BBNI
Contact our analyst Achmadi Hangradhika
35% upside. Buy
7th September, 2023
Price Rp9,500
Target price Rp12,800
Net Income Growth of 17% YoY
During the first half of 2023, Bank Negara Indonesia (BBNI) reported a net income of IDR 10.30 trillion, representing a significant 17.02% year-on-year increase from IDR 8.80 trillion in the same period of 2022. This growth was primarily driven by augmented operating income, including income from investments in associates, which saw a substantial 31.66% year-on-year expansion. Additionally, a decrease in provision expenses, down by 29.55% year-on-year, also contributed to this growth. Although BBNI experienced a notable 18.66% year-on-year growth in interest income, there was a robust 63.70% increase in interest expenses, resulting in a 12 basis points decline in the Net Interest Margin (NIM) ratio to 4.58%. Our projection anticipates that BBNI will maintain its net income growth, with a further increase of 36.30% in 2023, reaching IDR 24.96 trillion.
Moderate Loan Growth Amid Strong Deposit Expansion
As of June 2023, BBNI's consolidated loan growth showed moderate year-on-year (YoY) growth, expanding by 4.89%. This growth pattern can be attributed to declines in the Small and Medium segments, which contracted by -6.19% and -0.69%, respectively. In contrast, the Consumer segment experienced substantial YoY growth of 11.71%, while the Corporate segment also demonstrated a healthy growth rate of 7.46%. Working capital loans remained the primary contributor to the portfolio, accounting for a substantial 55.31%. On the other hand, Customer Deposits showed robust growth, surging by an impressive 10.58% YoY. This growth trajectory was chiefly propelled by a remarkable 20.83% YoY increase in Current Account deposits. Additionally, both Time Deposits and Savings Accounts demonstrated noteworthy annual growth rates of 9.31% and 0.58%, respectively. Consequently, this growth has led to a 40-basis point (bps) expansion in the CASA (Current Account and Savings Account) ratio YoY, reaching a level of 69.6%. Looking ahead, we anticipate BBNI will sustain its expansion momentum, projecting a further 7.38% increase in consolidated loans and a 7.25% increase in deposits in fiscal year 2023 (FY23).
Improved Asset Quality
As of June 2023, BBNI has achieved a significant improvement in its asset quality, evidenced by the reduction of its Non-Performing Loan (NPL) ratio by 70 basis points (bps) year-on-year (YoY) to reach 2.5%. The Corporate segment emerged as the best-performing segment, experiencing a decrease of 1.20% to achieve a remarkable 1.20% NPL ratio, the lowest among the four segments. Conversely, the Small loan segment witnessed an 80 bps YoY increase in its NPL ratio, reaching a level of 3.60%. The NPL ratios for the Medium and Consumer segments were 6.00% and 1.90%, respectively. Looking ahead, we predict that BBNI will continue its efforts to maintain its asset quality, projecting a further 37 bps YoY decrease to attain a level of 2.43% in 2023.
Valuation: 35% Upside, Buy.
Based on our Multi-Stage DDM valuation, we have set a one-year target price of IDR 12,800, implying a PBV multiple of 1.51x and a potential upside of 35%. Therefore, we recommend a "Buy."
During the first half of 2023, Bank Negara Indonesia (BBNI) reported a net income of IDR 10.30 trillion, representing a significant 17.02% year-on-year increase from IDR 8.80 trillion in the same period of 2022. This growth was primarily driven by augmented operating income, including income from investments in associates, which saw a substantial 31.66% year-on-year expansion. Additionally, a decrease in provision expenses, down by 29.55% year-on-year, also contributed to this growth. Although BBNI experienced a notable 18.66% year-on-year growth in interest income, there was a robust 63.70% increase in interest expenses, resulting in a 12 basis points decline in the Net Interest Margin (NIM) ratio to 4.58%. Our projection anticipates that BBNI will maintain its net income growth, with a further increase of 36.30% in 2023, reaching IDR 24.96 trillion.
Moderate Loan Growth Amid Strong Deposit Expansion
As of June 2023, BBNI's consolidated loan growth showed moderate year-on-year (YoY) growth, expanding by 4.89%. This growth pattern can be attributed to declines in the Small and Medium segments, which contracted by -6.19% and -0.69%, respectively. In contrast, the Consumer segment experienced substantial YoY growth of 11.71%, while the Corporate segment also demonstrated a healthy growth rate of 7.46%. Working capital loans remained the primary contributor to the portfolio, accounting for a substantial 55.31%. On the other hand, Customer Deposits showed robust growth, surging by an impressive 10.58% YoY. This growth trajectory was chiefly propelled by a remarkable 20.83% YoY increase in Current Account deposits. Additionally, both Time Deposits and Savings Accounts demonstrated noteworthy annual growth rates of 9.31% and 0.58%, respectively. Consequently, this growth has led to a 40-basis point (bps) expansion in the CASA (Current Account and Savings Account) ratio YoY, reaching a level of 69.6%. Looking ahead, we anticipate BBNI will sustain its expansion momentum, projecting a further 7.38% increase in consolidated loans and a 7.25% increase in deposits in fiscal year 2023 (FY23).
Improved Asset Quality
As of June 2023, BBNI has achieved a significant improvement in its asset quality, evidenced by the reduction of its Non-Performing Loan (NPL) ratio by 70 basis points (bps) year-on-year (YoY) to reach 2.5%. The Corporate segment emerged as the best-performing segment, experiencing a decrease of 1.20% to achieve a remarkable 1.20% NPL ratio, the lowest among the four segments. Conversely, the Small loan segment witnessed an 80 bps YoY increase in its NPL ratio, reaching a level of 3.60%. The NPL ratios for the Medium and Consumer segments were 6.00% and 1.90%, respectively. Looking ahead, we predict that BBNI will continue its efforts to maintain its asset quality, projecting a further 37 bps YoY decrease to attain a level of 2.43% in 2023.
Valuation: 35% Upside, Buy.
Based on our Multi-Stage DDM valuation, we have set a one-year target price of IDR 12,800, implying a PBV multiple of 1.51x and a potential upside of 35%. Therefore, we recommend a "Buy."
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