Bank Negara Indonesia (BBNI IJ) (Buy) - Revising earnings estimates and TP downward

Revising earnings estimates and TP downward

New TP of IDR5,500 implies 32% upside; maintain Buy

Following BBNI's YTD Jul-2025 results, we revise our FY25-27F earnings forecasts lower to reflect the challenging macroeconomic landscape marked by tight liquidity conditions and subdued loan demand. With YTD loan growth at 0.3%, we believe meeting management's loan growth guidance of ~8-10% will require sustained growth momentum, which appears difficult given the current conditions. Consequently, we adopt a more conservative stance in our projections, reflecting the uncertainty and potential risks in the banking sector.

We cut our FY25F earnings by ~1.6, mainly based on our assumptions of reduced NII of ~-0.4% and increased opex of ~0.8%. This has resulted in a lower equity value (and book value per share), with implied ROAE of 12.7% for FY25F; hence, we lower our TP to IDR5,500 (from IDR6,100). Overall liquidity in the banking sector is likely to remain tight in 2025, and thus we expect interest rate structures to remain elevated. Recent BI rate cuts could have limited impact on funding costs, particularly when we consider the slight uptick in retail bond yields. These could result in more deposits shifting toward government-issued retail bonds. In our view, near-term share price catalysts could be an improvement in system liquidity and additional BI rate cuts, as we believe there is still room for further cuts before the end of the year.

Despite these earnings cuts, we believe the market may have priced in these earnings risks, and as such, valuations for these banks are below their historical mean multiples.

Valuation and risks

We derive our new TP of IDR5,500 using DuPont analysis with key parameters as follows: a risk-free rate of 6.5%, an equity risk premium of 7.8%, growth of 8.5%, beta of 1.04x (up from 1.02x) and a CAR-adjusted ROAE of 16.0% (down from 16.5%). Our TP implies 1.2x FY25F P/B (vs current price valuation of 1.0x) and 9.7x FY25F P/E (va current price valuation of 7.7x). Key risks are worsening macroeconomic trends, tighter liquidity competition, and/or higher credit costs and opex growth.

Year-end 31 Dec	FY24		FY25F		FY26F		FY27F
Currency (IDR)	Actual	Old	New	Old	New	Old	New
PPOP (bn)	34,826	34,826	35,796	36,221	37,366	38,265	39,539
Reported net profit (bn)	21,464	21,464	21,054	21,400	21,703	22,435	22,703
Normalised net profit (bn)	21,464	21,464	21,054	21,400	21,703	22,435	22,703
FD normalised EPS	575.47	575.47	564.49	573.78	581.88	601.51	608.70
FD norm. EPS growth (%)	2.7	2.7	-1.9	-0.3	3.1	4.8	4.6
FD normalised P/E (x)	7.3	–	7.4	–	7.2	–	6.9
Price/adj. book (x)	1.0	–	0.9	–	0.9	–	0.4
Price/book (x)	1.0	–	0.9	–	0.9	–	0.4
Dividend yield (%)	6.7	–	9.0	–	8.8	–	18.1
ROE (%)	13.7	13.7	12.7	12.9	12.5	12.9	12.5
ROA (%)	1.9	1.9	1.8	1.9	1.8	1.9	1.8

Source: Company data, Verdhana estimates

Key data on Bank Negara Indonesia

Profit and loss (IDRbn)
Year-end 31 Dec	FY23	FY24	FY25F	FY26F	FY27F
Interest income	68,325	73,324	77,709	82,723	88,383
Interest expense	-25,390	-31,120	-33,880	-35,631	-37,794
Net interest income	42,935	42,204	43,830	47,092	50,590
Net fees and commissions	10,120	10,249	11,245	11,329	11,878
Trading related profits	2,199	3,031	2,519	2,519	2,519
Other operating revenue	7,494	9,030	9,030	9,030	9,030
Non-interest income	19,812	22,311	22,794	22,879	23,427
Operating income	62,747	64,515	66,624	69,970	74,017
Depreciation	-2,305	-2,417	-2,657	-2,764	-2,870
Amortisation	0	0	0	0	0
Operating expenses	-12,639	-13,324	-12,680	-13,188	-13,707
Employee share expense	-12,834	-13,948	-15,491	-16,653	-17,902
Pre-provision op profit	34,970	34,826	35,796	37,366	39,539
Provisions for bad debt	-9,196	-8,211	-9,683	-10,458	-11,403
Other provision charges	0	0	0	0	0
Operating profit	25,773	26,616	26,113	26,909	28,136
Other non-op income	-134	-35	-35	-35	-35
Associates & JCEs	0	0	0	0	0
Pre-tax profit	25,640	26,580	26,078	26,874	28,101
Income tax	-4,534	-4,911	-4,818	-4,965	-5,192
Net profit after tax	21,106	21,669	21,260	21,908	22,909
Minority interests	-197	-206	-206	-206	-206
Other items	0	0	0	0	0
Preferred dividends	0	0	0	0	0
Normalised NPAT	20,909	21,464	21,054	21,703	22,703
Extraordinary items	0	0	0	0	0
Reported NPAT	20,909	21,464	21,054	21,703	22,703
Dividends	-7,325	-10,455	-13,962	-13,696	-14,117
Transfer to reserves	13,585	11,009	7,092	8,007	8,585
Growth (%)
Net interest income	8.1	-1.7	3.9	7.4	7.4
Non-interest income	14.7	12.6	2.2	0.4	2.4
Non-interest expenses	6.5	5.4	-4.8	4.0	3.9
Pre-provision earnings	10.8	-0.4	2.8	4.4	5.8
Net profit	66.4	2.7	-1.9	3.1	4.6
Normalised EPS	66.4	2.7	-1.9	3.1	4.6
Normalised FDEPS	66.4	2.7	-1.9	3.1	4.6
Loan growth	12.0	13.8	8.2	8.1	10.1
Interest earning assets	7.0	3.4	3.6	5.2	7.3
Interest bearing liabilities	6.1	3.5	3.1	5.0	7.5
Asset growth	6.7	4.0	3.4	4.9	7.1
Deposit growth	5.5	-0.6	5.0	5.0	7.5
Source: Company data, Verdhana estimates

Balance sheet (IDRbn)
As at 31 Dec	FY23	FY24	FY25F	FY26F	FY27F
Cash and equivalents	11,207	13,710	7,985	8,385	9,013
Inter-bank lending	0	0	0	0	0
Deposits with central bank	65,256	51,669	46,497	48,821	52,483
Total securities	178,215	188,575	156,380	141,781	128,928
Other int earning assets	78,817	23,782	42,789	44,349	46,806
Gross loans	695,085	775,872	837,942	904,977	995,475
Less provisions	-47,158	-38,685	-40,367	-42,825	-46,228
Net loans	647,927	737,187	797,574	862,152	949,247
Long-term investments	564	637	724	724	724
Fixed assets	27,765	30,408	29,751	28,988	28,118
Goodwill	0	0	0	0	0
Other intangible assets	0	0	0	0	0
Other non IEAs	76,913	83,838	86,550	90,871	97,676
Total assets	1,086,664	1,129,806	1,168,250	1,226,071	1,312,995
Customer deposits	810,730	805,511	845,786	888,076	954,681
Bank deposits, CDs, debentures	23,679	47,414	49,785	52,274	56,194
Other int bearing liabilities	47,878	60,631	46,678	48,932	52,482
Total int bearing liabilities	882,287	913,555	942,249	989,281	1,063,358
Non-int bearing liabilities	49,644	49,064	51,517	54,093	58,150
Total liabilities	931,931	962,619	993,766	1,043,374	1,121,507
Minority interest	4,602	4,729	4,935	5,141	5,346
Common stock	9,055	9,055	9,055	9,055	9,055
Preferred stock	0	0	0	0	0
Retained earnings	107,236	118,664	125,755	133,762	142,348
Reserves for credit losses	0	0	0	0	0
Proposed dividends	0	0	0	0	0
Other equity	33,841	34,739	34,739	34,739	34,739
Shareholders' equity	150,131	162,458	169,549	177,556	186,142
Total liabilities and equity	1,086,664	1,129,806	1,168,250	1,226,071	1,312,995
Non-perf assets	18,161	14,836	15,267	16,488	17,807
Balance sheet ratios (%)
Loans to deposits	85.7	96.3	99.1	101.9	104.3
Equity to assets	13.8	14.4	14.5	14.5	14.2
Asset quality & capital
NPAs/gross loans (%)	2.6	1.9	1.8	1.8	1.8
Bad debt charge/gross loans (%)	1.32	1.06	1.16	1.16	1.15
Loss reserves/assets (%)	4.34	3.42	3.46	3.49	3.52
Loss reserves/NPAs (%)	259.7	260.8	264.4	259.7	259.6
Tier 1 capital ratio (%)	18.8	21.5	20.2	19.6	19.0
Total capital ratio (%)	20.6	23.2	21.7	20.9	20.3
Per share
Reported EPS (IDR)	560.62	575.47	564.49	581.88	608.70
Norm EPS (IDR)	560.62	575.47	564.49	581.88	608.70
FD norm EPS (IDR)	560.62	575.47	564.49	581.88	608.70
DPS (IDR)	196.39	280.31	374.35	367.20	757.02
PPOP PS (IDR)	937.59	933.75	959.76	1,001.85	1,060.10
BVPS (IDR)	4,025.25	4,355.74	4,545.89	4,760.57	9,981.51
ABVPS (IDR)	4,025.25	4,355.74	4,545.89	4,760.57	9,981.51
NTAPS (IDR)	4,025.25	4,355.74	4,545.89	4,760.57	9,981.51
Valuations and ratios
Reported P/E (x)	7.5	7.3	7.4	7.2	6.9
Normalised P/E (x)	7.5	7.3	7.4	7.2	6.9
FD normalised P/E (x)	7.5	7.3	7.4	7.2	6.9
Dividend yield (%)	4.7	6.7	9.0	8.8	18.1
Price/book (x)	1.0	1.0	0.9	0.9	0.4
Price/adjusted book (x)	1.0	1.0	0.9	0.9	0.4
Net interest margin (%)	4.79	4.23	4.24	4.37	4.41
Yield on assets (%)	7.63	7.35	7.52	7.67	7.71
Cost of int bearing liab (%)	3.09	3.47	3.65	3.69	3.68
Net interest spread (%)	4.53	3.88	3.87	3.98	4.03
Non-interest income (%)	31.6	34.6	34.2	32.7	31.7
Cost to income (%)	44.3	46.0	46.3	46.6	46.6
Effective tax rate (%)	17.7	18.5	18.5	18.5	18.5
Dividend payout (%)	35.0	48.7	66.3	63.1	62.2
ROE (%)	16.1	13.7	12.7	12.5	12.5
ROA (%)	2.10	1.94	1.83	1.81	1.79
Operating ROE (%)	19.8	17.0	15.7	15.5	15.5
Operating ROA (%)	2.58	2.40	2.27	2.25	2.22
Source: Company data, Verdhana estimates

Company profilePT Bank Negara Indonesia (Persero) Tbk or Bank Negara Indonesia (English: State Bank of Indonesia), is an Indonesian state-owned bank. It has primary operations in Indonesia, but it also has presence in Seoul, Singapore, Hong Kong, Tokyo, London and New York. It is the fourth-largest bank of Indonesia in terms of assets.

Valuation MethodologyWe derive our TP of IDR5,500 using DuPont analysis with key parameters as follows: a risk-free rate of 6.5%, an equity risk premium of 7.8%, growth of 8.5%, beta of 1.04x and a CAR-adjusted ROAE of 16.0%. Our TP implies 1.2x FY25F P/B and 9.7x FY25F P/E. The benchmark for the stock is JCI.

Risks that may impede the achievement of the target priceRisks are worsening economic trends, tighter liquidity competition, and/or higher credit cost and opex growth.

ESGBNI’s sustainable finance policy translates into a commitment to further develop BNI as a financial institution which: 1. Delivers excellent performance and services to all customers, 2. Boosts investment value for investors, 3. Establishes the best working conditions for employees, 4. Shows concern for the environment and the community, 5. Enforces good corporate governance in the context of sustainable finance. At BNI, the implementation of sustainable finance begins with the planning laid out in the Annual Work Plan, which is periodically evaluated and reported to all related stakeholders. BNI also plans and arranges the Sustainable Finance Action Plan (RAKB) which serves as the basis of BNI’s application of sustainable finance between 2020 and 2022, and has been presented to OJK through Letter No. DIR/585 dated 28 November 2019. In particular, in terms of BNI’s sustainable finance performance, BNI issues policies, imposes implementation strategy, and organizes constant evaluation and improvement.

Fig. 1: BBNI valuation

Bank Negara Indonesia - TP Derivation
	NEW	OLD	Remarks
Risk free rate %	6.5	6.5
Equity risk premium %	7.8	7.8
Beta x	1.04	1.02	Up from 1.02
Cost of capital %	14.7%	14.5%	Up from 14.5
Growth rate (2-yr Cagr) %	8.5%	8.5%
CAR-adj ROAE %	16.0%	16.5%	Down from 16.5
Target P/B x	1.2	1.3
Implied target price (IDR)	5,499	6,118
BVPS FY25F (IDR)	4,546	4,555
Implied PER 25F	9.7	10.7

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.

Rating Table

Rating Remains	Buy
Target price Reduced from IDR 6,100	IDR 5,500
Closing price 8 September 2025	IDR 4,180
Implied upside	+31.6%
Market Cap (USD mn)	9,468.9
ADT (USD mn)	12.5

Relative performance chart

Source: LSEG, Verdhana

M cap (USDmn)	9,468.9
Free float (%)	40.0
3-mth ADT (USDmn)	12.5

(%)	1M	3M	12M
Absolute (IDR)	2.7	-5.4	-26.0
Absolute (USD)	2.6	-5.6	-30.3
Rel to Jakarta Stock Exchange Composite Index	-1.7	-16.0	-27.9

Research Analysts

Erwin Wijaya (erwin.wijaya@verdhana.id)

Tags: BANKS, Bank Negara Indonesia, BBNI, BBNI JK, BBNI IJ, Erwin Wijaya

Bank Negara Indonesia (BBNI IJ) (Buy) - Revising earnings estimates and TP downward

Revising earnings estimates and TP downward

Key data on Bank Negara Indonesia

Fig. 1: BBNI valuation

Rating Table

Relative performance chart

Research Analysts

yudi Administrator

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Bank Central Asia -BBCA IJ- Buy - Steady growth reiterate Buy new TP IDR13200

Bank Negara Indonesia (BBNI IJ) (Buy) - Revising earnings estimates and TP downward

Fig. 1: BBNI valuation

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