BNGA
Contact our analyst Achmadi
13.58% upside. Buy.
10th January, 2025
Price Rp 1,730
Target price Rp1,965
Another Modest PATMI Growth
In 9M-2024, Bank CIMB Niaga’s (BNGA) profit after tax and minority interest (PATMI) exhibited modest growth, rising by 4.72% YoY to IDR 5.18 trillion. This growth was constrained by a sharp 22.81% YoY increase in interest expenses, which offset the 7.83% YoY growth in interest income. As a result, net interest income declined by 1.76% YoY, and the net interest margin (NIM) fell by 36 bps YoY to 4.16% for 9M-2024. For Q3-2024, the NIM stood at 4.07%, down 15 bps YoY. However, BNGA benefitted from a strong 144.68% YoY increase in gains from financial instruments measured at fair value through profit or loss (FVTPL), which supported higher overall profits compared to 9M-2023. We project BNGA’s PATMI to grow by 6.74% YoY for FY-2024, reaching IDR 6.91 trillion, with an expected NIM of 4.21%.
Moderate Loan Expansion
As of September 2024, BNGA’s consolidated loan portfolio grew moderately by 6.09% YoY to IDR 218.58 trillion. This growth was driven by a 4.92% increase in the bank-only portfolio and a significant 37.93% rise in the non-bank portfolio. Segment-wise, the EBB/SME credit segment recorded the highest expansion, growing by 13.01% YoY. Sustainable financing totaled IDR 54.37 trillion, with MSME credit representing the largest share. We forecast a slower pace for consolidated loan growth, with the portfolio expected to rise by 3.62% YoY by December 2024.
Deposit Growth Surpassing Loan Growth
BNGA’s deposits outpaced loan growth as of September 2024, increasing by 8.80% YoY and reducing the loan-to-deposit ratio (LDR) by 2.1% YoY to 84.3%. Deposit growth was primarily driven by a 14.84% surge in Current Accounts, followed by an 8.86% increase in Time Deposits. Savings Accounts grew at a slower pace, up only 2.89% YoY, leading to stagnation in the CASA ratio at 66.70%, despite an 8.77% YoY increase in CASA deposits. We expect total deposits to grow further by 9.76% YoY by December, with Current Accounts continuing to show the strongest growth at 22.58%.
Improved Asset Quality
BNGA demonstrated an improvement in asset quality as of September 2024, with the consolidated gross non-performing loan (NPL) ratio declining by 40 bps YoY to 2.00%. The special mention loan (SML) ratio also improved significantly, dropping 118 bps YoY to 4.43%. By December, we forecast further improvement, with consolidated NPL and SML ratios projected at 1.95% and 4.09%, respectively.
Valuation: 13.58% Upside, Buy.
Using a dividend discount model (DDM) multi-stage valuation, the target price for BNGA has been adjusted to IDR 1,965, down from the previous target of IDR 2,150. This reflects a price-to-book value (PBV) of 0.90x and an upside potential of 13.58%. We maintain our Buy recommendation for this stock.
In 9M-2024, Bank CIMB Niaga’s (BNGA) profit after tax and minority interest (PATMI) exhibited modest growth, rising by 4.72% YoY to IDR 5.18 trillion. This growth was constrained by a sharp 22.81% YoY increase in interest expenses, which offset the 7.83% YoY growth in interest income. As a result, net interest income declined by 1.76% YoY, and the net interest margin (NIM) fell by 36 bps YoY to 4.16% for 9M-2024. For Q3-2024, the NIM stood at 4.07%, down 15 bps YoY. However, BNGA benefitted from a strong 144.68% YoY increase in gains from financial instruments measured at fair value through profit or loss (FVTPL), which supported higher overall profits compared to 9M-2023. We project BNGA’s PATMI to grow by 6.74% YoY for FY-2024, reaching IDR 6.91 trillion, with an expected NIM of 4.21%.
Moderate Loan Expansion
As of September 2024, BNGA’s consolidated loan portfolio grew moderately by 6.09% YoY to IDR 218.58 trillion. This growth was driven by a 4.92% increase in the bank-only portfolio and a significant 37.93% rise in the non-bank portfolio. Segment-wise, the EBB/SME credit segment recorded the highest expansion, growing by 13.01% YoY. Sustainable financing totaled IDR 54.37 trillion, with MSME credit representing the largest share. We forecast a slower pace for consolidated loan growth, with the portfolio expected to rise by 3.62% YoY by December 2024.
Deposit Growth Surpassing Loan Growth
BNGA’s deposits outpaced loan growth as of September 2024, increasing by 8.80% YoY and reducing the loan-to-deposit ratio (LDR) by 2.1% YoY to 84.3%. Deposit growth was primarily driven by a 14.84% surge in Current Accounts, followed by an 8.86% increase in Time Deposits. Savings Accounts grew at a slower pace, up only 2.89% YoY, leading to stagnation in the CASA ratio at 66.70%, despite an 8.77% YoY increase in CASA deposits. We expect total deposits to grow further by 9.76% YoY by December, with Current Accounts continuing to show the strongest growth at 22.58%.
Improved Asset Quality
BNGA demonstrated an improvement in asset quality as of September 2024, with the consolidated gross non-performing loan (NPL) ratio declining by 40 bps YoY to 2.00%. The special mention loan (SML) ratio also improved significantly, dropping 118 bps YoY to 4.43%. By December, we forecast further improvement, with consolidated NPL and SML ratios projected at 1.95% and 4.09%, respectively.
Valuation: 13.58% Upside, Buy.
Using a dividend discount model (DDM) multi-stage valuation, the target price for BNGA has been adjusted to IDR 1,965, down from the previous target of IDR 2,150. This reflects a price-to-book value (PBV) of 0.90x and an upside potential of 13.58%. We maintain our Buy recommendation for this stock.
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