BMRI
Contact our analyst achmadi
23% UPSIDE, Buy
14th May 2024
Price Rp 6,200
Target Price Rp 7,650
Significant Quarterly Decline in PATMI
In Q1-2024, BMRI experienced a significant quarterly decline in its profit after tax and minority interest (PATMI) by -20.59% QoQ, reaching IDR 12.70 trillion. Annually, the figures still show a modest growth of 1.13% YoY. Despite this, BMRI's Net Interest Income maintained an annual growth of 5.11%. However, the Net Interest Margin (NIM) ratio saw a substantial decline of -33 basis points YoY, reaching 5.07%, attributable to a notable 35.40% YoY increase in interest expenses. We forecast that BMRI’s PATMI will decrease by -0.72% YoY to IDR 54.66 trillion in December 2024, with the NIM Ratio expected to reach 4.94%, impacted by a BI Rate hike.
Loan Growth Surpassing 2023 Target
As of March 2024, BMRI's consolidated loan portfolio stood at IDR 1,435.49 trillion, expanding by 19.08% YoY and surpassing its 2024 target. The highest growth was observed in the Corporate segment, which increased by 28.03% YoY, with the Metal Mining sector leading the rise by IDR 13.7 trillion YoY. We forecast that BMRI's consolidated loan will grow by 12.94% YoY in 2024.
Enhanced Assets Quality
As of March 2024, BMRI’s asset quality showed significant improvement, with its Consolidated NPL ratio decreasing by 60 basis points YoY to 1.17%, supported by a 228-basis points YoY decrease in the Commercial Segment. Additionally, the Corporate segment, now the major contributor to the portfolio, also became the healthiest segment with an NPL ratio standing at only 0.24%, a decrease of 61 basis points YoY. We forecast that BMRI’s NPL ratio will stabilize at a level of 1.18% in December 2024.
Sufficient Liquidity
In March 2024, BMRI’s liquidity remained sufficient, evident from its LDR, which was higher by 4.8% YoY, reaching 89.7%. Additionally, the bank's CASA ratio improved, increasing by 20 basis points YoY to 74.4%, with Saving Accounts being a major factor, growing by 10.61% YoY. We forecast that BMRI's LDR (Bank – Only) and CASA ratio will stand at levels of 88.62% and 75.27%, respectively, in December 2024.
Serious ESG Commitment
BMRI demonstrated its commitment to implementing ESG practices, as evidenced by its Sustainable Financing Portfolio in Q1-2024, which increased by 13.80% YoY, reaching IDR 264 trillion. Additionally, 81% of wholesale segment palm oil debtors are ISPO and/or RSPO certified, with the portfolio standing at a level of IDR 104 trillion, reflecting an increase of 5.55% YoY.
Valuation: 23% Upside, Buy
Based on the Q1-2024 results, we have revised our Multi-Stage Dividend Discount Model (DDM) Valuation. This revision indicates a target price of IDR 7,650 within a year, corresponding to a price-to-book value (PBV) ratio of 2.52x and offering a potential 23% upside. Therefore, our recommendation is to Buy.
In Q1-2024, BMRI experienced a significant quarterly decline in its profit after tax and minority interest (PATMI) by -20.59% QoQ, reaching IDR 12.70 trillion. Annually, the figures still show a modest growth of 1.13% YoY. Despite this, BMRI's Net Interest Income maintained an annual growth of 5.11%. However, the Net Interest Margin (NIM) ratio saw a substantial decline of -33 basis points YoY, reaching 5.07%, attributable to a notable 35.40% YoY increase in interest expenses. We forecast that BMRI’s PATMI will decrease by -0.72% YoY to IDR 54.66 trillion in December 2024, with the NIM Ratio expected to reach 4.94%, impacted by a BI Rate hike.
Loan Growth Surpassing 2023 Target
As of March 2024, BMRI's consolidated loan portfolio stood at IDR 1,435.49 trillion, expanding by 19.08% YoY and surpassing its 2024 target. The highest growth was observed in the Corporate segment, which increased by 28.03% YoY, with the Metal Mining sector leading the rise by IDR 13.7 trillion YoY. We forecast that BMRI's consolidated loan will grow by 12.94% YoY in 2024.
Enhanced Assets Quality
As of March 2024, BMRI’s asset quality showed significant improvement, with its Consolidated NPL ratio decreasing by 60 basis points YoY to 1.17%, supported by a 228-basis points YoY decrease in the Commercial Segment. Additionally, the Corporate segment, now the major contributor to the portfolio, also became the healthiest segment with an NPL ratio standing at only 0.24%, a decrease of 61 basis points YoY. We forecast that BMRI’s NPL ratio will stabilize at a level of 1.18% in December 2024.
Sufficient Liquidity
In March 2024, BMRI’s liquidity remained sufficient, evident from its LDR, which was higher by 4.8% YoY, reaching 89.7%. Additionally, the bank's CASA ratio improved, increasing by 20 basis points YoY to 74.4%, with Saving Accounts being a major factor, growing by 10.61% YoY. We forecast that BMRI's LDR (Bank – Only) and CASA ratio will stand at levels of 88.62% and 75.27%, respectively, in December 2024.
Serious ESG Commitment
BMRI demonstrated its commitment to implementing ESG practices, as evidenced by its Sustainable Financing Portfolio in Q1-2024, which increased by 13.80% YoY, reaching IDR 264 trillion. Additionally, 81% of wholesale segment palm oil debtors are ISPO and/or RSPO certified, with the portfolio standing at a level of IDR 104 trillion, reflecting an increase of 5.55% YoY.
Valuation: 23% Upside, Buy
Based on the Q1-2024 results, we have revised our Multi-Stage Dividend Discount Model (DDM) Valuation. This revision indicates a target price of IDR 7,650 within a year, corresponding to a price-to-book value (PBV) ratio of 2.52x and offering a potential 23% upside. Therefore, our recommendation is to Buy.
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