Bank CIMB Niaga (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’s operating results have improved. BNGA reported 1Q25 headline profit of IDR1.8tn (+9% q-q; +10% y-y), accounting for ~29% of our FY25F projections. We attribute BNGA’s strong bottom-line to lower provisioning of IDR182bn (-20% q-q; -56% y-y) as asset quality has improved.

1Q25 results summary

• Net interest income (NII) reached IDR3.3tn (+2% q-q; +1% y-y), accounting for ~24% of our FY25F projections. NIM was at 4.0% (flat q-q; -40bp y-y), largely due to higher funding costs, reflecting the tight liquidity in the banking system.

• PPOP reached IDR2.4tn (+7% q-q; -9% y-y), accounting for ~23% of our FY25F projections. During 1Q25, the bank reported CoC of 32bp (-9bp q-q; -45bp y-y) as the bank focused on quality borrowers. Indeed, in 1Q25, NPL reached 1.9% (+10bp q-q; -30bp y-y), while the loans-at-risk (LAR) ratio was at 8.5% (-10bp q-q; -250bp y-y). This brought LAR coverage to 54.1% (-10bp q-q; +490bp y-y) in 1Q25.

• At the bottom line, profit reached IDR1.8tn (+9% q-q; +10% y-y), accounting for ~29% of our FY25F projections.

• On the balance sheet, BNGA booked loan growth and deposits growth of 9% and 3% y-y, respectively. Loan growth was predominantly from corporate (+14% y-y) and SME (+8% y-y), while deposits growth mostly came from current accounts (+12% y-y) and saving accounts (+2% y-y). Given these, the bank reported an elevated CASA ratio of 67.4% (+280bp y-y), and a loans-to-deposits ratio (LDR) of 90.6% (+530bp y-y).

Valuation and risks

Our 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).

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)