BMRI
Contact our analyst achmadi
19% UPSIDE, Buy
19th August 2024
Price Rp 7,150
Target Price Rp 8,500
Higher Annual PATMI Growth Compared To Last Quarter
In the first semester of 2024, BMRI’s profit after tax and minority interest (PATMI) grew by 5.23% YoY to IDR 26.55 trillion. This growth was higher than the 1.13% YoY increase observed in Q1. The highest growth came from gains on the sale of securities and government bonds – net, which surged robustly by 618.39% YoY. Additionally, interest and shariah income grew by 12.51% YoY, leading to an increase in the NIM ratio to 5.09%, up from 5.07% in Q1-2024. However, it remains 47 basis points lower compared to the same period last year. We forecast that BMRI will continue to generate more profit in 2024, with a projected growth of 5.68% YoY, reaching IDR 58.19 trillion.
Another Loan Target Surpassed While Upholding ESG Commitments
As of June 2024, BMRI’s consolidated loan portfolio reached IDR 1,532.35 trillion, reflecting a 20.46% YoY increase. This growth exceeded the previous target range of 13%-15%, leading to a new target of 16%-18%. The wholesale loan segment drove this performance, with the Corporate segment growing significantly by 29.59% YoY, the highest among all segments, followed by the Commercial segment at 21.93% YoY. The Machinery Manufacturing sector saw an extraordinary 260% YoY increase, while the Metal Mining sector contributed the largest nominal rise, adding IDR 23.1 trillion. Alongside these financial achievements, BMRI has maintained a strong commitment to Environmental, Social, and Governance (ESG) principles. The bank’s sustainable portfolio expanded nearly 15%, growing from IDR 242 trillion in June 2023 to IDR 278 trillion in June 2024. Furthermore, 86% of the wholesale palm oil portfolio is now certified by ISPO and/or RSPO. Looking ahead, we anticipate that BMRI’s consolidated loan portfolio will experience another significant expansion, with a projected growth of 19.51% by the end of 2024, surpassing its revised target.
Significant Improvement in Asset Quality
As of June 2024, BMRI’s consolidated gross NPL ratio stood at 1.16%, down by 48-bps YoY, supported by a significant improvement in the Commercial segment’s NPL ratio, which decreased by 169 bps YoY to 1.24%. Additionally, the corporate NPL ratio decreased by 43 bps YoY to 0.40%, becoming the healthiest segment. The consolidated SML ratio also saw a notable decrease of 81 bps YoY, reaching 3.63%. We forecast that by December 2024, BMRI’s consolidated NPL ratio will stabilize at 1.19%, while the consolidated SML ratio is expected to decrease by 45 bps to 3.44%.
Liquidity Remained Strong
In the first half of 2024, BMRI's liquidity remained strong, as evidenced by a 15.45% YoY increase in customer deposits. This growth was primarily driven by CASA, which rose by 17.94% YoY, leading to a 160-bps increase in the CASA ratio to 75%. Additionally, the bank-only LDR increased by 480 bps YoY, reaching 90.48%. We forecast that by December 2024, BMRI's consolidated CASA ratio and bank-only LDR will be 76.01% and 91.11%, respectively.
Valuation: 19% Upside, Buy
Based on Q2-2024 results and using a Multi-Stage Dividend Discount Model, our revised target price is IDR 8,500, reflecting a 2.50x price-to-book ratio and 19% potential upside. We recommend buying the stock.
In the first semester of 2024, BMRI’s profit after tax and minority interest (PATMI) grew by 5.23% YoY to IDR 26.55 trillion. This growth was higher than the 1.13% YoY increase observed in Q1. The highest growth came from gains on the sale of securities and government bonds – net, which surged robustly by 618.39% YoY. Additionally, interest and shariah income grew by 12.51% YoY, leading to an increase in the NIM ratio to 5.09%, up from 5.07% in Q1-2024. However, it remains 47 basis points lower compared to the same period last year. We forecast that BMRI will continue to generate more profit in 2024, with a projected growth of 5.68% YoY, reaching IDR 58.19 trillion.
Another Loan Target Surpassed While Upholding ESG Commitments
As of June 2024, BMRI’s consolidated loan portfolio reached IDR 1,532.35 trillion, reflecting a 20.46% YoY increase. This growth exceeded the previous target range of 13%-15%, leading to a new target of 16%-18%. The wholesale loan segment drove this performance, with the Corporate segment growing significantly by 29.59% YoY, the highest among all segments, followed by the Commercial segment at 21.93% YoY. The Machinery Manufacturing sector saw an extraordinary 260% YoY increase, while the Metal Mining sector contributed the largest nominal rise, adding IDR 23.1 trillion. Alongside these financial achievements, BMRI has maintained a strong commitment to Environmental, Social, and Governance (ESG) principles. The bank’s sustainable portfolio expanded nearly 15%, growing from IDR 242 trillion in June 2023 to IDR 278 trillion in June 2024. Furthermore, 86% of the wholesale palm oil portfolio is now certified by ISPO and/or RSPO. Looking ahead, we anticipate that BMRI’s consolidated loan portfolio will experience another significant expansion, with a projected growth of 19.51% by the end of 2024, surpassing its revised target.
Significant Improvement in Asset Quality
As of June 2024, BMRI’s consolidated gross NPL ratio stood at 1.16%, down by 48-bps YoY, supported by a significant improvement in the Commercial segment’s NPL ratio, which decreased by 169 bps YoY to 1.24%. Additionally, the corporate NPL ratio decreased by 43 bps YoY to 0.40%, becoming the healthiest segment. The consolidated SML ratio also saw a notable decrease of 81 bps YoY, reaching 3.63%. We forecast that by December 2024, BMRI’s consolidated NPL ratio will stabilize at 1.19%, while the consolidated SML ratio is expected to decrease by 45 bps to 3.44%.
Liquidity Remained Strong
In the first half of 2024, BMRI's liquidity remained strong, as evidenced by a 15.45% YoY increase in customer deposits. This growth was primarily driven by CASA, which rose by 17.94% YoY, leading to a 160-bps increase in the CASA ratio to 75%. Additionally, the bank-only LDR increased by 480 bps YoY, reaching 90.48%. We forecast that by December 2024, BMRI's consolidated CASA ratio and bank-only LDR will be 76.01% and 91.11%, respectively.
Valuation: 19% Upside, Buy
Based on Q2-2024 results and using a Multi-Stage Dividend Discount Model, our revised target price is IDR 8,500, reflecting a 2.50x price-to-book ratio and 19% potential upside. We recommend buying the stock.
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