BBRI has released its bank-only Jul-25 results, which came in behind our projections (and Bloomberg consensus). YTD Jul-25 results highlighted the ongoing challenges faced by the bank. We think these will persist for the remaining 2025F (at the very least). On an YTD Jul-25 basis, the bank reported a profit of IDR28.6tn (-9% y-y). The large profit drop resulted not only from its operating level but also from persistently high credit costs (reflecting the ongoing issues with the bank’s loan qualities). The large decline also reflects the absence of non-loan reversal related to one of the construction costs in YTD Jul-25, while in YTD Jul-24, the bank reported a reversal of ~IDR2.8tn. Adjusting for this, headline profit would have been flat y-y.

Still, such a profit drop reflects persistently high estimated write-off rates and likely ongoing NPL formations. Indeed, we estimate BBRI’s 12MMA monthly write-off rate stood at ~3.6% in Jul-25. So far, the write-offs do not seem to be abating, which would mean elevated credit costs (CoC) for BBRI. We think the two areas that witnessed high write-off rates and/or NPL formations rates were micro and small loan portfolios. Given the above, we think BBRI’s medium-term earnings growth trajectory will remain subdued. Our projected 3-year (2024-27F) consolidated earnings CAGR is ~0.4%.  

Longer term, we retain our view that BBRI might need to start tapping into other segments as deposit growth in its mass-market segment is structurally slower than other segments given that deposit growth in the mass-market segment has been ~2-3% y-y — suggesting that loan growth for this segment will be <5% pa.

Post results, we think BBRI could continue to underperform its major peers at least in 2025F (and potentially into 2026F) given the still-slow growth rate in its high-yield mass market loan segment as well as elevated credit costs.

Refer to tables below for balance sheet details.

Valuation and risks

Our new 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 might 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)