A bullion bank, often referred to as a gold bank, is a financial institution specializing in the management and facilitation of transactions involving precious metals, mainly gold and silver. These transactions can include physical bullion such as bars, ingots, and coins, as well as related financial products. Bullion banks provide services such as gold savings accounts, financing, trading, and custody. They are regulated by the Indonesian Financial Services Authority (OJK).

In Indonesia, the creation and functioning of bullion banks are regulated by Law No. 4 of 2023 concerning the Development and Strengthening of the Financial Sector, along with OJK Regulation No. 17 of 2024. The official launch took place on 26 February 2025, led by the President. At present, BRIS is the only gold-play bank in Indonesia permitted to operate as bullion bank. This is on top of the bank’s already solid existing business model, being near monopoly in the shariah banking space.

Before obtaining the bullion banking licence, BRIS can only do two types of products: gold installment and gold pawning. The income from gold installment would be recorded as interest income, while the income from gold pawning would be recorded as fee-based income. With the bullion bank licence, the bank can now offer additional services such as safekeeping and gold trading (i.e. buy gold from customer).

At the present time, given the continued rise in gold as a safe-heaven asset class (and thus its prices), BRIS’ fee income related to the gold business would rise by 50pct y-y, potentially bringing in an additional annual fee income of IDR1.5tn. According to management, the target for both gold installment and pawning services is ~IDR20-21tn for FY25F. At present, CILEM (Cicil Emas product – Gold Financing) is generating daily sales of 100kg; potentially bringing monthly average of 2 ton (assuming only 20 working days). This is more than double that of last year. With these in mind, we retain BRIS as one of our long-term preferred banking stocks in Indonesia.

In the upcoming 1Q25 results, we expect BRIS to deliver superior earnings growth than its major Indonesian banking peers. We estimate 1Q25F PPOP and profit growth for BRIS at ~7% and ~9% y-y, one of the highest profit growth rates among the major Indonesia banks. At this pace of growth, its projected PPOP growth in 1Q25F would rank the third-highest after BBCA and BMRI despite BRIS’s much smaller asset base. Similarly, in terms of 1Q25F projected profit growth, BRIS profit growth should come fourth (projected profit growth similar to BBNI’s). Refer to Fig. 3-4 inside for more details.

Valuations and risks

BRIS – We derive our TP of IDR3,800 using DuPont methodology, with key parameters as follows: a risk-free rate of 6.5%, an equity risk premium of 7.8%, beta of 1.2x and a CAR adjusted ROAE of 18.1%. We have also used 2025F book value in deriving our TP. Our TP implies a FY25F P/B of 3.4x and a FY25F P/E of 21.5x (vs current multiples of 2.3x and 14.4x respectively). Risks are worsening macroeconomic trends, unfavorable regulatory changes, tighter liquidity competition that could increase funding costs, worsening credit quality that could raise credit costs, material management changes, and/or persistently high opex.

Fig. 1: Digital offering and product enhancement

Fig. 2: Major banks earnings preview

Fig. 3: 1Q25F PPOP Y-Y IDRbn

Fig. 4: 1Q25F NP Y-Y IDRbn

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)