BBNI
Contact our analyst Achmadi Hangradhika
21% upside. Buy
September 30th, 2024
Price Rp5350
Target price Rp6500
BBNI’s Modest Net Income Growth Amid Rising Expenses
In the first half of 2024, BBNI’s net income attributable to the parent entity grew by 3.78% YoY, reaching IDR 10.69 trillion. This limited growth was largely due to a 35.17% YoY increase in interest and shariah expenses, which caused the bank-only net interest margin (NIM) to drop from 4.6% in the same period of 2023 to 4%. Despite this, the-bank maintained growth in net income, supported by a 15.10% YoY increase in other operating income, including a 78.98% YoY rise in unrealized gains or losses on fair value through profit or loss (FVTPL). Provision expenses also decreased by 22.17% YoY. Looking ahead, we forecast a 6.84% YoY increase in net income attributable to the parent entity by the end of 2024, reaching IDR 22.34 trillion.
Loan Growth Nearing Target
As of June 2024, BBNI’s consolidated loans grew by 11.71% YoY, nearly exceeding the bank’s 2024 target of 9-11%. This growth was driven by lower-risk segments such as corporate, which surged by 18.73% YoY, and the consumer segment, which grew by 14.99% YoY, bolstered by a 17% YoY rise in personal loans. Additionally, BBNI strategically adjusted its SME segment, reducing its expansion by 11.2% YoY to focus on quality, given that 12% of SME loans are categorized as high-risk with adequate provisions. By the end of 2024, we expect BBNI’s credit portfolio to grow by 10.47% YoY, with corporate loans rising by 17.97% YoY.
Improved NPL Ratio
BBNI’s bank-only non-performing loan (NPL) ratio improved significantly as of June 2024, dropping by 50 basis points YoY to 2%. The corporate segment saw the strongest growth and the healthiest loan quality, with an NPL ratio of 1%, a 20-bps improvement YoY. The medium segment performed best, with its NPL ratio falling by 1.10% YoY to 4.90%, driven by the bank’s reduced exposure to high-risk SME loans. We forecast the bank-only NPL ratio to remain stable at around 2.02% by the end of 2024.
Advances in the super app sector with Wondr
BBNI introduced its new mobile banking app, Wondr, designed to help customers manage their finances and achieve financial goals. The app focuses on three main areas: transactions, insights, and growth, and includes features such as time deposits in various currencies, mutual funds, and personal finance management tools. Since its launch, BBNI Mobile Banking has remained popular, with transaction volumes exceeding IDR 360 trillion as of Q2 2024. Registered users grew by 17.8% YoY, reaching 17.6 million, while usage frequency increased by 48.9% YoY.
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Valuation: 21% Upside, Buy.
Using a multi-stage dividend discount model (DDM), we have revised our one-year target price to IDR 6,500, which implies a price-to-book value (PBV) multiple of 1.37x and offers a potential upside of 21%. As such, we recommend a Buy.
In the first half of 2024, BBNI’s net income attributable to the parent entity grew by 3.78% YoY, reaching IDR 10.69 trillion. This limited growth was largely due to a 35.17% YoY increase in interest and shariah expenses, which caused the bank-only net interest margin (NIM) to drop from 4.6% in the same period of 2023 to 4%. Despite this, the-bank maintained growth in net income, supported by a 15.10% YoY increase in other operating income, including a 78.98% YoY rise in unrealized gains or losses on fair value through profit or loss (FVTPL). Provision expenses also decreased by 22.17% YoY. Looking ahead, we forecast a 6.84% YoY increase in net income attributable to the parent entity by the end of 2024, reaching IDR 22.34 trillion.
Loan Growth Nearing Target
As of June 2024, BBNI’s consolidated loans grew by 11.71% YoY, nearly exceeding the bank’s 2024 target of 9-11%. This growth was driven by lower-risk segments such as corporate, which surged by 18.73% YoY, and the consumer segment, which grew by 14.99% YoY, bolstered by a 17% YoY rise in personal loans. Additionally, BBNI strategically adjusted its SME segment, reducing its expansion by 11.2% YoY to focus on quality, given that 12% of SME loans are categorized as high-risk with adequate provisions. By the end of 2024, we expect BBNI’s credit portfolio to grow by 10.47% YoY, with corporate loans rising by 17.97% YoY.
Improved NPL Ratio
BBNI’s bank-only non-performing loan (NPL) ratio improved significantly as of June 2024, dropping by 50 basis points YoY to 2%. The corporate segment saw the strongest growth and the healthiest loan quality, with an NPL ratio of 1%, a 20-bps improvement YoY. The medium segment performed best, with its NPL ratio falling by 1.10% YoY to 4.90%, driven by the bank’s reduced exposure to high-risk SME loans. We forecast the bank-only NPL ratio to remain stable at around 2.02% by the end of 2024.
Advances in the super app sector with Wondr
BBNI introduced its new mobile banking app, Wondr, designed to help customers manage their finances and achieve financial goals. The app focuses on three main areas: transactions, insights, and growth, and includes features such as time deposits in various currencies, mutual funds, and personal finance management tools. Since its launch, BBNI Mobile Banking has remained popular, with transaction volumes exceeding IDR 360 trillion as of Q2 2024. Registered users grew by 17.8% YoY, reaching 17.6 million, while usage frequency increased by 48.9% YoY.
.
Valuation: 21% Upside, Buy.
Using a multi-stage dividend discount model (DDM), we have revised our one-year target price to IDR 6,500, which implies a price-to-book value (PBV) multiple of 1.37x and offers a potential upside of 21%. As such, we recommend a Buy.
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