BBNI
Contact our analyst Achmadi Hangradhika
22% upside. Buy
16th February, 2024
Price Rp6,000
Target price Rp7300
Net Income Growth of 14% YoY
In 2023, BBNI grew its net income attributable to the parent by 14.18% year-on-year, reaching IDR 20.91 trillion. This achievement was boosted by a notable growth of unrealized gains, which increased by 373.19% year-on-year. Additionally, BRIS, as an associate entity, contributed to the bank's income, generating IDR 1.33 trillion, a 22.60% increase from the previous year. However, on the other hand, the NIM ratio (bank-only) decreased by 23 basis points year-on-year to 4.58% due to a surge in bank-only interest expense by 51.58% year-on-year and a lower-risk loan portfolio. We forecast that in 2024, BBNI will continue to grow its profit by another 16.72% year-on-year to IDR 24.405 trillion, with the NIM ratio reaching 4.60%.
Loan Growth Weaker than 2022
As of December 2023, BBNI's consolidated loan portfolio was IDR 695.08 trillion. It only grew by 7.57% year-on-year compared to 2022 growth of almost 11%. This was due to a significant decrease in the Small loan segment by -16% year-on-year. Based on economic sectors, Manufacturing remained the top contributor, accounting for 25.1%, while Electricity, Gas & Water experienced the highest growth with an increase of 20.1% year-on-year. We forecast that in 2024, BBNI will continue to expand its consolidated loan portfolio by another 9.92% year-on-year, in line with its guidance, which aspires to growth within a range of 9%-11%.
Improved Asset Quality
As of December 2023, BBNI’s NPL ratio stood at a level of 2.12%, experiencing a significant improvement of 69 basis points compared to last year. The Corporate segment emerged as the healthiest and the best performer, with the NPL ratio decreasing by 120 basis points year-on-year to 0.90%. However, despite this achievement, there's one segment, small, whose quality deteriorated, increasing by 100 basis points to 3.50%. We forecast that BBNI will continue to maintain its financial health by decreasing its NPL ratio to a level of 1.94% in December 2024.
ESG Initiatives
BBNI is strongly committed to implementing ESG practices in its business, as evidenced by its sustainability portfolio, particularly its bank-only sustainable loans, which constitute 26% of the total, reaching IDR 181.1 trillion. Further evidence can be seen in its CPO debtors, of which 70% are already certified by RSPO and/or ISPO, while the remainder are still in the process of certification. This compares to last year when only 52% were certified. Additionally, according to the IDX website, BBNI’s ESG score stood at 21.35 as of December 20th, 2023, ranking 19th among 79 public companies.
Valuation: 22% Upside, Buy.
Based on our Multi-Stage DDM valuation, we have set a one-year target price of IDR 7,300, implying a PBV multiple of 1.59x and a potential upside of 22%. Therefore, we recommend a "Buy."
In 2023, BBNI grew its net income attributable to the parent by 14.18% year-on-year, reaching IDR 20.91 trillion. This achievement was boosted by a notable growth of unrealized gains, which increased by 373.19% year-on-year. Additionally, BRIS, as an associate entity, contributed to the bank's income, generating IDR 1.33 trillion, a 22.60% increase from the previous year. However, on the other hand, the NIM ratio (bank-only) decreased by 23 basis points year-on-year to 4.58% due to a surge in bank-only interest expense by 51.58% year-on-year and a lower-risk loan portfolio. We forecast that in 2024, BBNI will continue to grow its profit by another 16.72% year-on-year to IDR 24.405 trillion, with the NIM ratio reaching 4.60%.
Loan Growth Weaker than 2022
As of December 2023, BBNI's consolidated loan portfolio was IDR 695.08 trillion. It only grew by 7.57% year-on-year compared to 2022 growth of almost 11%. This was due to a significant decrease in the Small loan segment by -16% year-on-year. Based on economic sectors, Manufacturing remained the top contributor, accounting for 25.1%, while Electricity, Gas & Water experienced the highest growth with an increase of 20.1% year-on-year. We forecast that in 2024, BBNI will continue to expand its consolidated loan portfolio by another 9.92% year-on-year, in line with its guidance, which aspires to growth within a range of 9%-11%.
Improved Asset Quality
As of December 2023, BBNI’s NPL ratio stood at a level of 2.12%, experiencing a significant improvement of 69 basis points compared to last year. The Corporate segment emerged as the healthiest and the best performer, with the NPL ratio decreasing by 120 basis points year-on-year to 0.90%. However, despite this achievement, there's one segment, small, whose quality deteriorated, increasing by 100 basis points to 3.50%. We forecast that BBNI will continue to maintain its financial health by decreasing its NPL ratio to a level of 1.94% in December 2024.
ESG Initiatives
BBNI is strongly committed to implementing ESG practices in its business, as evidenced by its sustainability portfolio, particularly its bank-only sustainable loans, which constitute 26% of the total, reaching IDR 181.1 trillion. Further evidence can be seen in its CPO debtors, of which 70% are already certified by RSPO and/or ISPO, while the remainder are still in the process of certification. This compares to last year when only 52% were certified. Additionally, according to the IDX website, BBNI’s ESG score stood at 21.35 as of December 20th, 2023, ranking 19th among 79 public companies.
Valuation: 22% Upside, Buy.
Based on our Multi-Stage DDM valuation, we have set a one-year target price of IDR 7,300, implying a PBV multiple of 1.59x and a potential upside of 22%. Therefore, we recommend a "Buy."
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