BMRI has released its FY24 results with headline consolidated profit at IDR55.8tn (+1.3% y-y). This brings implied ROAA and ROAE to ~2.4% (down from ~2.7% in FY23) and ~20.5% (down from ~22.4%), respectively. At the operating level, the bank recorded FY24 PPOP of IDR87.8tn (+4% y-y). We attribute the soft operating growth to its lower recoveries of ~IDR7tn in 2024 (down from ~IDR10tn in 2023) – reflecting a generally challenging macroeconomic environment.
On a q-q basis, headline consolidated profit fell to IDR13.8tn (-11% q-q), largely coming from a lower PPOP of IDR21.1tn (-10% q-q), a result of significant q-q jump in all key opex items; specifically, employee-related expenses which have jumped +33% y-y on a YTD basis.
From the results, we think a key concern is the very strong loan growth of ~20% y-y. Yet, headline net interest income only rose by ~6% y-y in FY24. This suggests declining NIMs, which can be attributed to the bank’s lack of loan pricing power as well as higher funding costs. We think such a high level of loan growth is unlikely to be repeated in FY25F. Thus, it is no surprise that the bank is guiding for a lower loan growth of 10-12% in 2025 – a marked deceleration from 2024’s 20%. This should moderate the risk of a further increase in LDR which stood at 98% in FY24 (up from 88% a year ago). Thus, we think the bank may need to reprice (upward) its lending rates. So far, we have seen early signs of lending rate repricing by several of its peers. However, we note that it is too early to conclude whether such loan repricing can be executed against a backdrop of softening macroeconomic.
On balance sheet, given the improvement in overall asset quality, we believe this should result in a stabilized CoC of 100-120bp in 2025F. One of the leading indicators that we monitor relates to the bank’s write-off trends, which came down to <100bp 12MMA in 4Q24 (refer to chart inside). This aligns with the bank’s CoC guidance.
Valuation and risks
We derive our TP of IDR8,700 using a DuPont methodology, with key parameters as follows: a risk-free rate of 6.5%, an equity risk premium of 7.8%, beta of 1.03x, and a CAR-adjusted ROAE of 20.0%. We also use 2025F book as reference. Our TP implies 2.5x FY25F P/B and 12.6x FY25F P/E – compared with the current valuations of 2.1x FY25F P/B and 10.1x FY25F P/E. Risks are worse-than-expected macroeconomic trends, government intervention, tight liquidity competition, and higher credit cost (due to worsening asset qualities) and higher opex growth.
Fig. 1: BMRI FY24 results (%)
Source: Company data, Verdhana research
Fig. 2: BMRI quarterly results
BMRI IDRbn
1Q24
2Q24
3Q24
4Q24
QoQ %
YoY %
YTD 2024
YTD 2023
Y-Y %
NII
24,729
25,454
25,723
28,373
10.3
15.5
104,278
98,010
6.4
Total op inc
34,334
35,295
37,126
39,931
7.6
5.4
146,686
138,765
5.7
PPOP
21,197
22,322
23,260
21,060
(9.5)
(6.8)
87,838
84,876
3.5
Prov
3,592
3,321
2,539
2,326
(8.4)
100.2
11,778
10,234
15.1
PBT
17,605
19,000
20,720
18,734
(9.6)
(12.6)
76,060
74,642
1.9
NP
12,702
13,848
15,467
13,765
(11.0)
(13.8)
55,783
55,060
1.3
1Q24
2Q24
3Q24
4Q24
QoQ %
YoY %
YTD 2024
YTD 2023
Total Assets
2,163,785
2,257,801
2,323,991
2,427,223
4.4
11.6
11.6
9.1
Gross Loans
1,429,981
1,526,823
1,584,037
1,664,790
5.1
19.5
19.5
16.4
Provisions
53,018
51,755
50,357
50,392
0.1
(6.5)
(6.5)
(17.6)
Net loans
1,376,962
1,475,068
1,533,681
1,614,398
5.3
20.6
20.6
18.4
Total Deposits
1,571,891
1,651,025
1,667,497
1,698,897
1.9
7.7
7.7
5.8
CASA
1,168,935
1,238,450
1,231,369
1,271,210
3.2
8.5
8.5
7.0
- CA
562,103
612,071
596,388
605,765
1.6
3.6
3.6
7.9
- SA
606,832
626,379
634,981
665,446
4.8
13.4
13.4
6.2
Equities
240,687
254,353
272,119
283,796
4.3
8.8
8.8
13.6
Source: Company data, Verdhana research
Fig. 3: BMRI ratios
BMRI Ratios %
1Q23
2Q23
3Q23
4Q23
1Q24
2Q24
3Q24
4Q24
ROAA
2.6
2.6
2.8
3.1
2.3
2.5
2.7
2.3
ROAE
20.3
20.4
21.2
23.0
18.3
20.1
21.2
17.9
CAR
20.3
20.7
21.3
22.0
19.9
20.1
20.7
20.8
NIM
5.5
5.7
5.7
5.3
5.1
5.1
5.0
5.2
CIR
37.2
36.9
40.7
40.3
38.3
36.8
37.4
47.3
CoC
1.2
1.3
0.5
0.3
1.0
0.9
0.7
0.6
LDR
86.2
88.6
90.3
88.3
91.0
92.5
95.0
98.0
LLR
5.3
5.0
4.5
3.9
3.7
3.4
3.2
3.0
LAR
11.7
10.5
9.9
8.7
8.6
7.8
7.3
6.8
LAR Cov
59.1
61.1
58.2
56.8
55.2
55.3
55.5
56.5
NPL
1.7
1.5
1.4
1.0
1.0
1.0
1.0
1.0
NPL cov
409.8
420.9
424.5
489.9
470.4
429.8
419.3
399.6
Asset yield
7.5
7.7
7.8
7.6
7.6
7.4
7.5
7.8
Source: Company data, Verdhana research
Fig. 4: BMRI loan breakdown
BMRI - Bank-only Loan IDRbn
4Q19
4Q20
4Q21
4Q22
4Q23
1Q24
2Q24
3Q24
4Q24
Corporate
364,800
344,300
370,200
414,100
490,000
507,000
561,000
581,000
620,000
Commercials/SMEs
210,300
212,200
234,000
263,700
314,800
321,900
345,400
359,000
380,000
Micro
123,000
120,700
131,900
152,100
168,000
170,000
174,000
184,000
188,000
Consumers
94,300
86,400
92,100
102,800
113,000
115,000
116,000
118,000
123,000
Total
792,400
763,600
828,200
932,700
1,085,800
1,113,900
1,196,400
1,242,000
1,311,000
as % of total
4Q19
4Q20
4Q21
4Q22
4Q23
1Q24
2Q24
3Q24
4Q24
Corporate
46.0
45.1
44.7
44.4
45.1
45.5
46.9
46.8
47.3
Commercials/SMEs
26.5
27.8
28.3
28.3
29.0
28.9
28.9
28.9
29.0
Micro
15.5
15.8
15.9
16.3
15.5
15.3
14.5
14.8
14.3
Consumers
11.9
11.3
11.1
11.0
10.4
10.3
9.7
9.5
9.4
Total
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
NPL by segment (IDRbn)
4Q19
4Q20
4Q21
4Q22
4Q23
1Q24
2Q24
3Q24
4Q24
Corporate
180
4,200
4,368
3,700
1,519
1,217
2,244
2,266
2,232
Commercials/SMEs
15,590
17,600
15,616
10,300
4,862
4,650
4,093
3,977
4,023
Micro
1,020
900
1,385
1,600
2,302
2,805
3,010
3,275
3,647
Consumers
1,020
900
1,385
1,600
2,302
2,805
3,010
3,275
3,647
Total
17,810
23,600
22,754
17,200
10,985
11,477
12,358
12,794
13,550
NPL ratio %
4Q19
4Q20
4Q21
4Q22
4Q23
1Q24
2Q24
3Q24
4Q24
Corporate
0.0
1.2
1.2
0.9
0.3
0.2
0.4
0.4
0.4
Commercials/SMEs
7.4
8.3
6.7
3.9
1.5
1.4
1.2
1.1
1.1
Micro
0.8
0.7
1.1
1.1
1.4
1.7
1.7
1.8
1.9
Consumers
1.1
1.0
1.5
1.6
2.0
2.4
2.6
2.8
3.0
Total
2.2
3.1
2.7
1.8
1.0
1.0
1.0
1.0
1.0
Source: Company data, Verdhana research
Fig. 5: BMRI LAR / NPL formation %
Source: Company data, Verdhana research
Fig. 6: BMRI - 12MMA WO %
Source: Company data, Verdhana research
Fig. 7: NPL ratios
NPL ratios %
1Q23
2Q23
3Q23
4Q23
1Q24
2Q24
3Q24
4Q24
Corporate
0.85
0.83
0.82
0.31
0.24
0.40
0.39
0.36
Commercial
3.86
2.93
2.24
1.73
1.58
1.24
1.15
1.10
Small
0.93
0.98
1.01
0.97
1.02
1.01
0.97
0.92
Micro
1.15
1.31
1.33
1.37
1.65
1.73
1.78
1.94
Consumers
1.92
2.13
2.09
2.04
2.23
2.30
2.11
2.18
Total
1.70
1.53
1.36
1.02
1.02
1.01
0.97
0.97
Commercial (incl SME/Micro)
2.41
2.04
1.72
1.48
1.52
1.37
1.34
1.35
Source: Company data, Verdhana research
Fig. 8: BMTI Dupont % of assets
BMRI Dupont % of assets
1Q23
2Q23
3Q23
4Q23
1Q24
2Q24
3Q24
4Q24
Int inc
7.1
7.5
7.6
7.2
7.2
7.0
7.2
7.7
Int exp
2.2
2.4
2.5
2.5
2.6
2.4
2.7
2.9
Net Int Inc
4.8
5.1
5.1
4.7
4.6
4.6
4.5
4.8
Non-int inc
2.0
1.8
1.8
2.5
1.8
1.8
2.0
1.9
Total op. inc
6.8
6.9
6.9
7.2
6.3
6.4
6.5
6.7
Non-int exp
2.5
2.5
2.8
2.9
2.4
2.3
2.4
3.2
PPOP
4.3
4.4
4.1
4.3
3.9
4.0
4.1
3.5
Prov
0.8
0.8
0.3
0.2
0.7
0.6
0.4
0.4
PBT
3.5
3.5
3.8
4.1
3.2
3.4
3.6
3.2
Net profit
2.6
2.6
2.8
3.1
2.3
2.5
2.7
2.3
Assets to Equities
7.9
7.8
7.6
7.5
7.8
8.0
7.8
7.7
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.
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.
