BJBR
Contact our analyst achmadi
24% upside, BUY
12 June 2024
Price Rp955
Target price Rp1180
Small Increase in Net Income
In the first quarter of 2024, BJBR generated a consolidated net income of IDR 383.42 billion, marking a 4.72% year-on-year growth compared to Q1-23. This modest growth was influenced by a significant increase in interest expenses and provision expenses, which surged by 28.71% and 58.69% year-on-year, respectively. This offset the growth in interest income and provision and commission income, which increased by 12.22% and 23.87% year-on-year, respectively. Consequently, the bank-only NIM ratio decreased by 80 basis points, reaching 3.97%. We anticipate that in 2024, BJBR will further enhance its profitability due to the formation of the KUB with BPD Bengkulu, with a projected growth of 10.88% year-on-year, to reach IDR 1.97 trillion.
Double-Digit Growth in Consolidated Loans
BJBR’s consolidated loans surged by 12.04% compared to last year, beating its expected growth range of 7±1% (revised from 8%). This was largely due to forming the first KUB with BPD Bengkulu, leading to an impressive 89.27% increase in Non-Bank/Subs figures, totaling IDR 15.29 trillion. Among bank-only figures, Micro loans saw the highest growth at 14.26% year-on-year, while the consumer segment, mainly driven by the recruitment of contract civil servants (PPPK), maintained a 5.91% year-on-year growth, with 36,968 PPPK becoming debtors in Q1-2024. In terms of sectors, Trade remained the top contributor, accounting for 27% of loans, up by 1.2% from the previous quarter. Looking ahead, BJBR is forecast to sustain its consolidated loan portfolio growth, aiming for a 10.56% year-on-year increase in 2024, surpassing its previous target.
Robust Deposit Growth Aligned with Loan Expansion
In Q1-24, BJBR saw a significant increase in its deposit position, which increased by 18.73% compared to Q1-23. This growth was in line with a 12.04% increase in loans, reflecting the bank's strategy to maintain liquidity and manage interest expenses effectively. The surge was primarily driven by a robust 30.41% year-on-year growth in Savings Accounts and a solid 25.10% rise in Time Deposits. However, Current Account deposits experienced a decline of -5.60% year-on-year, leading to a decrease in the CASA ratio to 41.26%, which was 299 basis points lower than Q1-23. Looking ahead, we anticipate BJBR to sustain its liquidity by targeting a further 9.31% year-on-year growth in deposits for 2024, with the aim of achieving a CASA ratio of 41.96%.
Successfully Forming the First KUB with BPD Bengkulu
In Q1-24, BJBR successfully formed a KUB with BPD Bengkulu, as evidenced by its consolidated financial report which now includes BPD Bengkulu’s figures. This partnership extends beyond Bengkulu, with ongoing due diligence processes for KUBs with Bank Jambi and Bank Maluku Malut, while a feasibility study is underway for collaboration with Bank Sultra.
Valuation: 24%, Upside, Buy
Based on our DDM valuation, we have set a target price of IDR 1,180 within a year, representing a valuation of 0.73x PBV and a potential upside of 24%. Consequently, we recommend a “Buy” rating for this stock.
In the first quarter of 2024, BJBR generated a consolidated net income of IDR 383.42 billion, marking a 4.72% year-on-year growth compared to Q1-23. This modest growth was influenced by a significant increase in interest expenses and provision expenses, which surged by 28.71% and 58.69% year-on-year, respectively. This offset the growth in interest income and provision and commission income, which increased by 12.22% and 23.87% year-on-year, respectively. Consequently, the bank-only NIM ratio decreased by 80 basis points, reaching 3.97%. We anticipate that in 2024, BJBR will further enhance its profitability due to the formation of the KUB with BPD Bengkulu, with a projected growth of 10.88% year-on-year, to reach IDR 1.97 trillion.
Double-Digit Growth in Consolidated Loans
BJBR’s consolidated loans surged by 12.04% compared to last year, beating its expected growth range of 7±1% (revised from 8%). This was largely due to forming the first KUB with BPD Bengkulu, leading to an impressive 89.27% increase in Non-Bank/Subs figures, totaling IDR 15.29 trillion. Among bank-only figures, Micro loans saw the highest growth at 14.26% year-on-year, while the consumer segment, mainly driven by the recruitment of contract civil servants (PPPK), maintained a 5.91% year-on-year growth, with 36,968 PPPK becoming debtors in Q1-2024. In terms of sectors, Trade remained the top contributor, accounting for 27% of loans, up by 1.2% from the previous quarter. Looking ahead, BJBR is forecast to sustain its consolidated loan portfolio growth, aiming for a 10.56% year-on-year increase in 2024, surpassing its previous target.
Robust Deposit Growth Aligned with Loan Expansion
In Q1-24, BJBR saw a significant increase in its deposit position, which increased by 18.73% compared to Q1-23. This growth was in line with a 12.04% increase in loans, reflecting the bank's strategy to maintain liquidity and manage interest expenses effectively. The surge was primarily driven by a robust 30.41% year-on-year growth in Savings Accounts and a solid 25.10% rise in Time Deposits. However, Current Account deposits experienced a decline of -5.60% year-on-year, leading to a decrease in the CASA ratio to 41.26%, which was 299 basis points lower than Q1-23. Looking ahead, we anticipate BJBR to sustain its liquidity by targeting a further 9.31% year-on-year growth in deposits for 2024, with the aim of achieving a CASA ratio of 41.96%.
Successfully Forming the First KUB with BPD Bengkulu
In Q1-24, BJBR successfully formed a KUB with BPD Bengkulu, as evidenced by its consolidated financial report which now includes BPD Bengkulu’s figures. This partnership extends beyond Bengkulu, with ongoing due diligence processes for KUBs with Bank Jambi and Bank Maluku Malut, while a feasibility study is underway for collaboration with Bank Sultra.
Valuation: 24%, Upside, Buy
Based on our DDM valuation, we have set a target price of IDR 1,180 within a year, representing a valuation of 0.73x PBV and a potential upside of 24%. Consequently, we recommend a “Buy” rating for this stock.
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