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Bank CIMB Niaga (BNGA IJ) (Neutral) - Improving performance; new TP of IDR1,850

Bank CIMB Niaga (BNGA IJ) (Neutral) - Improving performance; new TP of IDR1,850

Banks EW 199 27th Feb, 2025

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Improving performance; new TP of IDR1,850

FY25-26F earnings adjusted by ~-1.2-0.6%; maintain Neutral

Bank CIMB (BNGA) has a notable position in Indonesia’s SME and consumer businesses, including mortgages, unsecured loans, and auto financing, in our view. In recent quarters, the bank has recorded improved operating results. We have also seen improved asset quality, which led to a lower credit cost (CoC). The bank reported FY24 headline profit of IDR6.8tn (+5% y-y), which was well ahead of our projection. For 2025, management has guided loan growth of 5-7%. It expects NIM of 3.9-4.2% and CoC of below 1.0%. Thus, we adjust our FY25-26F earnings projections by ~-1.2-0.6% and revise our TP to IDR1,850 (from IDR2,200).

Summary of earnings forecast changes

We update our earnings projections for FY25F and FY26F, as well as add FY27F as a new forecast year. Broadly, we have made more conservative earnings projections for BNGA: we reduce FY25-26F earnings by -1.2-0.6%, driven largely by high funding costs (reflecting generally the tight liquidity in the banking system). We project headline profit to reach IDR6.3tn in FY25F (+0.6% from our previous projection) and IDR6.6tn in FY26F (-1.2% from our previous estimate). We expect reported ROAEs to decline to 11.3-11.6% in FY25-26F from our previous estimates of 11.9-12.4%. On the balance sheet, we assume gross loans of IDR229tn for FY25F and IDR240tn for FY26F (-1.5% compared to our previous projections). On the deposits side, we assume IDR274tn for FY25F and IDR287tn for FY26F (+5.2% compared to our previous projections). These bring the bank’s implied LDR to 83.6% for FY25-26F.

Valuation and risks

Our new TP of IDR1,850 is based on DuPont analysis, with key parameters as follows – a risk-free rate of 6.5%, an equity risk premium of 7.80%, a beta of 1.00x (previously 0.85x, due to higher sector risk), and a CAR-adjusted ROAE of 13.5%. At our TP, the stock would trade at a 2025F P/B of 0.8x. We maintain our Neutral rating on BNGA to reflect our long-term view that Indonesia’s major banks will likely continue to increase their market share. Upside/downside risks are better/worsening macroeconomic developments, higher/lower loan growth, higher/lower NIM, and/or lower/higher NPLs. Our preferred stocks in the sector are BBCA and BMRI (both rated Buy).

Year-end 31 DecFY24FY25FFY26FFY27F
Currency (IDR)ActualOldNewOldNewOldNew
PPOP (bn)10,53411,4509,99912,07611,229011,645
Reported net profit (bn)6,8256,2796,3146,6346,55806,771
Normalised net profit (bn)6,8256,2796,3146,6346,55806,771
FD normalised EPS271.57251.85251.24266.11263.05271.59
FD norm. EPS growth (%)5.416.5-7.55.74.73.2
FD normalised P/E (x)6.2–6.7–6.4–6.2
Price/adj. book (x)0.9–0.8–0.7–0.7
Price/book (x)0.9–0.8–0.7–0.7
Dividend yield (%)7.3–7.7–7.1–7.4
ROE (%)14.511.912.411.912.011.5
ROA (%)2.11.71.81.81.81.7
Source: Company data, Verdhana estimates

Key data on Bank CIMB Niaga

Profit and loss (IDRbn)
Year-end 31 Dec
FY23
FY24
FY25F
FY26F
FY27F
Interest income
22,306
24,227
23,286
24,613
25,816
Interest expense
-8,954
-10,961
-9,433
-9,528
-10,047
Net interest income
13,352
13,267
13,853
15,085
15,770
Net fees and commissions
3,155
3,002
3,164
3,323
3,489
Trading related profits
702
1,251
1,265
1,265
1,265
Other operating revenue
479
932
750
750
750
Non-interest income
4,336
5,185
5,179
5,338
5,504
Operating income
17,688
18,452
19,032
20,422
21,273
Depreciation
-563
-647
-665
-688
-711
Amortisation
0
0
0
0
0
Operating expenses
-1,975
-2,135
-3,257
-3,284
-3,311
Employee share expense
-4,947
-5,135
-5,110
-5,221
-5,606
Pre-provision op profit
10,202
10,534
9,999
11,229
11,645
Provisions for bad debt
-2,007
-1,805
-2,011
-2,932
-3,079
Other provision charges
0
0
0
0
0
Operating profit
8,195
8,729
7,989
8,297
8,566
Other non-op income
162
Associates & JCEs
0
0
0
0
0
Pre-tax profit
8,357
8,729
7,989
8,297
8,566
Income tax
-1,806
-1,830
-1,675
-1,739
-1,796
Net profit after tax
6,551
6,899
6,314
6,558
6,771
Minority interests
-77
-74
0
0
0
Other items
0
0
0
0
0
Preferred dividends
0
0
0
0
0
Normalised NPAT
6,475
6,825
6,314
6,558
6,771
Extraordinary items
0
0
0
0
0
Reported NPAT
6,475
6,825
6,314
6,558
6,771
Dividends
-2,872
-3,084
-3,251
-3,008
-3,124
Transfer to reserves
3,603
3,741
3,063
3,550
3,647
Growth (%)
Net interest income
3.0
-0.6
4.4
8.9
4.5
Non-interest income
-6.4
19.6
-0.1
3.1
3.1
Non-interest expenses
-52.0
8.1
52.5
0.8
0.8
Pre-provision earnings
11.8
3.3
-5.1
12.3
3.7
Net profit
22.9
5.4
-7.5
3.9
3.2
Normalised EPS
22.9
6.3
-7.5
3.9
3.2
Normalised FDEPS
23.9
5.4
-7.5
4.7
3.2
Loan growth
8.2
9.2
7.0
5.7
5.3
Interest earning assets
-2.5
8.6
8.1
9.3
5.9
Interest bearing liabilities
-5.4
4.6
12.7
5.2
5.2
Asset growth
-1.3
9.0
7.7
5.4
5.4
Deposit growth
-5.9
3.8
10.5
5.0
5.0
Source: Company data, Verdhana estimates
Balance sheet (IDRbn)
As at 31 Dec
FY23
FY24
FY25F
FY26F
FY27F
Cash and equivalents
5,439
3,928
3,650
6,995
7,345
Inter-bank lending
0
0
0
Deposits with central bank
8,985
13,180
9,991
14,002
14,703
Total securities
65,009
79,960
93,810
94,350
100,600
Other int earning assets
17,627
7,245
7,557
17,817
19,586
Gross loans
190,692
205,917
217,950
228,847
240,290
Less provisions
-13,087
-11,906
-10,451
-9,490
-9,360
Net loans
177,605
194,011
207,499
219,357
230,930
Long-term investments
4
4
23
27
37
Fixed assets
9,124
8,849
8,848
8,683
8,494
Goodwill
0
0
0
0
0
Other intangible assets
0
0
0
0
0
Other non IEAs
22,960
27,191
28,843
18,506
18,506
Total assets
306,754
334,369
360,221
379,737
400,200
Customer deposits
227,189
235,862
260,639
273,671
287,355
Bank deposits, CDs, debentures
2,506
1,760
5,959
6,257
6,570
Other int bearing liabilities
3,654
6,444
8,562
9,411
10,345
Total int bearing liabilities
233,348
244,066
275,161
289,340
304,270
Non-int bearing liabilities
28,130
40,966
31,863
33,456
35,129
Total liabilities
261,478
285,032
307,024
322,796
339,399
Minority interest
84
145
197
197
197
Common stock
8,646
8,681
8,748
8,748
8,748
Preferred stock
0
0
0
Retained earnings
33,311
36,892
40,617
44,361
48,222
Reserves for credit losses
0
0
0
0
0
Proposed dividends
0
0
0
0
0
Other equity
3,235
3,620
3,635
3,635
3,635
Shareholders' equity
45,192
49,193
52,999
56,744
60,604
Total liabilities and equity
306,754
334,369
360,221
379,737
400,200
Non-perf assets
5,386
4,077
4,316
4,531
4,758
Balance sheet ratios (%)
Loans to deposits
83.9
87.3
83.6
83.6
83.6
Equity to assets
14.7
14.7
14.7
14.9
15.1
Asset quality & capital
NPAs/gross loans (%)
2.8
2.0
2.0
2.0
2.0
Bad debt charge/gross loans (%)
1.05
0.88
0.92
1.28
1.28
Loss reserves/assets (%)
4.27
3.56
2.90
2.50
2.34
Loss reserves/NPAs (%)
243.0
292.0
242.2
209.4
196.7
Tier 1 capital ratio (%)
20.6
18.2
20.1
15.7
15.3
Total capital ratio (%)
21.9
19.2
21.1
16.5
16.1
Per share
Reported EPS (IDR)
257.62
273.77
253.27
263.05
271.59
Norm EPS (IDR)
257.62
273.77
253.27
263.05
271.59
FD norm EPS (IDR)
257.62
271.57
251.24
263.05
271.59
DPS (IDR)
114.27
123.72
130.42
120.65
125.31
PPOP PS (IDR)
405.94
422.55
401.10
450.43
467.12
BVPS (IDR)
1,798.21
1,973.25
2,125.94
2,276.15
2,430.99
ABVPS (IDR)
1,798.21
1,973.25
2,125.94
2,276.15
2,430.99
NTAPS (IDR)
1,798.21
1,973.25
2,125.94
2,276.15
2,430.99
Valuations and ratios
Reported P/E (x)
6.6
6.2
6.7
6.4
6.2
Normalised P/E (x)
6.6
6.2
6.7
6.4
6.2
FD normalised P/E (x)
6.6
6.2
6.7
6.4
6.2
Dividend yield (%)
6.7
7.3
7.7
7.1
7.4
Price/book (x)
0.9
0.9
0.8
0.7
0.7
Price/adjusted book (x)
0.9
0.9
0.8
0.7
0.7
Net interest margin (%)
4.80
4.63
4.46
4.47
4.35
Yield on assets (%)
8.02
8.46
7.50
7.29
7.12
Cost of int bearing liab (%)
3.73
4.59
3.63
3.38
3.38
Net interest spread (%)
4.29
3.86
3.87
3.92
3.73
Non-interest income (%)
24.5
28.1
27.2
26.1
25.9
Cost to income (%)
42.3
42.9
47.5
45.0
45.3
Effective tax rate (%)
21.6
21.0
21.0
21.0
21.0
Dividend payout (%)
44.4
45.2
51.5
45.9
46.1
ROE (%)
14.6
14.5
12.4
12.0
11.5
ROA (%)
2.10
2.13
1.82
1.77
1.74
Operating ROE (%)
18.5
18.5
15.6
15.1
14.6
Operating ROA (%)
2.65
2.72
2.30
2.24
2.20
Source: Company data, Verdhana estimates
Company profilePT Bank CIMB Niaga Tbk (CIMB Niaga) is Indonesia's sixth largest bank by assets, ans was established in 1955. CIMB Niaga, which is majority-owned by CIMB Group, is the largest payment bank in terms of transaction value under the Indonesian Central Securities Depository. With 11% market share currently, CIMB Niaga is the third largest mortgage provider in Indonesia.
Valuation MethodologyWe derive our TP of IDR1,850 based on Dupont analysis with key parameters as follows: a risk-free rate of 6.5%, an equity risk premium of 7.80%, beta of 1.0x, and a CAR-adj ROAE of 13.5%. At this TP, the stock would trade at 0.8x 2025F P/B. The benchmark index for this stock is the JCI.
Risks that may impede the achievement of the target priceUpside/downside risks are better/worsening macroeconomic developments, higher/lower loan growth, higher/lower NIM, and/or lower/higher NPLs.
ESGPredicated on the philosophy of ‘Banking for the Future’, CIMB Niaga endeavors to mobilize investments and capital for sustainable development and as an intermediary, the company aims to create net positive impact by bringing purpose-driven financial solutions to the market. Ranging from the introduction of a Green, Social, Sustainability Impact Products & Services Framework to new product opportunities, CIMB Niaga is committed to stimulate the emergence and growth of new impact-based business models. CIMB Niaga successfully launched a sharia financing program for electric motorcycles called “Motor X-TRA” using the Xtra Dana iB financing product. It is the first provider of sharia financing for electric motorcycles in Indonesia, using the Murabahah concept. The company has teamed up with Gesit (an electric bike producer in Indonesia) and many dealers or sub-dealers in Jawa, Palembang and Bali, and the program makes it easier for consumers to own an electric bike through small installments (starting from IDR600,000) and free life insurance.
Fig. 1: BNGA quarterly results

 BNGA IDR bn 4Q231Q242Q243Q244Q24Q-QY-YYTD-24YTD-23YoY %
 Int inc       5,592      5,845      6,006      6,173      6,2040.511.024,22722,3068.6
 Int exp       2,427      2,560      2,635      2,820      2,9464.421.410,9618,95422.4
 NII       3,165      3,285      3,371      3,352      3,259(2.8)3.013,26713,352(0.6)
 Other inc       1,114      1,515      1,414      1,448      1,275(11.9)14.55,6515,4334.0
 Total inc       4,279      4,800      4,785      4,800      4,533(5.6)6.018,91818,7860.7
 PPOP       2,323      2,561      2,674      2,499      2,179(12.8)(6.2)9,91310,181(2.6)
 Prov          192         408         466         449         226(49.7)17.81,5501,851(16.3)
 PBT       2,131      2,153      2,208      2,050      1,953(4.7)(8.4)8,3638,3300.4
 NP       1,573      1,681      1,765      1,687      1,6930.47.76,8266,4745.4
           
      Q-QY-YYTD-24YTD-23 
 Total assets   334,369  332,994  346,694  354,296  360,2211.77.77.79.0 
 Gross loans   213,370  211,588  217,082  218,580  228,0034.36.96.98.5 
 Provisions     12,047    11,465    11,635    11,192    10,653(4.8)(11.6)(11.6)(8.7) 
 Net loans   201,322  200,123  205,447  207,388  217,3504.88.08.09.8 
           
 Total deposits   235,862  248,029  249,844  255,971  260,6391.810.510.53.8 
 CA     73,202    79,084    83,011    88,700    91,7883.525.425.44.1 
 SA     77,431    81,027    79,874    82,032    80,279(2.1)3.73.74.5 
 CASA   150,633  160,111  162,885  170,732  172,0670.814.214.24.3 
 TD     85,229    87,918    86,959    85,239    88,5723.93.93.93.0 
 Equities     49,193    51,215    49,568    52,037    52,9991.87.77.78.9 
Source: Company data, Verdhana research

 

Fig. 2: BNGA ratios

 BNGA Ratios % 4Q231Q242Q243Q244Q24
 Asset yield 7.57.87.87.77.6
 COF 4.04.14.14.34.4
 NIM 4.24.44.44.24.0
 Loan yoy 8.56.05.96.46.9
 Loan qoq 3.8(0.8)2.60.74.3
 Deposit yoy 3.83.36.08.810.5
 Deposit qoq 0.35.20.72.51.8
 CASA 63.964.665.266.766.0
 NIM 4.24.44.44.24.0
 B/S ROAE 13.013.414.013.212.8
 CAR 24.024.522.723.423.3
 NIM 4.24.44.44.24.0
 CIR         45.7        46.6        44.1        47.9        51.9
 LDR 90.585.386.985.487.5
 NPL 2.02.22.22.01.8
 NPL cov          286         250         247         252         262
 LLR          5.6         5.4         5.4         5.1         4.7
 Cost of credit (bps) 36.776.987.082.540.5
 LARs 11.511.010.39.88.6
 LAR cov 49.349.251.952.554.2
 ROAA 1.92.02.11.91.9
Source: Company data, Verdhana research

 

Fig. 3: BNGA earnings changes

Source: Company data, Verdhana estimates

 

Fig. 4: BNGA loans & deposits

Source: Company data, Verdhana estimates

 

Fig. 5: BNGA loan classifications and ratios

Source: Company data, Verdhana estimates

 

Fig. 6: BNGA valuation

BNGA - TP derivation New  Remarks 
 Risk free rate rf %          6.50
 Equity risk premium k %          7.80 
 Beta x          1.00 Previously 0.85x 
 Cost of equity COE %          14.3 
 Growth rate %          10.0 
 CAR-adj ROAE %          13.5 
 Target FY25F P/B            0.8 Previously using FY24F book for reference 
 Implied share price IDR        1,823 Rounded to IDR1,850 (down from IDR2,200) 
Source: Company data, Verdhana estimates

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. 

GENERAL DISCLOSURE/DISCLAIMER 
This report is prepared by PT Verdhana Sekuritas Indonesia (“PTVSI”) a securities company registered in Indonesia, supervised by Indonesia Financial Services Authority (OJK) and a member of the Indonesia Stock Exchange (IDX).

This report is intended for client of PTVSI only and no part of this document may be (i) copied, photocopied or duplicated in any form or by any means or (ii) redistributed without the prior written consent of PTVSI.

The research set out in this report is based on information obtained from sources believed to be reliable, but PTVSI do not make any representation or warranty as to its accuracy, completeness or correctness. The information in this report is subject to change without notice, its accuracy is not guaranteed, it may be incomplete or condensed and it may not contain all material information concerning the company (or companies) referred to in this report. Any information, valuations, opinions, estimates, forecasts, ratings or targets herein constitutes a judgment as of the date of this report is published, and there is no assurance that future results or events will be consistent.


This report is not to be construed as an offer or a solicitation of an offer to buy or sell any securities or financial products. PTVSI and its associates, its directors, and/or its employees may from time to time have interests in the securities mentioned in this report or it may or will engage in any securities transaction or other capital market services for the company (companies) mentioned herein.

ANALYST CERTIFICATION
The research analyst primarily responsible for the content of this report and certifies that the views about the companies including their securities expressed in this report accurately reflect his/her personal views.  The analyst also certifies that no part of his/her compensation was, is, or will be, directly, or indirectly, related to specific recommendations or views expressed in this report.


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Rating Table

Rating
Remains
Neutral
Target price
Reduced from IDR 2,200
IDR 1,850
Closing price
24 February 2025
IDR 1,695
Implied upside+9.1%
Market Cap (USD mn)2,593.1
ADT (USD mn)0.4

Relative performance chart


Source: LSEG, Verdhana
M cap (USDmn)
2,593.1
Free float (%)
7.7
3-mth ADT (USDmn)
0.4
(%)
1M
3M
12M
Absolute (IDR)
-2.3
-4.0
-16.5
Absolute (USD)
-2.9
-6.3
-20.0
Rel to Jakarta Stock Exchange Composite Index
3.5
2.2
-9.0

Research Analysts

Erwin Wijaya (erwin.wijaya@verdhana.id)

Tags: BANKS, BNGA, BNGA JK, BNGA IJ, Erwin Wijaya
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