BJBR
Contact our analyst achmadi
17% upside, Buy
5th January 2024
Price Rp1180
Target price Rp1380
Negative growth on Net Income
In the first three quarters of 2023, BJBR faced a significant 20.52% YoY decline in net profit, reaching Rp1.42 trillion. This was primarily driven by a substantial 42.01% YoY increase in interest expenses, resulting in a 97-basis points drop in NIM ratio to 4.86%. Despite these challenges, the bank managed to stay profitable through notable gains in securities sales (161.16% YoY) and fees/commissions income (12.93% YoY). Cost efficiency also improved with an -18.14% YoY reduction in salaries and benefits. Looking ahead to FY2023, we project negative net profit growth of -17.84% YoY, reaching IDR 1.88 trillion.
Strong Growth in Loans and Financing
As of September 2023, BJBR demonstrated robust growth in its consolidated loan and financing, which increased by 10.21% YoY. Loans increased by 9.90%, while Shariah financing and receivables had growth of 14.79%. The Commercial Segment showed the highest growth at 25.76%, while the Consumer segment, being the largest contributor, grew by 6.19% YoY. Other segments, including Mortgage, Corporate, and Micro, also recorded positive growth rates of 15.53%, 14.50%, and 12.61% YoY, respectively. From an economic sector perspective, Trading, Construction, and Industry emerged as the top three contributors, accounting for 36.31%, 27.86%, and 21.14%, respectively. In addition, sustainable finance also experienced robust growth, increasing by 37.4% and accounting for 12.64% of the total portfolio, reaching IDR 15.8 trillion. Looking ahead, BJBR is expected to continue expanding its consolidated loan and financing, and we project a growth of 10.05% for FY23.
Risk Resilience: BJBR's NPL and Capital Growth
In 9M-2023, BJBR faced challenges with its bank-only NPL ratio rising to 1.26%, influenced by upward trends in all segments. Notably, the Micro segment saw a significant surge to 2.32%, and the Commercial & Corporate segment had the highest NPL ratio at 2.83%, with a 33-basis points increase. The Consumer segment, a substantial part of the portfolio, maintained a commendable NPL at 0.24%, with a marginal 0.01% uptick. The Mortgage segment's NPL ratio increased modestly by 4 basis points to 2.67%. Despite a 5.82% YoY increase in consolidated credit risk-weighted assets, BJBR's Capital Adequacy Ratio (CAR) improved significantly by 2.01%, reaching 19.86%. This improvement was due to a notable reduction in Risk-Weighted Assets. Looking ahead to FY2023, we forecast that BJBR's Bank-Only Gross NPL will stabilize at 1.20%, reflecting improved credit quality. Additionally, the CAR is expected to strengthen further, reaching 20.61%.
KUB Progress
BJBR is awaiting OJK approval for a capital injection and Fit and Proper Test for Bank Bengkulu to join KUB. Additionally, BJBR is prospecting Bank Sultra and other BPDs to become members of the KUB. An agreement has already been signed with Bank Sultra, and preparations for a Feasibility Study are underway.
Valuation:17%Upside,Hold
Based on our DDM valuation, we have set a target price of IDR 1,380 within a year, representing a valuation of 0.93x PBV and a potential upside of 17%. Therefore, we have a “Hold” rating on this stock.
In the first three quarters of 2023, BJBR faced a significant 20.52% YoY decline in net profit, reaching Rp1.42 trillion. This was primarily driven by a substantial 42.01% YoY increase in interest expenses, resulting in a 97-basis points drop in NIM ratio to 4.86%. Despite these challenges, the bank managed to stay profitable through notable gains in securities sales (161.16% YoY) and fees/commissions income (12.93% YoY). Cost efficiency also improved with an -18.14% YoY reduction in salaries and benefits. Looking ahead to FY2023, we project negative net profit growth of -17.84% YoY, reaching IDR 1.88 trillion.
Strong Growth in Loans and Financing
As of September 2023, BJBR demonstrated robust growth in its consolidated loan and financing, which increased by 10.21% YoY. Loans increased by 9.90%, while Shariah financing and receivables had growth of 14.79%. The Commercial Segment showed the highest growth at 25.76%, while the Consumer segment, being the largest contributor, grew by 6.19% YoY. Other segments, including Mortgage, Corporate, and Micro, also recorded positive growth rates of 15.53%, 14.50%, and 12.61% YoY, respectively. From an economic sector perspective, Trading, Construction, and Industry emerged as the top three contributors, accounting for 36.31%, 27.86%, and 21.14%, respectively. In addition, sustainable finance also experienced robust growth, increasing by 37.4% and accounting for 12.64% of the total portfolio, reaching IDR 15.8 trillion. Looking ahead, BJBR is expected to continue expanding its consolidated loan and financing, and we project a growth of 10.05% for FY23.
Risk Resilience: BJBR's NPL and Capital Growth
In 9M-2023, BJBR faced challenges with its bank-only NPL ratio rising to 1.26%, influenced by upward trends in all segments. Notably, the Micro segment saw a significant surge to 2.32%, and the Commercial & Corporate segment had the highest NPL ratio at 2.83%, with a 33-basis points increase. The Consumer segment, a substantial part of the portfolio, maintained a commendable NPL at 0.24%, with a marginal 0.01% uptick. The Mortgage segment's NPL ratio increased modestly by 4 basis points to 2.67%. Despite a 5.82% YoY increase in consolidated credit risk-weighted assets, BJBR's Capital Adequacy Ratio (CAR) improved significantly by 2.01%, reaching 19.86%. This improvement was due to a notable reduction in Risk-Weighted Assets. Looking ahead to FY2023, we forecast that BJBR's Bank-Only Gross NPL will stabilize at 1.20%, reflecting improved credit quality. Additionally, the CAR is expected to strengthen further, reaching 20.61%.
KUB Progress
BJBR is awaiting OJK approval for a capital injection and Fit and Proper Test for Bank Bengkulu to join KUB. Additionally, BJBR is prospecting Bank Sultra and other BPDs to become members of the KUB. An agreement has already been signed with Bank Sultra, and preparations for a Feasibility Study are underway.
Valuation:17%Upside,Hold
Based on our DDM valuation, we have set a target price of IDR 1,380 within a year, representing a valuation of 0.93x PBV and a potential upside of 17%. Therefore, we have a “Hold” rating on this stock.
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