BBNI
Contact our analyst Achmadi Hangradhika
25% upside. Buy
8th December, 2023
Price Rp5,075
Target price Rp6,350
Net Income Growth of 15% YoY
In 9M-2023, BBNI generated IDR 15.75 trillion in net income, a 15.05% YoY growth compared to 9M-2022. Despite this, the Q3 NIM ratio experienced a YoY decline of 23 bps to 4.78%, attributed to a surge in interest expenses of 71.08% YoY. However, thanks to other operating income items, such as income from investments in associates (which grew by 22.98% YoY to IDR 0.96 trillion) and a significant decrease in provision expenses by 24.84%, the overall performance remained strong. We forecast that BBNI will continue to gain more profit for FY23, with an expected growth of 17.59% YoY, reaching IDR 21.53 trillion.
Loan Growth Stronger than 1H-2023
As of September 2023, BBNI recorded IDR 671.37 billion for its consolidated loan portfolio, a 7.83% increase compared to 9M-2023, with the growth being 2.94% higher than 1H-2023. Three out of four segments had robust growth, except for the Small loans segment, which experienced a -13.39% YoY decrease. Corporate loans not only emerged as the largest segment but also had the fastest growth, increasing by 12.96% YoY, while other segments such as Consumer and Medium grew by 11.79% and 5.905%, respectively. From an economic sector perspective, Manufacturing became the top contributor, accounting for 24.6% of total loans. In terms of growth, Electricity, Gas & Water experienced the highest annual growth, with a substantial increase of 31.8% YoY. Our forecast is that BBNI will continue its credit expansion, with an anticipated growth of 6.44% as of December 31, 2023.
Improved Asset Quality
BBNI's Bank-Only NPL ratio improved by 70 basis points YoY to 2.30% as of September 2023. The corporate segment, the healthiest and best-performing, decreased by 1.30% YoY to 1.00%. Conversely, the Medium segment, the worst-performing, showed the largest improvement, with the NPL ratio decreasing by 1.50% to 5.40%. Consumer and Small segments had NPL Ratios of 2.00% and 3.90%, respectively. BBNI aims for a further 56-basis points YoY improvement, targeting a NPL ratio of 2.24% by December 31, 2023.
ESG Initiatives
BBNI is strongly committed to ESG implementation in its business, evident in its sustainability portfolio, particularly its bank-only sustainable loans, constituting 27% of the total, reaching IDR 178.9 trillion as of September 2023. The largest share goes to the Socioeconomic Advancement and Empowerment Loans, amounting to IDR 118.3 trillion or 66.13% of the total. BBNI further advanced its sustainability agenda by disbursing a total of USD 314 million through Sustainability Linked Loans to Poultry & Agri-Food Manufactures, Cement, and Steel Manufactures, to reduce water pollution and CO2 emissions.
Valuation: 25% Upside, Buy.
Based on our Multi-Stage DDM valuation, we have set a one-year target price of IDR 6,350, implying a PBV multiple of 1.51x and a potential upside of 25%. Therefore, we recommend a "Buy."
In 9M-2023, BBNI generated IDR 15.75 trillion in net income, a 15.05% YoY growth compared to 9M-2022. Despite this, the Q3 NIM ratio experienced a YoY decline of 23 bps to 4.78%, attributed to a surge in interest expenses of 71.08% YoY. However, thanks to other operating income items, such as income from investments in associates (which grew by 22.98% YoY to IDR 0.96 trillion) and a significant decrease in provision expenses by 24.84%, the overall performance remained strong. We forecast that BBNI will continue to gain more profit for FY23, with an expected growth of 17.59% YoY, reaching IDR 21.53 trillion.
Loan Growth Stronger than 1H-2023
As of September 2023, BBNI recorded IDR 671.37 billion for its consolidated loan portfolio, a 7.83% increase compared to 9M-2023, with the growth being 2.94% higher than 1H-2023. Three out of four segments had robust growth, except for the Small loans segment, which experienced a -13.39% YoY decrease. Corporate loans not only emerged as the largest segment but also had the fastest growth, increasing by 12.96% YoY, while other segments such as Consumer and Medium grew by 11.79% and 5.905%, respectively. From an economic sector perspective, Manufacturing became the top contributor, accounting for 24.6% of total loans. In terms of growth, Electricity, Gas & Water experienced the highest annual growth, with a substantial increase of 31.8% YoY. Our forecast is that BBNI will continue its credit expansion, with an anticipated growth of 6.44% as of December 31, 2023.
Improved Asset Quality
BBNI's Bank-Only NPL ratio improved by 70 basis points YoY to 2.30% as of September 2023. The corporate segment, the healthiest and best-performing, decreased by 1.30% YoY to 1.00%. Conversely, the Medium segment, the worst-performing, showed the largest improvement, with the NPL ratio decreasing by 1.50% to 5.40%. Consumer and Small segments had NPL Ratios of 2.00% and 3.90%, respectively. BBNI aims for a further 56-basis points YoY improvement, targeting a NPL ratio of 2.24% by December 31, 2023.
ESG Initiatives
BBNI is strongly committed to ESG implementation in its business, evident in its sustainability portfolio, particularly its bank-only sustainable loans, constituting 27% of the total, reaching IDR 178.9 trillion as of September 2023. The largest share goes to the Socioeconomic Advancement and Empowerment Loans, amounting to IDR 118.3 trillion or 66.13% of the total. BBNI further advanced its sustainability agenda by disbursing a total of USD 314 million through Sustainability Linked Loans to Poultry & Agri-Food Manufactures, Cement, and Steel Manufactures, to reduce water pollution and CO2 emissions.
Valuation: 25% Upside, Buy.
Based on our Multi-Stage DDM valuation, we have set a one-year target price of IDR 6,350, implying a PBV multiple of 1.51x and a potential upside of 25%. Therefore, we recommend a "Buy."
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