BMRI released its bank-only Jul-24 results with monthly earnings of IDR4.6tn (-9% m-m / +3% y-y), bringing YTD Jul-24 headline profit to IDR29.2tn (+7% y-y), largely in line with our FY24F projection (considering that on a consolidated basis we would add 3-4% to the bank-only results). At the operating level, the bank’s headline Jul-24 NII stood at IDR6.5tn (+3% m-m / +1% y-y), bringing YTD NII to IDR43.1tn (+4% y-y). Overall funding costs appear to have stabilized on a m-m basis, with headline Jul-24 CoF standing at 2.5% (+20bp m-m / +40bp y-y), as we see generally stable liquidity (and potentially further improvement toward year-end with upcoming maturities of SRBIs in 4Q24). These have resulted in NIM of 4.8% (+20bp m-m / -60bp y-y), or YTD NIM of 4.7%. Meanwhile, Jul-24 PPOP was IDR6.3tn (-9% m-m largely due to salary adjustments as well as performance bonus payments), bringing YTD Jul-24 PPOP to IDR41.3tn (+6% y-y). Admittedly, monthly results can be volatile; thus, in this report, we also look at the bank’s 12-month moving average (12MMA) to give us a better understanding of the bank’s latest trends in several areas. More details on the results are shown in the tables/charts inside this report. Post results, we reiterate our Buy rating on the stock with a TP of IDR8.450.
Bank-only Jul-24 results summary
Jul-24 net interest income stood at IDR6.5tn (+3% m-m; +1% y-y), primarily from: 1) higher gross interest income of IDR9.5tn (+4% m-m; +10% y-y), and 2) lower credit costs of 70bp (vs 110bp in Jul-23). Meanwhile, Jul-24 PPOP declined to IDR6.3tn (-9% m-m; +8% y-y). Overall, the implied balance sheet ROAA stood at 3.1%, with balance sheet ROAE of 23.6%.
On the balance sheet, Mandiri booked loan growth of 23% y-y (+12% YTD Jul24), the highest growth among major banks. We think most of the growth came from the corporate/commercial/SME segments.Thus, we expect that the bank should see FY24F loan growth of ~20% – well ahead of our system-wide loan growth estimate of ~10-12%). We believe that demand for loans will remain elevated (hovering around 8-9% y-y for the system), with demand coming for working capital, capital investment as well as consumption purposes. During our recent meeting, BMRI’s CEO also suggested that future loan growth could continue to be well ahead of systemwide growth, reflecting the bank’s long-term aspiration to maintain, if not increase, its dominance. We think that at the current pace, the bank would cement its status as Indonesia’s largest bank as well as most profitable bank by 2026F (if not 2025F). Its already dominant status could position itself to further gains from projected BI rate cuts before the year-end.
Meanwhile, deposits for the bank also rose by 13% y-y (-1% m-m / +4% YTD), with growth coming mostly from Current Accounts (CA) and Savings Accounts (SA), resulting in a rising CASA ratio of 80.3% (+20bp y-y). This would represent the second-highest CASA ratio for Indonesian banks under our coverages. We attribute BMRI’s high CASA ratio to the bank’s growing transactional franchise. Also, this translated into LDR of 93.7% in Jul-24 (+790bp y-y), suggesting still relatively tight liquidity.
Valuation and risks
We derive our TP of IDR8,450 using DuPont methodology. Key parameters are a risk-free rate of 6.5%, an equity risk premium of 7.8%, a CAR-adjusted ROAE of 19.8% and beta of 1.03x. We have also used 2025F book as reference. Our TP implies a 2.5x FY25F P/B and a 12.4x FY24F P/E – compared to current price valuations of a 2.1x FY25F P/B and a 10.6x FY25F P/E. Key downside risks are worse-than-expected macroeconomic trends, government intervention, tight liquidity competition, and higher credit cost and opex growth.
Fig. 1: BMRI monthly results
BMRI Monthly IDRbn
Jul-23
Dec-23
Jun-24
Jul-24
M-M
Y-Y
YTD-24
YTD-23
YoY
vs FY24F
FY24F
Gross interest income
8,619
8,885
9,106
9,512
4%
10%
53,538
47,222
13%
35%
152,899
Gross interest expense
2,212
2,802
2,840
3,056
8%
38%
16,853
12,189
38%
38%
44,315
Net interest income
6,407
6,083
6,267
6,456
3%
1%
36,685
35,034
5%
34%
108,584
PPOP
5,817
6,873
6,864
6,266
-9%
8%
35,077
33,155
6%
37%
94,975
Provision exp
449
(477)
684
701
2%
56%
4,737
4,901
-3%
28%
17,134
Net profit
4,437
6,028
5,019
4,579
-9%
3%
24,649
23,002
7%
43%
57,281
Comprehensive profit
4,393
6,849
4,891
5,231
7%
19%
23,945
23,701
1%
42%
57,281
MoM loan growth
0.1%
3.8%
3.8%
1.7%
MoM deposit growth
0.5%
4.2%
1.3%
-1.3%
YTD loan growth
5.7%
16.4%
10.2%
12.0%
YTD deposit growth
-3.9%
4.1%
5.7%
4.3%
YoY loan growth
10.2%
16.4%
21.5%
23.4%
YoY deposit growth
13.2%
4.1%
15.1%
12.9%
LDR
85.8%
87.3%
91.0%
93.7%
COF %
2.1%
2.5%
2.3%
2.5%
NIM (annualised)
5.4%
4.8%
4.6%
4.8%
4.0%
4.2%
Risk-adj NIM
5.1%
5.1%
4.1%
4.3%
3.4%
3.6%
LLR
5.0%
3.9%
3.3%
3.3%
CoC (annualised)
0.5%
-0.5%
0.7%
0.7%
0.7%
0.9%
CASA ratio
78.3%
79.4%
79.7%
80.3%
Monthly CIR
35.7%
34.2%
29.8%
32.1%
B/S ROAE (annualised)
25.1%
30.8%
26.5%
23.6%
B/S ROAA (annualised)
3.5%
4.4%
3.4%
3.1%
CASA growth yoy
17.0%
6.5%
17.2%
15.7%
Credit costs
0.5%
-0.5%
0.7%
0.7%
Loan-to-CASA
109.7
110.1
114.3
117.0
Source: Company data, Verdhana research
Fig. 2: BMRI balance sheet
BMRI B/S IDRbn
Jul-23
Dec-23
Jun-24
Jul-24
M-M
Y-Y
YTD-24
YTD-23
YoY
vs FY24F
FY24F
Total assets IDRbn
1,536,732
1,688,850
1,757,519
1,749,385
0%
14%
3.6%
-2.1%
68.9
2,431,453
Gross Loans IDRbn
985,346
1,085,787
1,196,095
1,215,875
2%
23%
12.0%
5.7%
92.6
1,224,957
LLR IDRbn
49,329
42,324
39,927
39,802
0%
-19%
-6.0%
-9.1%
63.9
64,613
Net loans IDRbn
936,016
1,043,464
1,156,169
1,176,074
2%
26%
12.7%
6.6%
94.2
1,160,345
Deposits
1,147,071
1,242,146
1,312,826
1,295,265
-1%
13%
4.3%
-3.9%
82.8
1,490,845
- CA IDRbn
460,324
532,533
558,225
547,642
-2%
19%
2.8%
-7.6%
116.9
434,470
- SA IDRbn
438,087
453,710
487,938
491,989
1%
12%
8.4%
2.3%
85.0
556,337
- TD IDRbn
248,661
255,903
266,663
255,633
-4%
3%
-0.1%
-6.8%
50.8
500,038
CASA IDRbn
898,410
986,243
1,046,164
1,039,632
-1%
16%
5.4%
-3.0%
99.0
990,807
Equities IDRbn
214,634
238,408
230,037
235,268
2%
10%
-1.3%
1.6%
75.9
288,773
Source: Company data, Verdhana research
Fig. 3: BMRI – NIM trend %
Source: Company data, Verdhana research
Fig. 4: BMRI – CoC vs estimated WO %
Source: Company data, Verdhana research
Fig. 5: BMRI – Y-Y growth comp %
Source: Company data, Verdhana research
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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