BJBR
Contact our analyst achmadi
9% upside, Hold
25th November 2024
Price Rp 540
Target price Rp590
Profitability Decline Due to Rising Credit Loss Provisions
In September 2024, BJTM’s net profit declined significantly, dropping by -15.04% YoY to IDR 930.06 billion, driven primarily by a sharp increase in credit loss provisions, which surged by 63.55% YoY due to allowances for expected credit losses on loans. Despite this, BJTM achieved a 10.36% YoY growth in net interest income, lifting its Net Interest Margin (NIM) to 5.72%, an increase of 34 basis points YoY. For the full year 2024, we forecast BJTM’s total net income to reach IDR 1.32 trillion, marking a -10.50% YoY decline, although the NIM is expected to improve further to 5.83%, supported by an 8.09% YoY growth in net interest income.
Strong Loan Growth Driven by Commercial & SME Segments
BJTM’s loan portfolio showed robust growth as of September 2024, expanding by 20.14% YoY to IDR 62.2 trillion, primarily driven by a 29.58% YoY increase in Commercial & SME loans. Consumer loans also performed well, with growth of 13.20% YoY. The wholesale and retail trade sector accounted for the largest share, contributing 14.11% of the total loan portfolio. By the end of 2024, we project the total loan portfolio to grow by 18.88% YoY, reaching IDR 65.1 trillion.
Healthier Asset Quality
BJTM improved its asset quality, with the gross Non-Performing Loan (NPL) ratio declining by 11 bps QoQ to 2.97%, although it increased 23 bps YoY. The Consumer segment remained the strongest, with an NPL ratio of 0.99%, followed by the Commercial & SME segment at 1.98%. To mitigate NPLs, BJTM undertook strategic measures, including writing off IDR 429.78 billion in loans and restructuring loans totaling IDR 876 billion. The bank also implemented enhanced monitoring through weekly collection and credit settlement meetings. We anticipate the NPL ratio to decrease slightly to 2.92% by the end of 2024.
KUB Formation and Strategic Partnerships
BJTM initiated the formation of a Bank Business Group (KUB) with Bank NTB Syariah as its first member, investing IDR 100 billion in equity and becoming a controlling shareholder alongside the NTB provincial government. This partnership has unlocked synergies in payment integration via J Connect, remittance services, trade finance, shared ATM networks, and a syndicated loan initiative for the paper industry, where two customers received IDR 300 billion each. Additional regional banks, Bank Lampung and Bank Banten (BEKS), are expected to join the KUB, with agreements currently underway.
Valuation: 9% Upside, Hold
Using a DDM Valuation, we revised our target price to IDR 590 within one year, reflecting a 9% upside at a 0.70x PBV. We recommend a HOLD position for BJTM shares.
In September 2024, BJTM’s net profit declined significantly, dropping by -15.04% YoY to IDR 930.06 billion, driven primarily by a sharp increase in credit loss provisions, which surged by 63.55% YoY due to allowances for expected credit losses on loans. Despite this, BJTM achieved a 10.36% YoY growth in net interest income, lifting its Net Interest Margin (NIM) to 5.72%, an increase of 34 basis points YoY. For the full year 2024, we forecast BJTM’s total net income to reach IDR 1.32 trillion, marking a -10.50% YoY decline, although the NIM is expected to improve further to 5.83%, supported by an 8.09% YoY growth in net interest income.
Strong Loan Growth Driven by Commercial & SME Segments
BJTM’s loan portfolio showed robust growth as of September 2024, expanding by 20.14% YoY to IDR 62.2 trillion, primarily driven by a 29.58% YoY increase in Commercial & SME loans. Consumer loans also performed well, with growth of 13.20% YoY. The wholesale and retail trade sector accounted for the largest share, contributing 14.11% of the total loan portfolio. By the end of 2024, we project the total loan portfolio to grow by 18.88% YoY, reaching IDR 65.1 trillion.
Healthier Asset Quality
BJTM improved its asset quality, with the gross Non-Performing Loan (NPL) ratio declining by 11 bps QoQ to 2.97%, although it increased 23 bps YoY. The Consumer segment remained the strongest, with an NPL ratio of 0.99%, followed by the Commercial & SME segment at 1.98%. To mitigate NPLs, BJTM undertook strategic measures, including writing off IDR 429.78 billion in loans and restructuring loans totaling IDR 876 billion. The bank also implemented enhanced monitoring through weekly collection and credit settlement meetings. We anticipate the NPL ratio to decrease slightly to 2.92% by the end of 2024.
KUB Formation and Strategic Partnerships
BJTM initiated the formation of a Bank Business Group (KUB) with Bank NTB Syariah as its first member, investing IDR 100 billion in equity and becoming a controlling shareholder alongside the NTB provincial government. This partnership has unlocked synergies in payment integration via J Connect, remittance services, trade finance, shared ATM networks, and a syndicated loan initiative for the paper industry, where two customers received IDR 300 billion each. Additional regional banks, Bank Lampung and Bank Banten (BEKS), are expected to join the KUB, with agreements currently underway.
Valuation: 9% Upside, Hold
Using a DDM Valuation, we revised our target price to IDR 590 within one year, reflecting a 9% upside at a 0.70x PBV. We recommend a HOLD position for BJTM shares.
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