BBRI has released its bank-only Apr-25 results. On YTD Apr-25 basis, the bank reported earnings of IDR15.0tn (-16% y-y). The significant drop in earnings was due to higher opex for the YTD Apr-25 period. This largely reflects the absence of non-loan reversal related to one of the construction companies in YTD Apr-25; while in YTD Apr-24, the bank reported reversal of ~IDR1.7tn. Adjusting for this, headline earnings would come down by ~7%.

Still, such a drop reflects persistently high estimated write-off rates. We estimate BBRI’s 12MMA monthly write-off rate stood at ~3.6%. So far, it does not seem to show abating trends, which would mean elevated credit costs (CoC) for BBRI. We see two areas of high write-off rates and/or NPL formations rates. Given the above, we think BBRI’s medium-term earnings growth trajectory will be subdued. Our projected three-year (2024-27F) consolidated earnings CAGR is ~1%.  

Longer term, we retain our view that BBRI may need to start tapping into other segments as growth in mass-market segments are structurally slower given the fact that deposit growth in mass-market segment (similar to broad M2 for the banking sector) have been ~2-4% y-y – suggesting that loan growth for this segment should be <10% p.a.

Post results, we think BBRI may continue to underperform its major peers at least in the near term given still ongoing slow growth in its high-yield mass-market loan segments as well as elevated credit costs.  

Valuation and risks

Our TP of IDR5,000 is based on DuPont analysis, with a risk-free rate of 6.5%, an equity risk premium of 7.8%, growth of 9.3%, beta 0.85x and a CAR-adjusted ROAE of 18.0%. We also use 2025F book as reference. The implied multiples at our TP would be 2.3x 2025F book and 12.5x 2025F earnings. 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 may affect the bank’s write-off policies and thus, credit costs. This would ultimately affect the bank’s near-term earnings.

Fig. 1: BBRI YTD y-y performance %

Fig. 4: BBRI – 12MMA CoC vs 12MMA WO %

Fig. 5: BBRI – 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)