Net interest income	16,259	17,409	20,130	22,965	25,520
Net fees and commissions	3,113	4,266	4,266	3,500	3,500
Trading related profits
Other operating revenue	1,092	1,291	1,291	1,250	1,250
Non-interest income	4,204	5,556	5,556	4,750	4,750
Operating income	20,463	22,966	25,686	27,715	30,270
Depreciation	-838	-1,050	-1,239	-1,301	-1,366
Amortisation
Operating expenses	-4,376	-5,460	-5,766	-5,936	-6,111
Employee share expense	-5,035	-5,284	-5,458	-5,731	-6,017
Pre-provision op profit	10,214	11,172	13,224	14,747	16,775
Provisions for bad debt	-2,622	-1,894	-3,065	-4,048	-5,343
Other provision charges
Operating profit	7,591	9,278	10,159	10,699	11,432
Other non-op income	-2	4	0	0	0
Associates & JCEs
Pre-tax profit	7,589	9,282	10,159	10,699	11,432
Income tax	-1,885	-2,277	-2,491	-2,624	-2,804
Net profit after tax	5,704	7,006	7,667	8,075	8,628
Minority interests
Other items
Preferred dividends
Normalised NPAT	5,704	7,006	7,667	8,075	8,628
Extraordinary items
Reported NPAT	5,704	7,006	7,667	8,075	8,628
Dividends	0	0	0	0	0
Transfer to reserves	5,704	7,006	7,667	8,075	8,628
Growth (%)
Net interest income	4.3	7.1	15.6	14.1	11.1
Non-interest income	13.6	32.2	0.0	-14.5	0.0
Non-interest expenses	3.3	24.8	5.6	3.0	3.0
Pre-provision earnings	8.6	9.4	18.4	11.5	13.8
Net profit	33.9	22.8	9.4	5.3	6.8
Normalised EPS	33.9	22.8	9.4	5.3	19.8
Normalised FDEPS	33.9	22.8	9.4	5.3	19.8
Loan growth	15.9	16.0	12.0	9.7	9.5
Interest earning assets	15.5	14.6	12.3	10.1	9.8
Interest bearing liabilities	15.9	14.8	7.2	9.5	9.6
Asset growth	15.7	15.6	10.9	9.5	9.5
Deposit growth	12.2	11.4	10.0	10.0	10.0
Source: Company data, Verdhana estimates

Balance sheet (IDRbn)
As at 31 Dec	FY23	FY24	FY25F	FY26F	FY27F
Cash and equivalents	5,256	8,081	2,331	2,198	2,184
Inter-bank lending
Deposits with central bank	32,441	49,966	58,758	55,400	50,783
Total securities	71,169	62,217	76,914	95,570	116,658
Other int earning assets	2,304	3,866	2,077	1,958	1,626
Gross loans	232,799	269,333	302,376	333,216	367,140
Less provisions	-4,361	-4,265	-5,415	-7,355	-10,381
Net loans	228,437	265,067	296,961	325,860	356,759
Long-term investments	2,190	3,122	3,454	3,766	4,107
Fixed assets	6,481	9,826	6,349	5,596	4,805
Goodwill
Other intangible assets
Other non IEAs	5,346	6,468	6,352	6,047	6,595
Total assets	353,624	408,613	453,195	496,396	543,517
Customer deposits	294,556	328,132	360,946	397,040	436,744
Bank deposits, CDs, debentures
Other int bearing liabilities	13,865	25,788	18,411	18,411	18,411
Total int bearing liabilities	308,421	353,920	379,356	415,451	455,155
Non-int bearing liabilities	6,464	9,652	22,882	23,062	23,062
Total liabilities	314,885	363,572	402,238	438,513	478,217
Minority interest	0	0	0	0	0
Common stock	17,132	24,575	27,893	34,818	42,235
Preferred stock
Retained earnings	19,337	25,917	29,430	36,454	43,932
Reserves for credit losses	-1,458	-2,598	-2,598	-2,598	-2,598
Proposed dividends	-426	-856	-1,051	-1,150	-1,211
Other equity	2,696	-4,596	-5,315	-12,240	-19,657
Shareholders' equity	38,739	45,042	50,957	57,882	65,299
Total liabilities and equity	353,624	408,613	453,195	496,396	543,517
Non-perf assets	2,953	3,325	2,343	2,343
Balance sheet ratios (%)
Loans to deposits	79.0	82.1	83.8	83.9	84.1
Equity to assets	11.0	11.0	11.2	11.7	12.0
Asset quality & capital
NPAs/gross loans (%)	1.3	1.2	0.8	0.7	0.0
Bad debt charge/gross loans (%)	1.13	0.70	1.01	1.21	1.46
Loss reserves/assets (%)	1.23	1.04	1.19	1.48	1.91
Loss reserves/NPAs (%)	197.0	206.4	342.0	424.9	–
Tier 1 capital ratio (%)	19.9	20.3	17.3	18.0	18.5
Total capital ratio (%)	21.0	21.4	18.2	18.9	19.4
Per share
Reported EPS (IDR)	123.65	151.88	166.21	175.06	209.78
Norm EPS (IDR)	123.65	151.88	166.21	175.06	209.78
FD norm EPS (IDR)	123.65	151.88	166.21	175.06	209.78
DPS (IDR)	0.00	0.00	0.00	0.00	0.00
PPOP PS (IDR)	221.42	242.19	286.66	319.69	407.86
BVPS (IDR)	839.79	976.42	1,104.66	1,407.33	1,587.66
ABVPS (IDR)	839.79	976.42	1,104.66	1,407.33	1,587.66
NTAPS (IDR)	839.79	976.42	1,104.66	1,407.33	1,587.66
Valuations and ratios
Reported P/E (x)	21.0	17.1	15.6	14.9	12.4
Normalised P/E (x)	21.0	17.1	15.6	14.9	12.4
FD normalised P/E (x)	21.0	17.1	15.6	14.9	12.4
Dividend yield (%)	–	–	–	–	–
Price/book (x)	3.1	2.7	2.4	1.8	1.6
Price/adjusted book (x)	3.1	2.7	2.4	1.8	1.6
Net interest margin (%)	5.13	4.78	4.87	5.00	5.06
Yield on assets (%)	7.02	6.94	6.83	6.94	7.00
Cost of int bearing liab (%)	2.09	2.38	2.20	2.24	2.25
Net interest spread (%)	4.94	4.56	4.62	4.70	4.75
Non-interest income (%)	20.5	24.2	21.6	17.1	15.7
Cost to income (%)	50.1	51.4	48.5	46.8	44.6
Effective tax rate (%)	24.8	24.5	24.5	24.5	24.5
Dividend payout (%)	0.0	0.0	0.0	0.0	0.0
ROE (%)	15.8	16.7	16.0	14.8	14.0
ROA (%)	1.73	1.84	1.78	1.70	1.66
Operating ROE (%)	21.0	22.1	21.2	19.7	18.6
Operating ROA (%)	2.30	2.43	2.36	2.25	2.20
Source: Company data, Verdhana estimates

Company profileBank Syariah Indonesia (BSI) is a state-owned Islamic bank in Indonesia. The bank was officially founded on 1 February 2021 as a result of merger between three state-owned sharia banks.The three state-owned sharia banks are subsidiaries of larger banks: BRIsyariah (of Bank Rakyat Indonesia/BBRI), Bank Syariah Mandiri (of Bank Mandiri/BMRI) and BNI Syariah (of Bank Negara Indonesia/BBNI).

Valuation MethodologyWe derive our TP of IDR3,250 using DuPont analysis with key parameters as follows: a risk-free rate of 6.5%, an equity risk premium of 7.8%, growth of 15.0%, beta of 1.2x and a CAR-adjusted ROAE of 18.0%. Our TP implies 3.2x FY25F P/B and 21.3 FY25F P/E.

Risks that may impede the achievement of the target priceRisks are worsening economic trends, tighter liquidity competition, and/or higher credit cost and opex growth.

ESGPT Bank Syariah Indonesia (BSI) is committed to implementing the sharia banking principles. The essence of the presence of sharia banking is to carry out sharia goals or Maqasid Ash Syariah, consisting of Hifdz Diin (upholding religion), Hifdz Nafs (nurturing the soul), Hifdz Aql (nurturing logic), Hifdz Nasb (raising offspring), and Hifdz Maal (maintaining wealth). This sharia principle aligns with our commitment in realizing the sustainability context and creating a synergy between growing the Bank’s business and supporting the Sustainable Development Goals (SDGs). The sustainability strategy of BSI is manifested through the making and implementation of Sustainable Finance Action Plan (RAKB). RAKB is prepared by adhering to the Financial Services Authority (POJK) Regulation Number 51/POJK.03/2017 with the priority scale on the aspects of policy adjustments and governance, sustainable finance products and services development, as well as the Bank’s internal capacity building. The sustainable finance strategy focuses on three pillars, which are business refocusing, fixing the fundamental, and strengthen enablers. RAKB also serves as a guideline for all Bank’s work units to control risks, mainly the environmental, social, and governance (ESG) risk.