BJBR
Contact our analyst achmadi
43% upside, Buy
17th April 2023
Price Rp1255
Target price Rp1800
Net Income grew more than 11%
In FY22, BJBR recorded a net income of IDR 2.25 trillion, reflecting a growth of 11.23% YoY from IDR 2.02 trillion in the previous year. This growth was primarily driven by a reduction in loan loss provisions, which decreased by almost 66% YoY to IDR 0.21 trillion from 0.62 trillion. Additionally, the NIM ratio (bank-only) also improved slightly from the previous year, rising by 2 bps to reach 5.86%. Based on our projections, we anticipate that BJBR will continue to grow its net income by 24.63% YoY in FY23, reaching IDR 2.80 trillion.
Strong Growth from Commercial Loans
As of December 2022, BJBR's consolidated loans grew by 13.06% YoY. The growth was primarily driven by commercial loans, which increased by 35.23% YoY. Additionally, other loans also witnessed growth, with corporate, mortgage, micro, and consumer loans growing by 34.83%, 18.50%, 15.96%, and 5.24% YoY respectively. From an industry perspective, the trade sector contributed the most to the portfolio, accounting for 26.6%, followed by the construction and financial sectors, which contributed 21.20% and 20.40% to total loans respectively. Based on our projections, we anticipate that the consolidated total gross loans will grow by 12.36% YoY in 2023.
Asset Quality Improved
BJBR has improved its asset quality, as evidenced by the decline in the gross NPL (bank-only) ratio by 8 basis points to 1.16% as of December 2022. The Consumer segment accounted for the lowest NPL ratio, at 0.21%, while the Commercial segment showed the best improvement, decreasing by 170 basis points to reach 5.20%, despite having had the worst NPL ratio compared to other types of loans. Our forecast is that BJBR will continue to improve its NPL ratio, with another decrease to 1.13% expected by December 2023.
The Pioneer of BPD synergy
As of November 30th, 2022, BJBR was the largest regional development bank in Indonesia, contributing 18.3% to the total assets. BJBR also became the pioneer of KUB (Kelompok Usaha Bank) for BPDs, one of the schemes for commercial bank consolidation, having already injected IDR 99.9 billion into Bank Bengkulu as the first phase of capital injection, which resulted in a share ownership of 7.15%. BJBR is also set to process the second phase of capital injection for the remaining commitment of up to IDR 150 billion, as per the Cooperation Agreement. Furthermore, BJBR has already signed a KUB Letter of Intent on September 29th, 2022, with Bank Sultra, as another part of its KUB. Other BPDs are also being approached by BJBR to join the KUB. We believe that this synergy will result in the growth of financial performance for BJBR and its KUB members, which in turn will make the Indonesian banking system stronger and act as a catalyst for economic growth.
Valuation: 43% Upside potential, Buy.
Based on our DDM valuation, we have set a target price of IDR 1,800 within a year, which represents a trading price of 1.1x PBV and a potential upside of 43%. Therefore, we have a "Buy" rating on this stock.
In FY22, BJBR recorded a net income of IDR 2.25 trillion, reflecting a growth of 11.23% YoY from IDR 2.02 trillion in the previous year. This growth was primarily driven by a reduction in loan loss provisions, which decreased by almost 66% YoY to IDR 0.21 trillion from 0.62 trillion. Additionally, the NIM ratio (bank-only) also improved slightly from the previous year, rising by 2 bps to reach 5.86%. Based on our projections, we anticipate that BJBR will continue to grow its net income by 24.63% YoY in FY23, reaching IDR 2.80 trillion.
Strong Growth from Commercial Loans
As of December 2022, BJBR's consolidated loans grew by 13.06% YoY. The growth was primarily driven by commercial loans, which increased by 35.23% YoY. Additionally, other loans also witnessed growth, with corporate, mortgage, micro, and consumer loans growing by 34.83%, 18.50%, 15.96%, and 5.24% YoY respectively. From an industry perspective, the trade sector contributed the most to the portfolio, accounting for 26.6%, followed by the construction and financial sectors, which contributed 21.20% and 20.40% to total loans respectively. Based on our projections, we anticipate that the consolidated total gross loans will grow by 12.36% YoY in 2023.
Asset Quality Improved
BJBR has improved its asset quality, as evidenced by the decline in the gross NPL (bank-only) ratio by 8 basis points to 1.16% as of December 2022. The Consumer segment accounted for the lowest NPL ratio, at 0.21%, while the Commercial segment showed the best improvement, decreasing by 170 basis points to reach 5.20%, despite having had the worst NPL ratio compared to other types of loans. Our forecast is that BJBR will continue to improve its NPL ratio, with another decrease to 1.13% expected by December 2023.
The Pioneer of BPD synergy
As of November 30th, 2022, BJBR was the largest regional development bank in Indonesia, contributing 18.3% to the total assets. BJBR also became the pioneer of KUB (Kelompok Usaha Bank) for BPDs, one of the schemes for commercial bank consolidation, having already injected IDR 99.9 billion into Bank Bengkulu as the first phase of capital injection, which resulted in a share ownership of 7.15%. BJBR is also set to process the second phase of capital injection for the remaining commitment of up to IDR 150 billion, as per the Cooperation Agreement. Furthermore, BJBR has already signed a KUB Letter of Intent on September 29th, 2022, with Bank Sultra, as another part of its KUB. Other BPDs are also being approached by BJBR to join the KUB. We believe that this synergy will result in the growth of financial performance for BJBR and its KUB members, which in turn will make the Indonesian banking system stronger and act as a catalyst for economic growth.
Valuation: 43% Upside potential, Buy.
Based on our DDM valuation, we have set a target price of IDR 1,800 within a year, which represents a trading price of 1.1x PBV and a potential upside of 43%. Therefore, we have a "Buy" rating on this stock.
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