BMRI
Contact our analyst achmadi
23% UPSIDE, Buy
21st November, 2023
Price Rp 5,875
Target price Rp 7,200
Better Profitability
In 9M2023, BMRI recorded a significant annual net income growth of 27.44%. The 20.61% YoY increase in interest income contributed to the bank's higher profitability, leading to a 17 bps YoY rise in the NIM ratio to a level of 5.59%. The bank's ROA also experienced growth, increasing by 31 bps to 2.60%. We forecast that BMRI will continue its profit growth, expecting another 30.76% YoY increase for FY23, with the NIM ratio standing at 5.50%, in line with its guidance.
Robust Annual Loan Growth
As of September 2023, BMRI’s consolidated loans have grown robustly by 12.71%. All segments served by the bank experienced significant growth. The highest growth came from the Commercial segment, which increased by 18.56% YoY. Other segments such as Consumer, SME, Micro, and Corporate grew by 11.99%, 11.75%, 10.10%, and 9.54%, respectively. From an industry perspective, the Financial Services and Energy & Water sectors experienced the highest YoY growth in Wholesale Banking, growing by 40% and 19%, respectively. We forecast that BMRI will continue to expand its loan portfolio, with a growth rate of 14.12% for the FY23 figure.
Better NPL Ratio
As of September 2023, BMRI's consolidated NPL ratio has experienced a significant improvement, decreasing by 75 basis points YoY to a level of 1.49%, while the bank-only NPL stands at 1.36%, reflecting a decrease of 90 basis points YoY. Within the bank-only context, the Corporate segment emerged as the best-performing segment, with an NPL ratio of 0.82%, while the Commercial segment reported the highest NPL ratio at 2.24%, representing 36% of the total NPLs. We forecast that BMRI will continue to manage its asset quality effectively, maintaining the gross consolidated NPL ratio at 1.49% for the FY23 figure.
Serious ESG Commitment
BMRI has a vision for its ESG business: 'Becoming Indonesia's Sustainability Champion For a Better Future.' This serious commitment has led BMRI to become the first bank in Indonesia to launch Recycled PVC for its Debit and Credit Cards. Additionally, BMRI actively participates in Carbon Trading. Quantitatively, BMRI's green portfolio accounts for more than 30% of the big 4 banks, with figures reaching IDR 122 Trillion. BMRI's Total Sustainable Loan Portfolio as of September 2023 was IDR 253 Trillion, representing 24.9% of the total portfolio and an increase of 50 basis points from September 2022.
Valuation: 23% Upside, Recommendation to Buy.
Our Multi-Stage DDM Valuation indicates a target price of IDR 7,200 within a year, implying a trading multiple of 3.6x PBV and offering a potential 23% upside. Consequently, we recommend a "Buy".
In 9M2023, BMRI recorded a significant annual net income growth of 27.44%. The 20.61% YoY increase in interest income contributed to the bank's higher profitability, leading to a 17 bps YoY rise in the NIM ratio to a level of 5.59%. The bank's ROA also experienced growth, increasing by 31 bps to 2.60%. We forecast that BMRI will continue its profit growth, expecting another 30.76% YoY increase for FY23, with the NIM ratio standing at 5.50%, in line with its guidance.
Robust Annual Loan Growth
As of September 2023, BMRI’s consolidated loans have grown robustly by 12.71%. All segments served by the bank experienced significant growth. The highest growth came from the Commercial segment, which increased by 18.56% YoY. Other segments such as Consumer, SME, Micro, and Corporate grew by 11.99%, 11.75%, 10.10%, and 9.54%, respectively. From an industry perspective, the Financial Services and Energy & Water sectors experienced the highest YoY growth in Wholesale Banking, growing by 40% and 19%, respectively. We forecast that BMRI will continue to expand its loan portfolio, with a growth rate of 14.12% for the FY23 figure.
Better NPL Ratio
As of September 2023, BMRI's consolidated NPL ratio has experienced a significant improvement, decreasing by 75 basis points YoY to a level of 1.49%, while the bank-only NPL stands at 1.36%, reflecting a decrease of 90 basis points YoY. Within the bank-only context, the Corporate segment emerged as the best-performing segment, with an NPL ratio of 0.82%, while the Commercial segment reported the highest NPL ratio at 2.24%, representing 36% of the total NPLs. We forecast that BMRI will continue to manage its asset quality effectively, maintaining the gross consolidated NPL ratio at 1.49% for the FY23 figure.
Serious ESG Commitment
BMRI has a vision for its ESG business: 'Becoming Indonesia's Sustainability Champion For a Better Future.' This serious commitment has led BMRI to become the first bank in Indonesia to launch Recycled PVC for its Debit and Credit Cards. Additionally, BMRI actively participates in Carbon Trading. Quantitatively, BMRI's green portfolio accounts for more than 30% of the big 4 banks, with figures reaching IDR 122 Trillion. BMRI's Total Sustainable Loan Portfolio as of September 2023 was IDR 253 Trillion, representing 24.9% of the total portfolio and an increase of 50 basis points from September 2022.
Valuation: 23% Upside, Recommendation to Buy.
Our Multi-Stage DDM Valuation indicates a target price of IDR 7,200 within a year, implying a trading multiple of 3.6x PBV and offering a potential 23% upside. Consequently, we recommend a "Buy".
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