BBRI
Contact our analyst achmadi
22% UPSIDE, BUY
17th January 2024
Price Rp 5,775
Target price Rp 7,050
Sustaining Double-Digit Growth Amid Challenges
In 9M-2023, BBRI reported a net profit (including NCI) of IDR 44.21 trillion, demonstrating resilient double-digit growth of 12.47% YoY, albeit at a slower pace. This deceleration is attributed to a substantial 63.76% increase in interest expenses, resulting in a modest 0.2% YoY decline in the NIM ratio, settling at 8.05%. Additionally, a notable surge of 861.77% YoY in provisions for non-financial assets contributed to the overall slowdown. Despite these challenges, our forecast suggests that BBRI is poised to maintain its double-digit growth momentum for FY23, with a forecast increase of 17.21% to reach IDR 59.98 trillion.
BBRI's Robust Loan Portfolio Growth
BBRI's loan portfolio is expanding, with robust growth as of September 2023. The overall credit portfolio showed a significant 12.53% YoY increase, with positive performances across all segments. Medium loans exhibited the fastest growth at almost 46% YoY, while Small Commercial loans experienced a more moderate 5.60% uptick. In a consolidated perspective, the micro loan portfolio witnessed an 11.6% YoY growth, with Pegadaian up 17.3% and BRI Micro at a commendable 10.93% YoY increase. BRI Micro's expansion was fueled primarily by a substantial 57.5% growth in Kupedes, despite declines in KUR and Briguna. Despite a 50 bps YoY decrease, the Sustainable Loan Portfolio maintained a robust proportion at 66.1%, surpassing the growth seen in 9M22 at 11.89% YoY. Looking ahead, our forecast envisions BBRI sustaining its vigorous consolidated loan portfolio growth, projecting a further 12.10% expansion by December 31st, 2023.
Customer Deposit Growth Remain Strong
As of September 2023, BBRI's total customer deposits grew impressively by 13.21%, with Current Accounts showing strong growth at 28.12%, contributing to a 10.11% increase in CASA. The notable CASA expansion can be attributed to the outstanding growth in Merchant EDC numbers, reaching 330.4 thousand merchants, a substantial 42.84% YoY increase. However, despite this growth, the CASA ratio declined by 179 basis points (bps) YoY, mainly due to a significant 19.06% YoY increase in Time Deposits. Looking ahead, our forecast suggests that BBRI will continue to foster deposit growth, albeit at a more modest rate of 0.71% YoY. This slower growth is expected to be influenced by a notable quarter-over-quarter decrease observed in 1H-23.
Slow Asset Quality Improvement
As of September 2023, BBRI's consolidated asset quality has shown a modest improvement compared to 9M-2022, with the NPL ratio decreasing by 20 basis points (bps) YoY to 3.09%. This improvement is attributed to declines in the Small and Medium segments, which decreased by 23 bps and 37 bps, respectively. However, in contrast, the SML ratio increased to 5.74%, up from 5.12% in 9M22. The sluggish improvement in asset quality is linked to the impact of El Nino on farmers and fisheries debtors. Despite this challenge, we anticipate a further improvement in BBRI's Consolidated NPL to reach 3.01% in FY23, while the SML ratio is expected to remain stable at 5.74%.
Valuation: 22%, Upside, Buy
Based on our DDM valuation, we have a target price of IDR 7,050 within one year, implying a valuation of 3.56x PBV and indicating a potential upside of 22%. Therefore, we recommend a Buy rating.
In 9M-2023, BBRI reported a net profit (including NCI) of IDR 44.21 trillion, demonstrating resilient double-digit growth of 12.47% YoY, albeit at a slower pace. This deceleration is attributed to a substantial 63.76% increase in interest expenses, resulting in a modest 0.2% YoY decline in the NIM ratio, settling at 8.05%. Additionally, a notable surge of 861.77% YoY in provisions for non-financial assets contributed to the overall slowdown. Despite these challenges, our forecast suggests that BBRI is poised to maintain its double-digit growth momentum for FY23, with a forecast increase of 17.21% to reach IDR 59.98 trillion.
BBRI's Robust Loan Portfolio Growth
BBRI's loan portfolio is expanding, with robust growth as of September 2023. The overall credit portfolio showed a significant 12.53% YoY increase, with positive performances across all segments. Medium loans exhibited the fastest growth at almost 46% YoY, while Small Commercial loans experienced a more moderate 5.60% uptick. In a consolidated perspective, the micro loan portfolio witnessed an 11.6% YoY growth, with Pegadaian up 17.3% and BRI Micro at a commendable 10.93% YoY increase. BRI Micro's expansion was fueled primarily by a substantial 57.5% growth in Kupedes, despite declines in KUR and Briguna. Despite a 50 bps YoY decrease, the Sustainable Loan Portfolio maintained a robust proportion at 66.1%, surpassing the growth seen in 9M22 at 11.89% YoY. Looking ahead, our forecast envisions BBRI sustaining its vigorous consolidated loan portfolio growth, projecting a further 12.10% expansion by December 31st, 2023.
Customer Deposit Growth Remain Strong
As of September 2023, BBRI's total customer deposits grew impressively by 13.21%, with Current Accounts showing strong growth at 28.12%, contributing to a 10.11% increase in CASA. The notable CASA expansion can be attributed to the outstanding growth in Merchant EDC numbers, reaching 330.4 thousand merchants, a substantial 42.84% YoY increase. However, despite this growth, the CASA ratio declined by 179 basis points (bps) YoY, mainly due to a significant 19.06% YoY increase in Time Deposits. Looking ahead, our forecast suggests that BBRI will continue to foster deposit growth, albeit at a more modest rate of 0.71% YoY. This slower growth is expected to be influenced by a notable quarter-over-quarter decrease observed in 1H-23.
Slow Asset Quality Improvement
As of September 2023, BBRI's consolidated asset quality has shown a modest improvement compared to 9M-2022, with the NPL ratio decreasing by 20 basis points (bps) YoY to 3.09%. This improvement is attributed to declines in the Small and Medium segments, which decreased by 23 bps and 37 bps, respectively. However, in contrast, the SML ratio increased to 5.74%, up from 5.12% in 9M22. The sluggish improvement in asset quality is linked to the impact of El Nino on farmers and fisheries debtors. Despite this challenge, we anticipate a further improvement in BBRI's Consolidated NPL to reach 3.01% in FY23, while the SML ratio is expected to remain stable at 5.74%.
Valuation: 22%, Upside, Buy
Based on our DDM valuation, we have a target price of IDR 7,050 within one year, implying a valuation of 3.56x PBV and indicating a potential upside of 22%. Therefore, we recommend a Buy rating.
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