Date of Report

October 29, 2024

Broker Name

PT Maybank Sekuritas Indonesia

Company Overview

Bank Negara Indonesia (BBNI IJ) is a state-owned enterprise bank that provides general banking services, specializing in wholesale banking operations.

Financial Performance

• 9M24 Net Profit: IDR 16.3 trillion (+4.7% QoQ; +3.5% YoY), achieving 74% of the projected FY24E forecast.
• Earnings Drivers: Lower provisions (-19.7% YoY) and higher non-interest income (+14.9% YoY), despite a slight decline in net interest income (-5.5% YoY).

Growth Outlook

• Loan Growth: 9M24 loans grew by 9.5% YoY, with strong corporate (+15.1% YoY) and consumer lending (+14.6% YoY).
• Net Interest Margin (NIM): Expected gradual improvement as funding cost pressure subsides due to anticipated interest rate cuts by Bank Indonesia.

Asset Quality

• Improved Loan Quality: Non-performing loans (NPLs) decreased to 2.0%, down from 2.3% in 9M23. Loans at risk (LAR) also improved to 11.8% from 14.4%.
• Credit Cost: Expected to stabilize around 1.0% in FY24/25E.

Risk Factors

• Downside Risks: Potential rise in operating expenses and worsening loan quality could impact profitability.

Price Performance

• Current Share Price: IDR 5,500
• 12-Month Price Target: IDR 6,100 (+16%)

Investment Strategy

• Rating: Maintain BUY
• Target Price (TP): IDR 6,100, based on a target 1.3x FY25E Price-to-Book Value (P/BV).

Value Proposition

• Focus on Sustainable Growth: BBNI aims to enhance shareholder value by supporting Indonesia’s economic growth through loans for investment and working capital.
• Risk Management: Improved risk management strategies to navigate near-term economic challenges effectively.

Conclusion

Bank Negara Indonesia is positioned for sustainable growth, with an emphasis on improving asset quality and profitability. The bank’s proactive approach to managing credit risk and operational efficiency indicates a positive outlook amidst changing economic conditions.