BBRI
Contact our analyst achmadi
22% UPSIDE, BUY
16th December 2022
Price Rp 4910
Target price Rp 5970
Massive Net Income Growth
In 9M22, BBRI reported huge net income growth of +103.34% YoY from IDR 19.25 trillion in 9M21 to IDR 39.15 trillion in 9M22. Net Interest Income and Premium Income were the drivers of growth, up by +16.33% and +29.94% YoY respectively. Provisions also contributed to growth declining by -13.63% YoY. We project that BBRI will end this year with growth in Net Income of +68.12% YoY, from IDR 31.07 trillion in FY21 to IDR IDR 52.23 trillion in FY22.
Solid Loan Growth and CASA Improvement
BBRI’s financial position has become stronger in 9M22 than it was in 9M21. From the asset side, BBRI recorded solid consolidated and bank-only loan growth of +7.82% YoY and +8.17% respectively. Micro loans had the fastest growth at about +13.93% due to digitalization and BBRI’s strategy to “Go Smaller, Go Shorter, and Go Faster” by securing and leveraging new sources of growth to focus on growing Micro & Ultra Micro Loans. Small, consumer and corporate loans grew by +6.61%, +6.25% and +0.50% respectively, while medium loans had negative growth of -0.94%. Meanwhile, from liabilities, CASA grew by +10.22% YoY compared to 9M21. The consolidated CASA ratio for 9M22 was 65.43%, up by +583 bps from 9M21. BBRI’s current accounts grew the fastest at +19% YoY, while Saving Accounts grew by +6.37% YoY. The growth was also driven by BBRI’s strategy of "Re-Inventing Business Models and digitalization of ecosystem platforms". We project that BBRI will continue to grow its gross loans by 11.07% YoY in FY22, while the CASA ratio will continue to increase from 63.08% in FY21 to 67.01% in FY22.
Better Asset Quality
As of 9M22, BBRI’s gross NPL ratio (bank-only) was 3.14%, better than in 9M21 with a decrease of -15 bps. Consumer loans have the lowest NPL ratio at 1.98%. The NPL ratios for Micro, Medium, Corporate, and Small are 2.12%, 2.53%, 4.64%, and 4.81% respectively. We forecast that BBRI will continue to improve the quality of its assets by decreasing its bank-only gross NPL by -14 bps YoY to 2.94% in FY22.
Valuation: 22%, Upside, Buy
Based on our DDM Valuation, we project a price of IDR 5,970 within one year, or trading at 2.8x PBV, which gives a 22% potential upside, BUY.
In 9M22, BBRI reported huge net income growth of +103.34% YoY from IDR 19.25 trillion in 9M21 to IDR 39.15 trillion in 9M22. Net Interest Income and Premium Income were the drivers of growth, up by +16.33% and +29.94% YoY respectively. Provisions also contributed to growth declining by -13.63% YoY. We project that BBRI will end this year with growth in Net Income of +68.12% YoY, from IDR 31.07 trillion in FY21 to IDR IDR 52.23 trillion in FY22.
Solid Loan Growth and CASA Improvement
BBRI’s financial position has become stronger in 9M22 than it was in 9M21. From the asset side, BBRI recorded solid consolidated and bank-only loan growth of +7.82% YoY and +8.17% respectively. Micro loans had the fastest growth at about +13.93% due to digitalization and BBRI’s strategy to “Go Smaller, Go Shorter, and Go Faster” by securing and leveraging new sources of growth to focus on growing Micro & Ultra Micro Loans. Small, consumer and corporate loans grew by +6.61%, +6.25% and +0.50% respectively, while medium loans had negative growth of -0.94%. Meanwhile, from liabilities, CASA grew by +10.22% YoY compared to 9M21. The consolidated CASA ratio for 9M22 was 65.43%, up by +583 bps from 9M21. BBRI’s current accounts grew the fastest at +19% YoY, while Saving Accounts grew by +6.37% YoY. The growth was also driven by BBRI’s strategy of "Re-Inventing Business Models and digitalization of ecosystem platforms". We project that BBRI will continue to grow its gross loans by 11.07% YoY in FY22, while the CASA ratio will continue to increase from 63.08% in FY21 to 67.01% in FY22.
Better Asset Quality
As of 9M22, BBRI’s gross NPL ratio (bank-only) was 3.14%, better than in 9M21 with a decrease of -15 bps. Consumer loans have the lowest NPL ratio at 1.98%. The NPL ratios for Micro, Medium, Corporate, and Small are 2.12%, 2.53%, 4.64%, and 4.81% respectively. We forecast that BBRI will continue to improve the quality of its assets by decreasing its bank-only gross NPL by -14 bps YoY to 2.94% in FY22.
Valuation: 22%, Upside, Buy
Based on our DDM Valuation, we project a price of IDR 5,970 within one year, or trading at 2.8x PBV, which gives a 22% potential upside, BUY.
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