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BBRI
Contact our analyst achmadi

25% UPSIDE, BUY
24th March 2023
Price Rp 4770
Target price Rp 5960

​Significant Net Income Growth
In FY22, BBRI achieved significant net income growth of +67.15% YoY, with profit surging from IDR 30.76 trillion in FY21 to IDR 51.41 trillion in FY22. Net interest income increased by +9.21%, contributing to a positive NIM growth of 7.85% in FY22. Meanwhile, net premium income had the fastest growth among the operating income categories. Provisions also played a role in growth, declining by -31.33% YoY. We project that BBRI will conclude this year with a net income growth (including net income attributable to NCI) of +30.03% YoY, with profit rising from IDR 51.41 trillion in FY22 to IDR 66.85 trillion in FY23.

Solid Loan Growth and CASA Improvement
As of December 31st, 2022, BBRI consolidated loans grew 9.23% YoY, and bank-only loans grew  +9.12%. The micro segment is the biggest contributor to the bank's portfolio, accounting for 43.66% of loans and grew by 13.25%, helped by KUR which grew by 32.16% YoY. Others, such as Consumer, Small Commercial, Corporate, and Medium loans, also saw growth, expanding by 8.23%, 6.27%, 4.76%, and 0.96%, respectively. Pegadaian and PNM loans also contributed with growth of +12.65% and +23.36% respectively. BBRI also saw an improvement in its CASA ratio, which increased by 363 bps to 66.70%, driven by huge growth in Current Accounts, which grew by +58.55% YoY. We forecast that BBRI will continue to grow its Consolidated and Bank-Only Loans by 9.75% and 9.71% respectively, while the consolidated CASA will also grow to 69.19% by the end of 2023.

Asset Quality Improvement
BRI's consolidated gross NPL (Non-Performing Loan) decreased from 3.00% in 2021 to 2.67% in 2022, while the bank-only NPL decreased to 2.82%, indicating improving asset quality. This progress was accompanied by higher reserves with an NPL coverage ratio of 305.74% in 2022, up from 281.16% in 2021. Micro loans had the lowest NPL ratio of 1.74% among the five loan segments, albeit there was a 25-basis point increase from the previous year. The Consumer, Small, Medium, and Corporate segments had NPL ratios of 1.83%, 4.30%, 2.26%, and 4.76%, respectively. We project that BBRI's asset quality will continue to improve in 2023, with the NPL ratio expected to decrease to 2.55% (consolidated) and 2.66% (bank-only). In addition, the NPL coverage ratio is expected to increase to 308.08%, acting as a preventive measure to offset risks from global economic uncertainty, inflation, and interest rate hikes.

Valuation: 25% Upside, Buy
Based on our DDM valuation, we have a target price of IDR 5,960 withinone year, which implies a valuation of 2.5x PBV and a potential upside of 25%. Therefore, we recommend to Buy.

Download full report here
Previously
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
PT. Binaartha Sekuritas

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