BBNI
Contact our analyst Achmadi Hangradhika
27% upside. Buy
3rd July, 2024
Price Rp4650
Target price Rp5925
Small Increase in Net Income
In Q1 2024, BBNI's Net Income Attributable to the Parent Entity grew by a modest 2.03% year-on-year (YoY), reaching IDR 5.33 trillion. This limited growth was primarily due to a significant increase in Interest and Shariah Expenses, which rose by 40.51% YoY. Consequently, the bank-only Net Interest Margin (NIM) ratio declined by 0.7 percentage points to 4%. However, BBNI managed to sustain some growth in its Net Income, bolstered by a 14.51% YoY increase in other operating income. Looking ahead to the end of 2024, we forecast that BBNI will continue its growth trajectory, with Net Income projected to increase by 11.51% YoY to IDR 23.315 trillion.
Strong Loan Growth Supported by Corporate Segment
As of March 2024, BBNI's consolidated loans exhibited robust growth, nearing double digits with a 9.59% increase. This expansion was significantly supported by an 18.08% growth in the Corporate Segment, which helped offset declines in Small and Medium Loans by -14.72% YoY and -3.14% YoY, respectively. Additionally, Consumer loans saw significant growth, expanding by 13.14% YoY, while Non-Bank loans grew dramatically by 115.82%. Looking forward, we forecast that by December 2024, BBNI's consolidated loans will grow by 6.15% YoY.
Significant Improvement of Asset Quality
As of March 2024, BBNI’s bank-only gross Non-Performing Loans (NPL) ratio stood at 2.00%, marking a significant improvement of 80 basis points compared to March 2023. This improvement was primarily driven by the corporate segment, where the NPL ratio decreased significantly by 1.40 percentage points YoY to 0.70%. We forecast that by December 2024, BBNI’s bank-only gross NPL ratio will further improve to 1.87%.
ESG Initiatives
BBNI is strongly committed to implementing ESG practices, as evidenced by its sustainability portfolio. Notably, its bank-only sustainable loans account for 26% of the total, amounting to IDR 177.3 trillion. Further demonstrating this commitment, 71% of its CPO debtors are certified by RSPO and/or ISPO, with the remainder in the process of certification, a marked improvement from last year's 51.4% certification rate. Additionally, as of March 26, 2024, BBNI’s ESG rating from MSCI remains stable at A. Moreover, its ESG Risk Rating from Sustainalytics improved to 21.4% as of February 3, 2024, from 25.7% as of March 31, 2023.
Valuation: 27% Upside, Buy.
Based on our Multi-Stage Dividend Discount Model (DDM) valuation, we have revised our one-year target price to IDR 5,925, implying a Price-to-Book Value (PBV) multiple of 1.30x and a potential upside of 27%. Therefore, we recommend a "Buy."
In Q1 2024, BBNI's Net Income Attributable to the Parent Entity grew by a modest 2.03% year-on-year (YoY), reaching IDR 5.33 trillion. This limited growth was primarily due to a significant increase in Interest and Shariah Expenses, which rose by 40.51% YoY. Consequently, the bank-only Net Interest Margin (NIM) ratio declined by 0.7 percentage points to 4%. However, BBNI managed to sustain some growth in its Net Income, bolstered by a 14.51% YoY increase in other operating income. Looking ahead to the end of 2024, we forecast that BBNI will continue its growth trajectory, with Net Income projected to increase by 11.51% YoY to IDR 23.315 trillion.
Strong Loan Growth Supported by Corporate Segment
As of March 2024, BBNI's consolidated loans exhibited robust growth, nearing double digits with a 9.59% increase. This expansion was significantly supported by an 18.08% growth in the Corporate Segment, which helped offset declines in Small and Medium Loans by -14.72% YoY and -3.14% YoY, respectively. Additionally, Consumer loans saw significant growth, expanding by 13.14% YoY, while Non-Bank loans grew dramatically by 115.82%. Looking forward, we forecast that by December 2024, BBNI's consolidated loans will grow by 6.15% YoY.
Significant Improvement of Asset Quality
As of March 2024, BBNI’s bank-only gross Non-Performing Loans (NPL) ratio stood at 2.00%, marking a significant improvement of 80 basis points compared to March 2023. This improvement was primarily driven by the corporate segment, where the NPL ratio decreased significantly by 1.40 percentage points YoY to 0.70%. We forecast that by December 2024, BBNI’s bank-only gross NPL ratio will further improve to 1.87%.
ESG Initiatives
BBNI is strongly committed to implementing ESG practices, as evidenced by its sustainability portfolio. Notably, its bank-only sustainable loans account for 26% of the total, amounting to IDR 177.3 trillion. Further demonstrating this commitment, 71% of its CPO debtors are certified by RSPO and/or ISPO, with the remainder in the process of certification, a marked improvement from last year's 51.4% certification rate. Additionally, as of March 26, 2024, BBNI’s ESG rating from MSCI remains stable at A. Moreover, its ESG Risk Rating from Sustainalytics improved to 21.4% as of February 3, 2024, from 25.7% as of March 31, 2023.
Valuation: 27% Upside, Buy.
Based on our Multi-Stage Dividend Discount Model (DDM) valuation, we have revised our one-year target price to IDR 5,925, implying a Price-to-Book Value (PBV) multiple of 1.30x and a potential upside of 27%. Therefore, we recommend a "Buy."
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