BRIS is off to a solid start in 2025. The bank delivered strong Jan-25 results, with net profit of IDR590bn (+15% y-y). While still very early, it is on track to exceed our current FY25F earnings projection. Among major banks, we think BRIS has proportionally more fixed-yield earnings assets than most conventional banks (we estimate ~55-60% of total financings are fixed-yield in nature). Further, we expect BRIS to continue delivering higher financing growth than the sector average and to stabilize funding costs, which would minimize pressure on NFM. In our view, these will be the key earnings drivers in the medium term for the bank. Meanwhile, we expect asset quality to improve further, which could potentially keep provisions expense (CoC) at <100bp. Hence, we reiterate our Buy rating on the stock with a TP of IDR3,800.

Jan-25 result summary

Net financing/margin income (NFI) stood at IDR1.5tn (+11% y-y). PPOP was at IDR1.0tn (+16% y-y), while headline net profit stood at IDR590bn (-27% m-m; +15% y-y). We attribute the m-m decline in net profit to normalization from the December peak season. However, we expect BRIS to book better numbers in the coming months given the fact that BRIS has held a near monopoly position in the syariah banking space. The implied ROAA still stood at a strong 1.8% (-70bp m-m; flat y-y), with ROAE of 15.6% (-600bp m-m; -20bp y-y).

On the balance sheet, BRIS booked financing growth of 17% y-y. On funding, the bank reported financing (deposits) growth of 11% y-y. This implies LFR of 86.4% (+250bp m-m; +410bp y-y) – still relatively ample compared to the broader banking sector in Indonesia.

Valuation and risks

We derive our TP of IDR3,800 using DuPont methodology, with key parameters as follows: a risk-free rate of 6.5%, an equity risk premium of 7.8%, beta of 1.2x and a CAR-adjusted ROAE of 18.1%. We have also used 2025F book value in deriving our TP. Our TP implies a FY25F P/B of 3.4x and a FY25F P/E of 21.5x. Risks are worsening macroeconomic trends, unfavorable regulatory changes, tighter liquidity competition that could increase funding costs, worsening credit quality that could raise credit costs, material management changes, and/or persistently high opex.

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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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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Erwin WIjaya (erwin.wijaya@verdhana.id)