BBRI
Contact our analyst Achmadi Hangradhika
26% UPSIDE, BUY
5th March 2025
Price Rp 3840
Target price Rp 4850
Stagnant Earnings Growth Due to Rising Costs and Provisions
BBRI’s 2024 earnings remained stagnant, with profit attributable to the parent entity (PATMI) growing by only 0.09% YoY to IDR 60.15 trillion. This limited growth was primarily due to a 30.58% YoY surge in interest expenses, which offset the 9.96% YoY increase in interest income. As a result, the Net Interest Margin (NIM) declined by 41 bps to 7.74%, though it remained within the bank’s guidance. However, a 195.10% YoY increase in net foreign exchange gains helped BBRI avoid negative growth. BBRI’s bank-only financial report for 1M-2025 revealed a net profit of IDR 2 trillion, reflecting a 58.35% YoY decline. This was driven by a 9.2% YoY drop in net interest income and a 340.6% surge in provision expenses, mainly due to additional management overlays as part of a long-term risk management strategy. We forecast BBRI’s PATMI to reach IDR 64.13 trillion in 2025, reflecting a 6.70% YoY growth.
Loan Growth in 2024: Corporate Strength Offsets Micro Loan Weakness
BBRI’s consolidated loan portfolio grew by 6.97% YoY to IDR 1,354.64 trillion as of December 2024, slightly below its 7%-9% target range. The shortfall was due to a 1.09% YoY decline in micro loans, despite strong corporate loan growth of 22.68% YoY. In sustainable financing, total loans reached IDR 785.26 trillion, accounting for 57.97% of total loans. The Sustainable Management of Living Natural Resources & Land Use segment was the largest contributor, with IDR 64.68 trillion in green loans. For 1M-2025, bank-only loan growth stood at 4.61% YoY. We forecast BBRI’s consolidated loan portfolio to reach IDR 1,456.05 trillion by December 2025, reflecting a 7.49% YoY increase.
CASA Growth Offsets Weak Deposit Growth
Despite weak deposit growth, BBRI’s CASA growth helped offset the decline. Total third-party funds increased by just 0.52% YoY, mainly due to a 7.80% drop in time deposits, while CASA deposits grew by 5.14%. This shift toward lower-cost funding led to a 295-bps increase in the CASA ratio to 67.30%. We forecast third-party funds to grow by 7.19% YoY by December 2025, with the CASA ratio rising to 67.49%.
Asset Quality Shows Gradual Improvement
Asset quality improved slightly in 2024, with BBRI’s gross NPL ratio standing at 2.78%. Consumer loans had the lowest NPL ratio at 1.97%, while corporate loans showed the most improvement, with NPLs declining by 126 bps YoY to 2.60%. However, micro loans deteriorated, with the NPL ratio rising from 2.47% to 2.85%. We forecast BBRI’s gross NPL ratio to improve further to 2.71% by year-end 2025.
Valuation: 26%, Upside, Buy Recommendation
Using a Dividend Discount Model (DDM) valuation, we revise our one-year target price to IDR 4,850, implying a 2.13x PBV valuation and a 26% upside potential. We maintain a Buy recommendation for BBRI.
BBRI’s 2024 earnings remained stagnant, with profit attributable to the parent entity (PATMI) growing by only 0.09% YoY to IDR 60.15 trillion. This limited growth was primarily due to a 30.58% YoY surge in interest expenses, which offset the 9.96% YoY increase in interest income. As a result, the Net Interest Margin (NIM) declined by 41 bps to 7.74%, though it remained within the bank’s guidance. However, a 195.10% YoY increase in net foreign exchange gains helped BBRI avoid negative growth. BBRI’s bank-only financial report for 1M-2025 revealed a net profit of IDR 2 trillion, reflecting a 58.35% YoY decline. This was driven by a 9.2% YoY drop in net interest income and a 340.6% surge in provision expenses, mainly due to additional management overlays as part of a long-term risk management strategy. We forecast BBRI’s PATMI to reach IDR 64.13 trillion in 2025, reflecting a 6.70% YoY growth.
Loan Growth in 2024: Corporate Strength Offsets Micro Loan Weakness
BBRI’s consolidated loan portfolio grew by 6.97% YoY to IDR 1,354.64 trillion as of December 2024, slightly below its 7%-9% target range. The shortfall was due to a 1.09% YoY decline in micro loans, despite strong corporate loan growth of 22.68% YoY. In sustainable financing, total loans reached IDR 785.26 trillion, accounting for 57.97% of total loans. The Sustainable Management of Living Natural Resources & Land Use segment was the largest contributor, with IDR 64.68 trillion in green loans. For 1M-2025, bank-only loan growth stood at 4.61% YoY. We forecast BBRI’s consolidated loan portfolio to reach IDR 1,456.05 trillion by December 2025, reflecting a 7.49% YoY increase.
CASA Growth Offsets Weak Deposit Growth
Despite weak deposit growth, BBRI’s CASA growth helped offset the decline. Total third-party funds increased by just 0.52% YoY, mainly due to a 7.80% drop in time deposits, while CASA deposits grew by 5.14%. This shift toward lower-cost funding led to a 295-bps increase in the CASA ratio to 67.30%. We forecast third-party funds to grow by 7.19% YoY by December 2025, with the CASA ratio rising to 67.49%.
Asset Quality Shows Gradual Improvement
Asset quality improved slightly in 2024, with BBRI’s gross NPL ratio standing at 2.78%. Consumer loans had the lowest NPL ratio at 1.97%, while corporate loans showed the most improvement, with NPLs declining by 126 bps YoY to 2.60%. However, micro loans deteriorated, with the NPL ratio rising from 2.47% to 2.85%. We forecast BBRI’s gross NPL ratio to improve further to 2.71% by year-end 2025.
Valuation: 26%, Upside, Buy Recommendation
Using a Dividend Discount Model (DDM) valuation, we revise our one-year target price to IDR 4,850, implying a 2.13x PBV valuation and a 26% upside potential. We maintain a Buy recommendation for BBRI.
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