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BBRI
Contact our analyst achmadi

35% UPSIDE, BUY
13th June 2023
Price Rp 5550
Target price Rp 7500

​Significant Net Income Growth
In Q1 2023, BBRI achieved a significant net income growth of +27.41% YoY, from IDR 12.17 trillion in Q1 2022 to IDR 15.50 trillion in Q1 2023. Net interest income increased by +7.80% YoY, leading to a 10 bps YoY growth in the NIM ratio, which reached 7.82%. However, the NIM ratio was 3 bps lower than the previous quarter due to a significant increase in interest expenses, which grew by 53.07% YoY. The major growth driver was unrealized gains on changes in fair value of securities, which grew by 102.07% YoY. We project that BBRI will end this year with net income (PATMI) growth of +23.69% YoY, rising from IDR 51.17 trillion in FY22 to IDR 63.29 trillion in FY23.

Strong Loan and Deposit Growth
As of March 31st, 2023, BBRI exhibited strong performance, with consolidated loans growing by 9.68% YoY and bank-only loans growing by 9.31%. All segments experienced growth, with the Medium segment showing the highest growth at 17.65% YoY. The Corporate, Consumer, Micro, and Small segments grew by 10.64%, 10.27%, 9.89%, and 5.49% respectively. Among the micro loans, PNM had the highest growth at 24.46%, while BRI Micro and Pegadaian grew by 12.29% and 9.89% respectively. However, KUR, the largest contributor to the BRI Micro portfolio, only grew by 4.1%, while Kupedes experienced robust growth at 29.3%. BBRI also witnessed an improvement in its Customer Deposits, with a substantial increase of 11.45%, driven by significant growth in Current Accounts, which grew by 58.55% YoY. The CASA ratio also increased by 93 bps to 64.53%, despite a 2.17% quarterly decrease. We forecast that BBRI will continue to experience growth in its Consolidated and Bank-Only Loans, projected at 8.19% and 9.17% respectively. Additionally, the consolidated CASA is expected to grow to 68.66% by the end of 2023.

Asset Quality Improvement
BRI's consolidated gross NPL (Non-Performing Loan) decreased from 3.09% in Q1-2022 to 2.86% in Q1-2023, indicating better asset quality, while the bank-only NPL decreased by 0.13% YoY to 3.02%. This progress was matched by ample  reserves, with an NPL coverage ratio of 282.49% in Q1-2023. Additionally, the corporate credit loans segment became the best performing, with NPLs down by 0.49% YoY, although Consumer loans had the lowest NPLs at 2.06%. Other loan segments experienced increasing NPLs, such as Small and Micro loans, which increased by 0.15% and 0.50% to reach levels of 4.45% and 2.24%, respectively. Medium loan NPLs , decreased by 20 basis points to 2.06%. We project that BBRI's asset quality will continue to improve in 2023, with the NPL ratio expected to decrease to 2.62% (consolidated) and 2.78% (bank-only). The NPL coverage ratio is anticipated to increase to 307.24%, acting as a preventive measure against global economic uncertainty, inflation, interest rate hikes, and weaker economic growth.

Valuation: 35%, Upside, Buy
Based on our DDM valuation, we have a target price of IDR 7,500 within one year, implying a trading price of 3.79x PBV and indicating a potential upside of 35%. Therefore, we recommend a Buy rating.


Download full report here
Previously
​BBRI Mar2023
BBRI Dec2022
​BBRI Oct2022
​BBRI Jul2022
​BBRI Feb2022
​​BBRI Jan2022
​BBRI Nov2021
​BBRI Aug2021
​BBRI Jun2021
​BBRI Feb2021
​BBRI Nov2020
​BBRI Aug2020
​BBRI May2020
​BBRI Jan2020
​BBRI Sep2019
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