/      /      /  
Panin Bank (PNBN IJ) (Neutral) - We adjust FY25-26F earnings by ~11-12%

Panin Bank (PNBN IJ) (Neutral) - We adjust FY25-26F earnings by ~11-12%

Banks EW 249 10th Mar, 2025

download (0)

We adjust FY25-26F earnings by ~11-12%

Maintain Neutral and raise TP to IDR1,400 (from IDR1,325)

The Indonesia banking sector is likely to continue to face liquidity issues in 2025F, in our view. However, we believe that within the sector, major banks will continue to dominate. We expect mid-sized banks, such as PNBN, to experience declining market share (either in terms of loans, assets, or profit). Consequently, we adjust our earnings forecasts and reiterate our Neutral call on the stock with a higher TP of IDR1,400 (from IDR1,325).

Earnings changes summary

We update our earnings projections for FY25F and FY26F, as well as add FY27F as a new forecast year. For FY25F/26F, we raise earnings by ~11/12%, largely driven by lower provision expense (reflecting improving asset quality). In 4Q24, CoC for PNBN decreased to 241bp from 398bp in 4Q23. However, over the year, we note the bank’s funding costs have gradually increased (reflecting the overall tight liquidity in the banking system). On the balance sheet, we have reduced loans forecasts by 13-19% for FY25F-27F while deposit projections are expected to remain relatively flat, as major banks would continue to dominate.

Valuation and risks

We derive our new TP of IDR1,400 (from IDR1,325) based on the DuPont methodology, assuming a risk-free rate of 6.5%, an equity-risk premium of 7.8%, beta of 1.0x and a CAR-adjusted ROAE of 12.5% (all metrics unchanged), which implies a 2025F P/B of 0.6x and a 2025F P/E of 14.0x (compared with previous valuations of 0.6x and 15.4x, respectively). Upside/downside risks are improved/worsening economic trends, easing/tighter liquidity, and lower/rising bond yields, which would translate into higher/lower equity base due to potential marked-to-market losses, and/or lower/higher credit costs and opex growth.

Year-end 31 DecFY24FY25FFY26FFY27F
Currency (IDR)ActualOldNewOldNewOldNew
PPOP (bn)5,3796,7266,0267,2005,86805,551
Reported net profit (bn)2,7382,1592,4162,3012,55702,579
Normalised net profit (bn)2,7382,1592,4162,3012,55702,579
FD normalised EPS113.6789.65100.3195.53106.16107.09
FD norm. EPS growth (%)8.13.3-11.86.65.80.9
FD normalised P/E (x)12.1–13.8–13.0–12.9
Price/adj. book (x)0.6–0.6–0.6–0.6
Price/book (x)0.6–0.6–0.6–0.6
Dividend yield (%)–––––––
ROE (%)5.44.14.54.24.64.4
ROA (%)1.20.91.00.91.01.0

Source: Company data, Verdhana estimates

Key data on Panin Bank

Profit and loss (IDRbn)
Year-end 31 Dec
FY23
FY24
FY25F
FY26F
FY27F
Interest income
14,588
15,454
17,740
17,923
17,944
Interest expense
-5,382
-6,545
-6,790
-7,060
-7,307
Net interest income
9,206
8,909
10,951
10,863
10,637
Net fees and commissions
125
130
100
100
100
Trading related profits
150
145
0
0
0
Other operating revenue
2,302
1,913
1,000
1,000
1,250
Non-interest income
2,576
2,187
1,100
1,100
1,350
Operating income
11,783
11,096
12,051
11,963
11,987
Depreciation
-472
-515
-516
-528
-541
Amortisation
Operating expenses
-2,439
-2,642
-2,825
-2,749
-2,939
Employee share expense
-2,435
-2,559
-2,684
-2,817
-2,955
Pre-provision op profit
6,437
5,379
6,026
5,868
5,551
Provisions for bad debt
-2,758
-1,676
-2,801
-2,455
-2,108
Other provision charges
Operating profit
3,679
3,703
3,225
3,413
3,443
Other non-op income
96
-48
0
0
0
Associates & JCEs
Pre-tax profit
3,776
3,655
3,225
3,413
3,443
Income tax
-770
-788
-695
-736
-742
Net profit after tax
3,006
2,867
2,530
2,677
2,701
Minority interests
-474
-129
-114
-120
-121
Other items
0
0
0
0
0
Preferred dividends
0
0
0
0
0
Normalised NPAT
2,532
2,738
2,416
2,557
2,579
Extraordinary items
0
0
0
0
0
Reported NPAT
2,532
2,738
2,416
2,557
2,579
Dividends
0
0
0
0
0
Transfer to reserves
2,532
2,738
2,416
2,557
2,579
Growth (%)
Net interest income
-7.5
-3.2
22.9
-0.8
-2.1
Non-interest income
29.1
-15.1
-49.7
0.0
22.7
Non-interest expenses
12.4
8.4
6.9
-2.7
6.9
Pre-provision earnings
-6.2
-16.4
12.0
-2.6
-5.4
Net profit
-16.8
8.1
-11.8
5.8
0.9
Normalised EPS
-16.8
8.1
-11.8
5.8
0.9
Normalised FDEPS
-16.8
8.1
-11.8
5.8
0.9
Loan growth
7.8
0.9
-11.6
-1.8
-1.6
Interest earning assets
4.7
11.0
4.5
4.6
4.5
Interest bearing liabilities
4.6
9.7
4.3
4.3
4.3
Asset growth
4.5
9.9
4.1
4.2
4.2
Deposit growth
3.0
5.4
5.0
5.0
5.0
Source: Company data, Verdhana estimates
Balance sheet (IDRbn)
As at 31 Dec
FY23
FY24
FY25F
FY26F
FY27F
Cash and equivalents
1,298
1,810
1,900
1,995
2,095
Inter-bank lending
6,036
6,074
6,378
6,697
7,032
Deposits with central bank
7,870
9,287
9,751
10,239
10,751
Total securities
43,837
63,384
88,885
100,807
112,750
Other int earning assets
1,298
684
752
827
910
Gross loans
151,898
153,797
140,173
140,410
140,646
Less provisions
-11,442
-12,138
-14,987
-17,490
-19,646
Net loans
140,456
141,660
125,186
122,920
121,001
Long-term investments
766
776
853
938
1,032
Fixed assets
10,002
9,898
9,898
9,898
9,898
Goodwill
0
0
0
0
0
Other intangible assets
0
0
0
0
0
Other non IEAs
10,447
10,386
10,386
10,386
10,386
Total assets
222,010
243,959
253,991
264,708
275,855
Customer deposits
146,030
153,903
161,598
169,678
178,162
Bank deposits, CDs, debentures
18,685
26,766
26,849
26,782
26,715
Other int bearing liabilities
0
0
0
0
0
Total int bearing liabilities
164,716
180,669
188,447
196,460
204,876
Non-int bearing liabilities
3,982
7,220
7,458
7,485
7,514
Total liabilities
168,698
187,889
195,905
203,945
212,391
Minority interest
3,608
3,745
3,859
3,979
4,100
Common stock
2,409
2,409
2,409
2,409
2,409
Preferred stock
Retained earnings
36,751
39,633
41,535
44,093
46,672
Reserves for credit losses
0
0
0
0
0
Proposed dividends
0
0
0
0
0
Other equity
10,545
10,283
10,283
10,283
10,283
Shareholders' equity
49,705
52,324
54,227
56,784
59,364
Total liabilities and equity
222,010
243,959
253,991
264,708
275,855
Non-perf assets
4,275
4,158
3,855
8,074
12,307
Balance sheet ratios (%)
Loans to deposits
104.0
99.9
86.7
82.8
78.9
Equity to assets
22.4
21.4
21.4
21.5
21.5
Asset quality & capital
NPAs/gross loans (%)
2.8
2.7
2.8
5.8
8.8
Bad debt charge/gross loans (%)
1.82
1.09
2.00
1.75
1.50
Loss reserves/assets (%)
5.15
4.98
5.90
6.61
7.12
Loss reserves/NPAs (%)
267.6
291.9
388.8
216.6
159.6
Tier 1 capital ratio (%)
24.4
28.4
26.5
24.9
23.9
Total capital ratio (%)
27.1
30.5
28.2
26.5
25.4
Per share
Reported EPS (IDR)
105.11
113.67
100.31
106.16
107.09
Norm EPS (IDR)
105.11
113.67
100.31
106.16
107.09
FD norm EPS (IDR)
105.11
113.67
100.31
106.16
107.09
DPS (IDR)
0.00
0.00
0.00
0.00
0.00
PPOP PS (IDR)
267.24
223.31
250.19
243.62
230.45
BVPS (IDR)
2,063.50
2,172.25
2,251.25
2,357.40
2,464.49
ABVPS (IDR)
2,063.50
2,172.25
2,251.25
2,357.40
2,464.49
NTAPS (IDR)
2,063.50
2,172.25
2,251.25
2,357.40
2,464.49
Valuations and ratios
Reported P/E (x)
13.1
12.1
13.8
13.0
12.9
Normalised P/E (x)
13.1
12.1
13.8
13.0
12.9
FD normalised P/E (x)
13.1
12.1
13.8
13.0
12.9
Dividend yield (%)
–
–
–
–
–
Price/book (x)
0.7
0.6
0.6
0.6
0.6
Price/adjusted book (x)
0.7
0.6
0.6
0.6
0.6
Net interest margin (%)
4.69
4.21
4.81
4.56
4.27
Yield on assets (%)
7.43
7.29
7.79
7.53
7.21
Cost of int bearing liab (%)
3.34
3.79
3.68
3.67
3.64
Net interest spread (%)
4.09
3.50
4.11
3.86
3.56
Non-interest income (%)
21.9
19.7
9.1
9.2
11.3
Cost to income (%)
45.4
51.5
50.0
50.9
53.7
Effective tax rate (%)
20.4
21.6
21.6
21.6
21.6
Dividend payout (%)
0.0
0.0
0.0
0.0
0.0
ROE (%)
5.2
5.4
4.5
4.6
4.4
ROA (%)
1.17
1.18
0.97
0.99
0.95
Operating ROE (%)
7.6
7.3
6.1
6.1
5.9
Operating ROA (%)
1.69
1.59
1.30
1.32
1.27
Source: Company data, Verdhana estimates
Company profilePT Bank Pan Indonesia Tbk (doing business under the name PaninBank ) is a bank headquartered in Jakarta. In 1982, this bank became the first bank listed on the Jakarta Stock Exchange.
Valuation MethodologyWe derive our TP of IDR1,400 using DuPont analysis, using 2025F as a reference, and key parameters as follows: a risk-free rate of 6.5%, an equity risk premium of 7.8%, beta of 1.0x and a CAR-adjusted ROAE of 12.5%. At our TP of IDR1,400, shares would trade 0.6x 2025F P/B and 14.0x 2025F P/E. The benchmark index for the stock is JCI Index .
Risks that may impede the achievement of the target priceUpside/downside risks are better/worsening macroeconomic development; higher/lower asset yields and thus NIMs; better/worse asset quality which would translate into lower/higher credit costs; and lower/higher opex increases
ESGPanin consistently implements corporate social responsibility activities as a form of the company's awareness towards the communities as well as appreciation towards customers who have made the company as a reliable partner on products offered. The Company social responsibilities are summed into efforts in (1 Community development: National CSR Roadshow, National Blood Donor Action, Financial Literacy, (2 environment protection: mangrove planting seeds, (3consumers protection: product responsibility.
Fig. 1: PNBN – Quarterly results

 PNBN IDR bn 4Q232Q243Q244Q24QoQ %YoY %YTD 23YTD 24YoY %
 Int inc 3,6213,7213,8474,0705.812.414,60015,4746.0
 Int exp 1,4171,5611,6401,82011.028.45,3336,54122.7
 NII 2,2042,1602,2082,2501.92.19,2678,933(3.6)
 Non-int inc 611356673525(21.9)(14.1)2,6462,219(16.2)
 Total op inc 2,8152,5162,8802,775(3.7)(1.4)11,91311,151(6.4)
 Non-int exp 1,3441,4161,5491,184(23.6)(11.9)5,3815,7046.0
 PPOP 1,4721,1001,3311,59019.58.16,5325,447(16.6)
 Provision expense 1,248403105780641.2(37.5)2,7701,683(39.2)
 PBT 2287831,186754(36.4)231.13,7763,655(3.2)
 Net profit 173625930443(52.4)156.73,0062,738(8.9)
Source: Company data, Verdhana research

 

Fig. 2: PNBN – Ratios

 PNBN Ratios %  4Q23  2Q24  3Q24  4Q24  QoQ %  YoY %  YTD 23  YTD 24 
 Asset yield                 8.6                8.5                8.6                8.6
 COF                 3.6                3.9                4.0                4.1
 Spread                 5.0                4.7                4.6                4.5
 NIM                 5.2                5.0                4.9                4.8
 Risk-adj NIM                  2.3                4.0                4.7                3.1
 LDR 89898485
 Loan yoy 7.56.36.6(0.0)
 Loan qoq 6.51.31.1(0.1)
 Deposit yoy 2.4(0.6)6.14.9
 Deposit qoq 0.61.26.6(0.5)
 CASA 45444343
 CIR 48565443
 Cost of credit (bps) 39812733241
 CAR 32.432.234.134.5
 ROAE 1.34.66.73.2
 NPL  3.02.83.02.9
 NPL Coverage                221               225               191               203
 LLR                 6.6                6.3                5.7                5.9
 Sp mention loans                 8.9                9.7                8.6                7.3
 Restructured loans               17.0              13.9              13.3              12.9
 LARs               19.7              17.0              15.9              15.3
 LAR Cov               33.3              37.0              36.2              38.8
 Loans        129,289       127,987       129,344       129,253(0.1)(0.0)7.5(0.0)
 Deposits        145,221       143,543       153,081       152,370(0.5)4.92.44.9
 - CA          12,011         11,486         12,087         12,3942.53.2(4.3)3.2
 - SA          53,755         51,012         53,726         52,650(2.0)(2.1)5.5(2.1)
 - TD          79,455         81,045         87,268         87,3260.19.91.49.9
 Equities          49,705         50,799         52,162         52,3240.35.34.95.3
 Assets        222,010       219,219       230,588       243,9595.89.94.59.9
Source: Company data, Verdhana research

 

Fig. 3: PNBN – Earnings forecast changes

Source: Company data, Verdhana estimates

 

Fig. 4: PNBN – Loans & deposits

Source: Company data, Verdhana estimates

 

Fig. 5: PNBN – Valuation

 PNBN - Fair valuation  NewRemarks
 Risk free rate %                    6.5
 Equity risk premium %                    7.8
 Beta (x)                    1.0
 Cost of equity %                  14.3
 Growth rate %                    9.5
 Sustainable ROAE %                  12.5
 Target P/B in 2025F (x)                    0.6
 Implied 2025F PER                  14.0
 Implied share price (IDR)                1,407Rounded to IDR1,400 (up from IDR1,325)
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.


RESTRICTIONS ON DISTRIBUTION

By accepting this report, the recipient hereof represents and warrants that you are entitled to receive such report in accordance with the restrictions and agrees to be bound by the limitations contained herein. Neither this report nor any copy hereof may be distributed except in compliance with applicable Indonesian capital market laws and regulations. 

Rating Table

Rating
Remains
Neutral
Target price
Increased from IDR 1,325
IDR 1,400
Closing price
6 March 2025
IDR 1,380
Implied upside+1.4%
Market Cap (USD mn)2,015.1
ADT (USD mn)0.5

Relative performance chart


Source: LSEG, Verdhana
M cap (USDmn)
2,015.1
Free float (%)
15.1
3-mth ADT (USDmn)
0.5
(%)
1M
3M
12M
Absolute (IDR)
-22.7
-27.0
22.7
Absolute (USD)
-22.7
-29.1
17.9
Rel to Jakarta Stock Exchange Composite Index
-18.9
-16.6
32.4

Research Analysts

Erwin Wijaya (erwin.wijaya@verdhana.id)

Tags: BANKS, PNBN, PNBN JK, PNBN IJ, Erwin Wijaya
Disclaimer
Facebook
Twitter
Instagram
Google
Website