We recently lowered our FY25F-27F earnings projections for Bank Negara Indonesia (BBNI) by ~2-9% primarily to reflect the challenging macroeconomic environment (slow money supply, tight liquidity and high credit risks). We believe these conditions will likely persist through the rest of 2025F, although we expect higher government spending in 2H25F in order to rejuvenate economic growth. Hence, it comes as no surprise to us when BBNI reported soft YTD May-25 results with PPOP and profit of IDR13.0tn and IDR8.5tn, respectively.

Bank-only May-25 results summary

For May-25, net interest income stood at IDR3.1tn (+1% m-m and y-y), with gross interest income of IDR5.4tn (+1% m-m and y-y), and gross interest expenses of IDR2.3tn (+1% m-m; +2% y-y). This brings YTD May-25 NII to IDR15.7tn (+3% y-y). Meanwhile, PPOP slipped slightly to IDR2.5tn (-1% m-m; -4% y-y), bringing YTD May-25 PPOP to IDR13.0tn (flat y-y). In May-25, BBNI booked credit costs of IDR0.6tn (implying 100bp, same in May-24). This brings YTD May-25 CoC to IDR2.9tn (+2% y-y) – implying YTD CoC of 90bp (-10bp y-y). As a result, BBNI’s implied YTD NIM and risk-adjusted NIM stood at 3.7% (flat y-y) and 3.0% (-10bp y-y), respectively. So far, we have not seen any meaningful asset yield uplift despite still relatively tight liquidity in the banking system. Bank-only May-25 net profit reached IDR1.6tn (+6% m-m; -7% y-y), bringing YTD May-25 profit to IDR8.5tn (-1% y-y). Overall, the implied balance sheet ROAA stood at 1.7%, with balance sheet ROAE of 12.4%.

On the balance sheet, BBNI booked loan growth of 7% y-y (-1% YTD) while deposits grew 1% y-y (+1% YTD), with growth coming mostly from Savings Account (SA) +8% y-y (-1% YTD). Current Account (CA) and Time Deposits (TD) dipped slightly by 1% y-y (+6% YTD) and 2% y-y (-4% YTD), resulting in a CASA ratio of 71.7% and LDR of 94.5% (vs 89.9% in May-24). Loan-Loss-Reserve (LLR) stood at 5.0% (-140bp y-y / flat YTD).

Valuation and risks

We derive our TP of IDR6,100 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 1.0x and a CAR-adjusted ROAE of 16.5%. Our TP implies 1.3x FY25F P/B (vs current price valuation of 1.0x) and 10.7x FY25F P/E (vs current price valuations of 7.5x). Risks are worsening economic trends, tighter liquidity competition, and/or higher credit cost and opex growth.

Fig. 1: BBNI YTD Y-Y Performance %

Fig. 3: BBNI 12MMA CoC vs 12MMA WO %

Fig. 4: BBNI LLR vs 12MMA WO %

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)