BMRI
Contact our analyst achmadi
23% UPSIDE, Buy
6th November 2024
Price Rp 6,550
Target Price Rp 8,025
Continued PATMI Growth
In the first nine months of 2024, Bank Mandiri (BMRI) recorded a profit after tax and minority interest (PATMI) of IDR 42.02 trillion, representing a 7.56% year-on-year (YoY) increase, up from 5.23% YoY growth in the first half of 2024. Interest income rose by 12.89%, boosting the net interest margin (NIM) by 2 basis points to 5.11%, although still below the 5.59% seen in the same period in 2023. Additionally, income from fair value through profit or loss (FVTPL) investments surged 28.41% YoY to IDR 3.37 trillion, with net gains from derivative transactions contributing IDR 1.35 trillion, emerging as the primary driver. We project BMRI’s full-year PATMI to reach IDR 60.08 trillion by year-end 2024, reflecting a 9.12% YoY increase.
Robust Growth in Consolidated Loans Driven by ESG Initiatives
BMRI’s consolidated gross loans amounted to IDR 1,589.84 trillion, a robust 20.82% YoY increase, exceeding expectations as of June 2024. All lending segments experienced growth, led by corporate loans at 29.59% and commercial loans at 23.71%. The metal mining sector posted the largest increase in loan value, rising by IDR 18.7 trillion YoY, while the machinery manufacturing sector recorded the highest percentage growth at 332% YoY. Sustainable finance expanded significantly, growing 12.8% YoY to IDR 285 trillion and contributing 18% to total consolidated loans, with renewable energy adding IDR 10 trillion to the portfolio. Management expects sustainable finance to constitute 20% of the portfolio in the coming years, driven by alignment with Indonesia’s sustainability goals and increasing demand. We forecast that by December 31, 2024, BMRI’s consolidated gross loans will reach IDR 1,657.55 trillion, representing an 18.56% YoY increase, surpassing the 2024 target.
Improved Asset Quality
As of September 2024, BMRI’s consolidated gross non-performing loan (NPL) ratio improved to 1.13%, a 36-basis-point decrease YoY. The corporate segment emerged as the healthiest, with a gross NPL ratio of 0.39%, down 43 basis points YoY. The commercial segment showed the greatest improvement, with its NPL ratio declining by 1.09% YoY to 1.15%. However, the micro segment experienced a setback, with its NPL ratio rising by 45 basis points YoY to 1.78%. We forecast further improvement in asset quality, expecting the consolidated gross NPL ratio to reach 1.11% by year-end 2024.
Strong Liquidity Supported by Digital Innovation
BMRI maintained strong liquidity, driven by digital advancements, resulting in a 14.86% increase in customer deposits. Consolidated Current Accounts, Savings Accounts, and Time Deposits rose by 17.81%, 12.57%, and 14.35%, respectively, with the consolidated CASA (Current Account and Savings Account) ratio climbing by 10 basis points to 73.80%. Bank-only savings accounts grew 12.3% YoY, outperforming the industry average, supported by Livin’ Mandiri. The number of registered Livin’ Mandiri accounts rose by 33% YoY, reaching 27.3 million users. We project customer deposits to grow by 8.68% by December 31, 2024, with the CASA ratio anticipated to rise to 74.03%.
Valuation: 16% Upside, Buy
Based on Q3-2024 performance and using a Multi-Stage Dividend Discount Model, we have set a revised target price of IDR 8,025, reflecting a 2.33x price-to-book ratio and a 16% upside potential. We recommend a “Buy” rating.
In the first nine months of 2024, Bank Mandiri (BMRI) recorded a profit after tax and minority interest (PATMI) of IDR 42.02 trillion, representing a 7.56% year-on-year (YoY) increase, up from 5.23% YoY growth in the first half of 2024. Interest income rose by 12.89%, boosting the net interest margin (NIM) by 2 basis points to 5.11%, although still below the 5.59% seen in the same period in 2023. Additionally, income from fair value through profit or loss (FVTPL) investments surged 28.41% YoY to IDR 3.37 trillion, with net gains from derivative transactions contributing IDR 1.35 trillion, emerging as the primary driver. We project BMRI’s full-year PATMI to reach IDR 60.08 trillion by year-end 2024, reflecting a 9.12% YoY increase.
Robust Growth in Consolidated Loans Driven by ESG Initiatives
BMRI’s consolidated gross loans amounted to IDR 1,589.84 trillion, a robust 20.82% YoY increase, exceeding expectations as of June 2024. All lending segments experienced growth, led by corporate loans at 29.59% and commercial loans at 23.71%. The metal mining sector posted the largest increase in loan value, rising by IDR 18.7 trillion YoY, while the machinery manufacturing sector recorded the highest percentage growth at 332% YoY. Sustainable finance expanded significantly, growing 12.8% YoY to IDR 285 trillion and contributing 18% to total consolidated loans, with renewable energy adding IDR 10 trillion to the portfolio. Management expects sustainable finance to constitute 20% of the portfolio in the coming years, driven by alignment with Indonesia’s sustainability goals and increasing demand. We forecast that by December 31, 2024, BMRI’s consolidated gross loans will reach IDR 1,657.55 trillion, representing an 18.56% YoY increase, surpassing the 2024 target.
Improved Asset Quality
As of September 2024, BMRI’s consolidated gross non-performing loan (NPL) ratio improved to 1.13%, a 36-basis-point decrease YoY. The corporate segment emerged as the healthiest, with a gross NPL ratio of 0.39%, down 43 basis points YoY. The commercial segment showed the greatest improvement, with its NPL ratio declining by 1.09% YoY to 1.15%. However, the micro segment experienced a setback, with its NPL ratio rising by 45 basis points YoY to 1.78%. We forecast further improvement in asset quality, expecting the consolidated gross NPL ratio to reach 1.11% by year-end 2024.
Strong Liquidity Supported by Digital Innovation
BMRI maintained strong liquidity, driven by digital advancements, resulting in a 14.86% increase in customer deposits. Consolidated Current Accounts, Savings Accounts, and Time Deposits rose by 17.81%, 12.57%, and 14.35%, respectively, with the consolidated CASA (Current Account and Savings Account) ratio climbing by 10 basis points to 73.80%. Bank-only savings accounts grew 12.3% YoY, outperforming the industry average, supported by Livin’ Mandiri. The number of registered Livin’ Mandiri accounts rose by 33% YoY, reaching 27.3 million users. We project customer deposits to grow by 8.68% by December 31, 2024, with the CASA ratio anticipated to rise to 74.03%.
Valuation: 16% Upside, Buy
Based on Q3-2024 performance and using a Multi-Stage Dividend Discount Model, we have set a revised target price of IDR 8,025, reflecting a 2.33x price-to-book ratio and a 16% upside potential. We recommend a “Buy” rating.
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