BNGA
Contact our analyst Achmadi
14.06% upside. Buy.
3rd September, 2024
Price Rp 1,885
Target price Rp2,150
Forex Gains Propel BNGA’s Profit Amid Rising Interest Expenses
In the first half of 2024, BNGA’s profit after tax and minority interest (PATMI) continued its upward trajectory, albeit with a modest 5.38% year-on-year (YoY) increase. This growth was primarily driven by a substantial rise in foreign exchange gains, which surged by 163.20%, effectively offsetting a -2.34% YoY decline in Net Interest Income. The decrease in net interest income was largely attributed to a significant 24.60% increase in interest expenses, resulting in a Net Interest Margin (NIM) of 4.21% for the first half of the year, down 40 basis points (bps). However, a closer look at quarterly performance reveals a slight improvement in the NIM ratio in Q2-2024, which edged up by 2 bps to 4.22% compared to the first quarter. We project that by December 2024, PATMI will expand by 15.60% YoY, with the NIM ratio reaching 4.34%.
Sustainable Financing Grows Amid Modest Loan Expansion
As of June 2024, BNGA’s consolidated loan portfolio stood at IDR 217.08 trillion, reflecting slow growth with a 5.35% YoY increase, mirroring the previous quarter’s trend. However, sustainable financing saw a notable YoY rise of 9.53%, now constituting 26% of total loans, up from 25% previously. This underscores BNGA’s strong commitment to integrating ESG principles into its operations, further supported by its ESG Risk Rating from Morningstar Sustainalytics, which assigned a score of 20.7, classifying BNGA as a medium-risk company, ranking 294th out of 1,037 banks. We anticipate that by December 2024, BNGA’s consolidated loans will grow by an additional 5.05% YoY.
Robust CASA Growth
As of June 2024, BNGA’s Current Account Savings Account (CASA) balance reached IDR 249.84 trillion, representing solid growth of 7.44% YoY. This was fuelled by a strong 15.30% YoY increase, resulting in a significant rise in the CASA Ratio, which improved by 90 bps YoY to 65.19%. We expect BNGA’s CASA ratio to stabilize around 65%. Although this is slightly lower than the Q2 figure of 65.03%, it reflects an 8.63% YoY increase in CASA by December 31, 2024.
Improved Asset Quality
As of June 2024, BNGA’s consolidated gross Non-Performing Loan (NPL) ratio stood at 2.10%, a 40-bps improvement from Q2 2023. Additionally, the Special Mention Loan (SML) ratio showed a significant improvement, decreasing by 118 bps to 4.43%. We forecast that by December 2024, both the consolidated NPL and SML ratios will improve further to 1.89% and 3.86%, respectively, indicating healthier asset quality.
Valuation: 14.06% Upside, Buy Recommendation
Our discounted dividend model (DDM) valuation sets a one-year target price at IDR 2,150, a small increase of revision from the previous target of IDR 2,110, which equates to a valuation of 1.00x PBV. With a potential upside of 14.06%, we recommend a BUY.
In the first half of 2024, BNGA’s profit after tax and minority interest (PATMI) continued its upward trajectory, albeit with a modest 5.38% year-on-year (YoY) increase. This growth was primarily driven by a substantial rise in foreign exchange gains, which surged by 163.20%, effectively offsetting a -2.34% YoY decline in Net Interest Income. The decrease in net interest income was largely attributed to a significant 24.60% increase in interest expenses, resulting in a Net Interest Margin (NIM) of 4.21% for the first half of the year, down 40 basis points (bps). However, a closer look at quarterly performance reveals a slight improvement in the NIM ratio in Q2-2024, which edged up by 2 bps to 4.22% compared to the first quarter. We project that by December 2024, PATMI will expand by 15.60% YoY, with the NIM ratio reaching 4.34%.
Sustainable Financing Grows Amid Modest Loan Expansion
As of June 2024, BNGA’s consolidated loan portfolio stood at IDR 217.08 trillion, reflecting slow growth with a 5.35% YoY increase, mirroring the previous quarter’s trend. However, sustainable financing saw a notable YoY rise of 9.53%, now constituting 26% of total loans, up from 25% previously. This underscores BNGA’s strong commitment to integrating ESG principles into its operations, further supported by its ESG Risk Rating from Morningstar Sustainalytics, which assigned a score of 20.7, classifying BNGA as a medium-risk company, ranking 294th out of 1,037 banks. We anticipate that by December 2024, BNGA’s consolidated loans will grow by an additional 5.05% YoY.
Robust CASA Growth
As of June 2024, BNGA’s Current Account Savings Account (CASA) balance reached IDR 249.84 trillion, representing solid growth of 7.44% YoY. This was fuelled by a strong 15.30% YoY increase, resulting in a significant rise in the CASA Ratio, which improved by 90 bps YoY to 65.19%. We expect BNGA’s CASA ratio to stabilize around 65%. Although this is slightly lower than the Q2 figure of 65.03%, it reflects an 8.63% YoY increase in CASA by December 31, 2024.
Improved Asset Quality
As of June 2024, BNGA’s consolidated gross Non-Performing Loan (NPL) ratio stood at 2.10%, a 40-bps improvement from Q2 2023. Additionally, the Special Mention Loan (SML) ratio showed a significant improvement, decreasing by 118 bps to 4.43%. We forecast that by December 2024, both the consolidated NPL and SML ratios will improve further to 1.89% and 3.86%, respectively, indicating healthier asset quality.
Valuation: 14.06% Upside, Buy Recommendation
Our discounted dividend model (DDM) valuation sets a one-year target price at IDR 2,150, a small increase of revision from the previous target of IDR 2,110, which equates to a valuation of 1.00x PBV. With a potential upside of 14.06%, we recommend a BUY.
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