BMRI started 2025 with satisfactory bank-only Jan-25 results— headline profit at IDR4.0tn (+4% y-y). While still in early days, we believe the bank is on track to exceed our FY25F earnings projection (considering that on a consolidated basis we would add 3-4% to the bank-only results). We attribute these resilient results to its relatively stable funding costs despite still stubbornly tight liquidity in the banking system. Indeed, the bank’s cost of funds was 2.6% (+10bp y-y / flat m-m). Post results, we reiterate our Buy rating on the stock with TP of IDR7,600.

Bank-only Jan-25 results summary

Jan-25 net interest income stood at IDR6.5tn (-10% m-m; +11% y-y), primarily from: 1) higher gross interest income of IDR10tn (-6% m-m; +14% y-y), and 2) lower credit costs of 50bp (vs 70bp in Jan-24). These mitigated the higher funding costs of 2.6% in Jan-24 largely due to the still-tight liquidity in the banking sector. Meanwhile, Jan-25 PPOP reached IDR5.5tn (+13% m-m; +3% y-y). Bank-only Jan-25 profit reached IDR4.0tn (+1% m-m; +4% y-y). Overall, the implied balance sheet ROAA stood at 2.5%, with balance sheet ROAE of 18.5%.

On the balance sheet, Mandiri booked loan growth of 19% y-y, which is likely to be highest growth rate among major banks in our coverage. This should moderate to 10-12pct y-y as the year progresses, in our view. We think most of the growth would come from the commercial/SME segments. Deposits for the bank also rose by 15% y-y (+5% m-m), resulting in a CASA ratio of 79.3% (-40bp y-y). This would represent the second-highest CASA ratio for the Indonesia banks under our coverage. We attribute BMRI’s high CASA ratio to the bank’s growing transactional franchise. Also, this translated into a LDR of 93.6% in Jan-25 (+320bp y-y), suggesting still tight liquidity.

Valuation and risks

We derive our TP of IDR7,600 based on a DuPont analysis, assuming a risk-free rate of 6.5%, an equity risk premium of 7.8%, growth of 11.0%, beta 1.05x and a CAR-adjusted ROAE of 19.5%. We also use 2025F book as reference. The implied multiples at our TP are 2.3x 2025F book and 12.4x 2025F earnings (compared to current multiples of 2.5x and 13.7x, respectively). Key risks to our view are worsening macroeconomic trends, unfavorable regulatory changes, tighter liquidity competition (which would increase funding costs), worsening credit quality (which would raise credit costs), and higher opex.

We highlight the upcoming shareholders’ meeting with management changes will be a main agenda item.

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)