Bank Rakyat Indonesia (BBRI IJ) (Buy) - Earnings revisions

Earnings revisions

New TP IDR4,500 (from IDR5,000)

Following BBRI's soft YTD Oct-2025 results, we revise down our FY25-27F earnings forecasts by ~1-3%. Heading into 2026F, we see a continued challenging macroeconomic environment. This would mean that broad loan growth is likely to remain at ~7-9% in 2026-27F. Despite improvement in liquidity, we think the bank’s margins could be at risks given competition, a potential reduction in subsidized rates for the government-related loan program as well as broad based declines in risk-free rates. Meanwhile, we expect credit costs (CoC) to remain elevated at ~3.3-3.5% in FY25-27F. Consequently, we adopt a more conservative stance in our projections, reflecting uncertainties and potential risks in the banking sector.

Despite these earnings downgrades, we see improvement in profits. Unlike in 2025F where the bank’s headline profits are likely to decline y-y, we think earnings in 2026F-2027F will stabilize with earnings growth ranging between ~1% and 3% y-y. Alongside potential dividend yields of ~8-9% per annum, we think the stock price is near to bottoming. Thus, we retain our long- term Buy call on the stock with a revised TP of IDR4,500 (from IDR5,000 previously).

Valuation and risks

We derive our TP of IDR4,500 (previously IDR5,000) using DuPont analysis (methodology unchanged), with key parameters as follows: a risk-free rate of 6.5% (unchanged), an equity risk premium of 7.8% (unchanged), beta of 0.9x (previously 0.85x, reflecting a more challenging environment) and a CAR-adjusted ROAE of 18.0% (unchanged). Our TP implies 2.0x 2026F P/B (vs 1.7x currently) and 11.6x 2026F P/E (vs 9.8x currently). Risks are worsening macroeconomic trends, unfavorable regulatory changes, and tighter liquidity competition, which could increase funding costs, worsening credit quality which would raise credit costs, and higher opex. Changes in management could affect the bank’s write-off policies and thus, credit costs. This would ultimately affect the bank’s near-term earnings, in our view.

Year-end 31 Dec	FY24		FY25F		FY26F		FY27F
Currency (IDR)	Actual	Old	New	Old	New	Old	New
PPOP (bn)	120,336	118,655	118,662	121,958	122,014	126,231	124,709
Reported net profit (bn)	60,155	58,349	56,742	58,961	58,431	60,857	59,023
Normalised net profit (bn)	60,155	58,349	56,742	58,961	58,431	60,857	59,023
FD normalised EPS	398.60	386.63	375.99	390.69	387.18	403.34	391.19
FD norm. EPS growth (%)	0.1	-3.0	-5.7	1.0	3.0	3.2	1.0
FD normalised P/E (x)	9.5	–	10.1	–	9.8	–	9.7
Price/adj. book (x)	1.8	–	1.7	–	1.7	–	1.6
Price/book (x)	1.8	–	1.7	–	1.7	–	1.6
Dividend yield (%)	8.3	–	9.1	–	8.5	–	8.7
ROE (%)	19.1	18.0	17.5	17.6	17.4	17.6	17.1
ROA (%)	3.0	2.8	2.8	2.7	2.7	2.6	2.6

Source: Company data, Verdhana estimates

Key data on Bank Rakyat Indonesia

Profit and loss (IDRbn)
Year-end 31 Dec	FY23	FY24	FY25F	FY26F	FY27F
Interest income	188,075	208,027	216,798	228,348	236,715
Interest expense	-50,730	-62,719	-63,606	-67,892	-71,828
Net interest income	137,345	145,308	153,192	160,456	164,886
Net fees and commissions	20,738	20,475	20,156	21,567	23,077
Trading related profits	2,301	3,397	2,688	2,688	2,688
Other operating revenue	22,906	30,689	25,000	22,500	22,500
Non-interest income	45,945	54,561	47,844	46,755	48,265
Operating income	183,290	199,869	201,036	207,211	213,151
Depreciation	-3,726	-5,843	-6,065	-6,235	-6,242
Amortisation	0	0	0	0	0
Operating expenses	-35,362	-34,506	-36,021	-37,796	-40,137
Employee share expense	-37,850	-39,184	-40,287	-41,166	-42,063
Pre-provision op profit	106,352	120,336	118,662	122,014	124,709
Provisions for bad debt	-29,523	-41,758	-47,032	-48,167	-50,000
Other provision charges	0	0	0	0	0
Operating profit	76,829	78,578	71,630	73,847	74,709
Other non-op income	-399	-979	0	0	0
Associates & JCEs	0	0	0	0	0
Pre-tax profit	76,430	77,599	71,630	73,847	74,709
Income tax	-16,005	-16,955	-14,326	-14,769	-14,942
Net profit after tax	60,425	60,644	57,304	59,077	59,767
Minority interests	-325	-489	-562	-647	-744
Other items	0	0	0	0	0
Preferred dividends	0	0	0	0	0
Normalised NPAT	60,100	60,155	56,742	58,431	59,023
Extraordinary items	0	0	0	0	0
Reported NPAT	60,100	60,155	56,742	58,431	59,023
Dividends	-47,558	-47,584	-52,034	-48,231	-49,666
Transfer to reserves	12,541	12,571	4,708	10,200	9,357
Growth (%)
Net interest income	8.9	5.8	5.4	4.7	2.8
Non-interest income	-2.9	18.8	-12.3	-2.3	3.2
Non-interest expenses	-8.8	-2.4	4.4	4.9	6.2
Pre-provision earnings	16.0	13.1	-1.4	2.8	2.2
Net profit	17.5	0.1	-5.7	3.0	1.0
Normalised EPS	17.8	0.1	-5.7	3.0	1.0
Normalised FDEPS	17.8	0.1	-5.7	3.0	1.0
Loan growth	12.9	7.8	2.5	6.9	6.6
Interest earning assets	4.1	3.0	6.4	6.5	6.4
Interest bearing liabilities	4.6	1.8	6.4	6.9	7.0
Asset growth	5.3	1.4	5.7	6.0	6.0
Deposit growth	3.9	0.5	5.0	7.5	7.5
Source: Company data, Verdhana estimates

Balance sheet (IDRbn)
As at 31 Dec	FY23	FY24	FY25F	FY26F	FY27F
Cash and equivalents	31,604	29,784	36,283	39,004	41,929
Inter-bank lending	0	0	0	0	0
Deposits with central bank	101,909	88,879	108,273	116,394	125,123
Total securities	364,605	343,323	396,944	413,526	433,551
Other int earning assets	87,545	83,448	87,417	95,685	104,474
Gross loans	1,260,852	1,350,480	1,389,200	1,486,444	1,590,495
Less provisions	-79,924	-76,903	-83,486	-91,206	-103,128
Net loans	1,180,927	1,273,577	1,305,714	1,395,239	1,487,368
Long-term investments	7,305	8,077	402	473	547
Fixed assets	59,678	62,478	61,413	55,277	49,135
Goodwill	0	0	0	0	0
Other intangible assets	0	0	0	0	0
Other non IEAs	131,433	103,418	109,587	116,737	124,424
Total assets	1,965,007	1,992,983	2,106,032	2,232,335	2,366,551
Customer deposits	1,358,329	1,365,450	1,433,723	1,541,252	1,656,846
Bank deposits, CDs, debentures	80,675	72,226	103,435	111,193	119,532
Other int bearing liabilities	99,347	128,372	128,372	128,372	128,372
Total int bearing liabilities	1,538,352	1,566,047	1,665,529	1,780,816	1,904,750
Non-int bearing liabilities	110,183	103,747	103,855	104,024	104,206
Total liabilities	1,648,535	1,669,794	1,769,384	1,884,840	2,008,956
Minority interest	5,109	6,095	6,657	7,304	8,048
Common stock	83,431	83,458	83,458	83,458	83,458
Preferred stock	0	0	0	0	0
Retained earnings	213,711	218,093	230,990	241,190	250,547
Reserves for credit losses	0	0	0	0	0
Proposed dividends	0	0	0	0	0
Other equity	14,221	15,543	15,543	15,543	15,543
Shareholders' equity	311,364	317,094	329,991	340,191	349,548
Total liabilities and equity	1,965,007	1,992,983	2,106,032	2,232,335	2,366,551
Non-perf assets	37,386	38,102	43,362	46,397	49,645
Balance sheet ratios (%)
Loans to deposits	92.8	98.9	96.9	96.4	96.0
Equity to assets	15.8	15.9	15.7	15.2	14.8
Asset quality & capital
NPAs/gross loans (%)	3.0	2.8	3.1	3.1	3.1
Bad debt charge/gross loans (%)	2.34	3.09	3.39	3.24	3.14
Loss reserves/assets (%)	4.07	3.86	3.96	4.09	4.36
Loss reserves/NPAs (%)	213.8	201.8	192.5	196.6	207.7
Tier 1 capital ratio (%)	17.4	15.2	15.1	17.8	19.7
Total capital ratio (%)	18.2	16.1	15.9	18.6	20.5
Per share
Reported EPS (IDR)	398.33	398.69	376.07	387.26	391.19
Norm EPS (IDR)	398.33	398.69	376.07	387.26	391.19
FD norm EPS (IDR)	398.24	398.60	375.99	387.18	391.19
DPS (IDR)	315.20	315.38	344.87	319.66	328.08
PPOP PS (IDR)	704.87	797.55	786.46	808.68	826.54
BVPS (IDR)	2,063.64	2,101.62	2,187.09	2,254.70	2,308.98
ABVPS (IDR)	2,063.64	2,101.62	2,187.09	2,254.70	2,308.98
NTAPS (IDR)	2,063.64	2,101.62	2,187.09	2,254.70	2,308.98
Valuations and ratios
Reported P/E (x)	9.5	9.5	10.1	9.8	9.7
Normalised P/E (x)	9.5	9.5	10.1	9.8	9.7
FD normalised P/E (x)	9.5	9.5	10.1	9.8	9.7
Dividend yield (%)	8.3	8.3	9.1	8.5	8.7
Price/book (x)	1.8	1.8	1.7	1.7	1.6
Price/adjusted book (x)	1.8	1.8	1.7	1.7	1.6
Net interest margin (%)	7.93	8.11	8.16	8.03	7.76
Yield on assets (%)	10.86	11.60	11.55	11.43	11.13
Cost of int bearing liab (%)	3.37	4.04	3.94	3.94	3.90
Net interest spread (%)	7.49	7.56	7.61	7.49	7.24
Non-interest income (%)	25.1	27.3	23.8	22.6	22.6
Cost to income (%)	42.0	39.8	41.0	41.1	41.5
Effective tax rate (%)	20.9	21.8	20.0	20.0	20.0
Dividend payout (%)	79.1	79.1	91.7	82.5	84.1
ROE (%)	19.7	19.1	17.5	17.4	17.1
ROA (%)	3.14	3.04	2.77	2.69	2.57
Operating ROE (%)	25.2	25.0	22.1	22.0	21.7
Operating ROA (%)	4.01	3.97	3.49	3.40	3.25
Source: Company data, Verdhana estimates

Company profilePT Bank Rakyat Indonesia (Persero) Tbk (BBRI IJ) is one of the largest banks in Indonesia. It specialises in small scale and microfinance style borrowing and lending.

Valuation MethodologyWe derive our TP of IDR4,500 using DuPont analysis, with key parameters as follows: a risk-free rate of 6.5%, an equity risk premium of 7.8%, beta of 0.9x and a CAR-adjusted ROAE of 18.0%. Our TP implies 2.0x 2026F P/B and 11.6x 2026F P/E. The benchmark for the stock is the JCI.

Risks that may impede the achievement of the target priceRisks are worsening macroeconomic trends, unfavorable regulatory changes, and tighter liquidity competition, which could increase funding costs, worsening credit quality which would raise credit costs, and higher opex. Changes in management may affect the bank’s write-off policies and thus, credit costs. This would ultimately affect the bank’s near-term earnings, in our view.

ESGBRI has launched various activities and programs in its contribution towards the global commitments and the national objectives as stipulated in the Presidential Regulation Number 59 year 2017 which regulates the Implementation of the Sustainable Development Goals. BRI is the Chair of the Indonesian Sustainable Finance Initiative (IKBI) which aims to help the government’s efforts to achieve the SDGs. BRI prioritizes customers that offer environmentally friendly products / have environmental certifications. BRI collaborates with Bank Indonesia and the Indonesian Economic and Trade Office (Kantor Dagang dan Ekonomi Indonesia - KDEI) in Taiwan to organize education sessions for Indonesian migrant workers on theimportance of cashless remittance transfers. BRI collaborates / actively participates in programs at community, national- and global- levels to enhance the development of sustainable finance. These programs including METI, CDP Pilot Project, UNDP, ADLIGHT, NPAP and CASE Programs.

Fig. 1: BBRI new P&L forecasts

Source: Company data, Verdhana estimates

Fig. 2: BBRI valuation

BBRI - TP derivation	2026F	Remarks
Risk free rate %	6.5
Equity risk premium %	7.8
Beta (x)	0.90	0.85x
Cost of equity %	13.5
Normalised growth %	9.3
CAR-adj ROAE %	18.0
Target 12-mth fwd PB	2.0	using 2026F as reference
Implied 12-mth fwd PE	11.6
Implied share price (IDR rounded)	4,462	Rounded to IDR4,500 (from IDR5,000)

Source: Company data, Verdhana estimates

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 5,000	IDR 4,500
Closing price 15 December 2025	IDR 3,780
Implied upside	+19.0%
Market Cap (USD mn)	34,043.5
ADT (USD mn)	51.6

Relative performance chart

Source: LSEG, Verdhana

M cap (USDmn)	34,043.5
Free float (%)	43.3
3-mth ADT (USDmn)	51.6

(%)	1M	3M	12M
Absolute (IDR)	-3.1	-8.7	-9.4
Absolute (USD)	-2.9	-10.1	-13.0
Rel to Jakarta Stock Exchange Composite Index	-6.4	-17.7	-27.4

Research Analysts

Erwin Wijaya (erwin.wijaya@verdhana.id)

Tags: BANKS, Bank Rakyat Indonesia, BBRI, BBRI JK, BBRI IJ, Erwin Wijaya

Bank Rakyat Indonesia (BBRI IJ) (Buy) - Earnings revisions

Earnings revisions

Key data on Bank Rakyat Indonesia

Fig. 1: BBRI new P&L forecasts

Fig. 2: BBRI valuation

Rating Table

Relative performance chart

Research Analysts

yudi Administrator

Bank Central Asia BBCA IJ - Buy - Solid YTD Jul-24 results

Bank Rakyat Indonesia -BBRI IJ- Buy - Towards more commercial micro

Bank Negara Indonesia BBNI IJ - Buy - Operating 1H24 results were below

Bank Rakyat Indonesia -BBRI IJ- Buy - YTD Jul-24 bank only results - steady progress

Bank Rakyat Indonesia -BBRI IJ- Buy - ROAE uptrend on positive micro trends

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

Bank Rakyat Indonesia (BBRI IJ) (Buy) - Earnings revisions

Fig. 1: BBRI new P&L forecasts

Fig. 2: BBRI valuation

Related Books

Password

Embed Code

Report Issue

Site Languages