BJTM
Contact our analyst Achmadi
13% upside. HOLD.
2nd February 2024
Price Rp 655
Target price Rp 740
Decrease in Net Income
In 2023, BJTM reported a net profit of IDR 1.47 trillion, reflecting a 4.71% YoY decline. This decline was driven by a substantial surge in provision expenses, which increased by 71.54% YoY. Additionally, interest expenses rose by 17.84%. Despite these challenges, BJTM’s NIM ratio showed improvement, rising by 0.46% YoY to 5.57%. This rise was attributed to a 6.90% YoY growth in interest income, surpassing the 2023 target range of 5.3%-5.4%. Looking ahead to 2024, we anticipate a recovery for BJTM, with a projected profit increase of 3.72% YoY, reaching IDR 1.53 trillion. The NIM ratio is expected to further improve, reaching 5.77%, aligning with BJTM’s targets and reflecting continued growth and effective financial management.
Enormous Loan Growth
As of December 2023, BJTM’s loans grew robustly, expanding by 18.54% YoY. This outpaced the target of 12%-13% and also surpassed the loan growth in Indonesia, which was 10.38% YoY. Consumer loans were the top contributor with growth of 8.91% YoY, while the Commercial & SME segment also experienced a significant surge, growing by 34.26%, notably driven by the growth of 133.15% in SME loans. By economic sector, Wholesale and Retail Trade emerged as the top contributor at 32.35%. The sector with the highest growth was Agriculture, Hunting, and Forestry, experiencing a solid 77.47% YoY growth. Looking forward to 2024, we anticipate BJTM's loans to grow by 16.49%, aligning with BJTM’s focus on seizing opportunities and expanding its business by strengthening MSME loans while also maintaining its ecosystem.
Better NPL Ratio
BJTM’s NPL ratio improved significantly, decreasing by 0.34% to 2.49% in 2023. The Consumer segment not only emerged as the top contributor but also exhibited the best performance, with an NPL ratio of 0.96%, reflecting a 7-bps decrease. In the Commercial SME segment, the ratio stood at 1.53%, marking a reduction of 0.27%. Looking ahead, we anticipate BJTM to further enhance its NPL ratio, decreasing by 0.30% YoY to 2.19% in 2024.
Solvency Enhancement
BJTM’s solvency has improved compared to 2022. This improvement is evident in its Capital Adequacy Ratio (CAR), which increased by 0.97% YoY to reach 25.71%. The positive shift can be attributed to a substantial 54.59% YoY decrease in Risk-Weighted Assets for market risk. This notable enhancement in solvency has also paved the way for dividends that BJTM plans to allocate to investors. According to its annual report, BJTM is forecasted to pay 54.39% of the Net Profit. Looking ahead, we anticipate that in 2024, BJTM will continue to bolster its solvency, targeting a level of 26.75%. Moreover, the bank is projected to distribute dividends at the rates of 54.27% and 55.31% in 2024 and 2025, respectively.
Valuation: 13% Upside, Hold
Based on our DDM Valuation, we have a target price within one year of IDR 740 or trading at 0.86x PBV, which gives a 13% potential upside. We recommend a Hold.
In 2023, BJTM reported a net profit of IDR 1.47 trillion, reflecting a 4.71% YoY decline. This decline was driven by a substantial surge in provision expenses, which increased by 71.54% YoY. Additionally, interest expenses rose by 17.84%. Despite these challenges, BJTM’s NIM ratio showed improvement, rising by 0.46% YoY to 5.57%. This rise was attributed to a 6.90% YoY growth in interest income, surpassing the 2023 target range of 5.3%-5.4%. Looking ahead to 2024, we anticipate a recovery for BJTM, with a projected profit increase of 3.72% YoY, reaching IDR 1.53 trillion. The NIM ratio is expected to further improve, reaching 5.77%, aligning with BJTM’s targets and reflecting continued growth and effective financial management.
Enormous Loan Growth
As of December 2023, BJTM’s loans grew robustly, expanding by 18.54% YoY. This outpaced the target of 12%-13% and also surpassed the loan growth in Indonesia, which was 10.38% YoY. Consumer loans were the top contributor with growth of 8.91% YoY, while the Commercial & SME segment also experienced a significant surge, growing by 34.26%, notably driven by the growth of 133.15% in SME loans. By economic sector, Wholesale and Retail Trade emerged as the top contributor at 32.35%. The sector with the highest growth was Agriculture, Hunting, and Forestry, experiencing a solid 77.47% YoY growth. Looking forward to 2024, we anticipate BJTM's loans to grow by 16.49%, aligning with BJTM’s focus on seizing opportunities and expanding its business by strengthening MSME loans while also maintaining its ecosystem.
Better NPL Ratio
BJTM’s NPL ratio improved significantly, decreasing by 0.34% to 2.49% in 2023. The Consumer segment not only emerged as the top contributor but also exhibited the best performance, with an NPL ratio of 0.96%, reflecting a 7-bps decrease. In the Commercial SME segment, the ratio stood at 1.53%, marking a reduction of 0.27%. Looking ahead, we anticipate BJTM to further enhance its NPL ratio, decreasing by 0.30% YoY to 2.19% in 2024.
Solvency Enhancement
BJTM’s solvency has improved compared to 2022. This improvement is evident in its Capital Adequacy Ratio (CAR), which increased by 0.97% YoY to reach 25.71%. The positive shift can be attributed to a substantial 54.59% YoY decrease in Risk-Weighted Assets for market risk. This notable enhancement in solvency has also paved the way for dividends that BJTM plans to allocate to investors. According to its annual report, BJTM is forecasted to pay 54.39% of the Net Profit. Looking ahead, we anticipate that in 2024, BJTM will continue to bolster its solvency, targeting a level of 26.75%. Moreover, the bank is projected to distribute dividends at the rates of 54.27% and 55.31% in 2024 and 2025, respectively.
Valuation: 13% Upside, Hold
Based on our DDM Valuation, we have a target price within one year of IDR 740 or trading at 0.86x PBV, which gives a 13% potential upside. We recommend a Hold.
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