BBCA kicked off 2025 with decent bank-only Jan-25 results with headline profit of IDR4.7tn (+6% y-y). While still very early, it is on track to exceed our current FY25F earnings projection. We attribute these resilient results to primarily stable funding costs despite still stubbornly tight liquidity in the banking system. Indeed, the bank reported cost of funds of 1.10% (a -6bp decline y-y / +2bp m-m).

Meanwhile, with blended asset yield hovering at ~6.9-7.0%, the bank reported NIM of 6.0%. This brings net interest income to IDR6.7tn (+7% y-y), probably to be the highest growth among major banks. Headline PPOP reached IDR6.4tn (+12% y-y), which is on track to comfortably meet our FY25F PPOP estimate of IDR75tn. Despite lower write-off in Jan-25, the bank continued to take prudent stance with credit costs of ~80bp (largely in line with 12MMA write-off rates). This suggests limited provision releases, which resulted in stable LLR of 3.7%.

On the balance sheet, the bank booked loan and deposit growth of +15% y-y and 2% y-y, respectively, which brought LDR to 80% (+900bp y-y / -100bp m-m). We expect loan growth to moderate in subsequent months towards FY25 growth of 6-8% (according to management guidance). Key observation on deposit growth suggested high quality growth coming from savings products which rose +5% y-y. On LLR, management maintained prudent stance with stable LLR of 3.7%.

Post results, we retain BBCA as our preferred banking stock.

Valuation and risks

We derive our TP of IDR12,600 using DuPont analysis with key parameters as follows: a risk-free rate of 6.5%, an equity risk premium of 7.8%, beta of 0.8x and a CAR-adjusted ROAE of 24.5%. Our TP implies 5.4x FY25F P/B (vs current price valuation of 4.2x) and a FY25F P/E of 26.0x (vs current price valuation of 21.0x). Key downside risks are worsening economic trends, tighter liquidity competition, and/or higher credit cost and opex growth.

Fig. 1: BBCA Jan'25 results

Fig. 2: BBCA ROAE and loan growth

Fig. 3: BBCA loan and NII growth

Fig. 4: BBCA LLR and write-offs

Fig. 5: BBCA CoC and write-offs

INVESTMENT RATINGS
A rating of ‘Buy’, indicates that the analyst expects the stock to outperform the Benchmark over the next 12 months. A rating of ‘Neutral’, indicates that the analyst expects the stock to perform in line with the Benchmark over the next 12 months. A rating of ‘Reduce’, indicates that the analyst expects the stock to underperform the Benchmark over the next 12 months. A rating of ‘Suspended’, indicates that the rating, target price, and estimates have been suspended temporarily to comply with applicable regulations and/or firm policies. Securities and/or companies that are labelled as ‘Not Rated’ or ‘No Rating’ are not in regular research coverage. Benchmark is Indonesia Composite Index (‘IDX Composite’). A ‘Target Price’, if discussed, indicates the analyst’s forecast for the share price with a 12-month time horizon, reflecting in part of the analyst’s estimates for the company’s earnings, and may be impeded by general market and macroeconomic trends, and by other risks related to the company or the market in general. 

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Erwin Wijaya (erwin.wijaya@verdhana.id)