In-Depth Analysis of Bank Negara Indonesia and Its Peers

Date: November 21, 2024

Broker: PT Maybank Sekuritas Indonesia

Bank Negara Indonesia (BBNI IJ): Stability and Growth

Bank Negara Indonesia (BBNI IJ) continues to show stable growth with its 10M24 earnings, maintaining a “BUY” recommendation with a target price (TP) of IDR 6,100. BBNI focuses on minimizing expensive funding, which is expected to enhance margins. Despite a slight contraction in net interest income by 5.1% YoY, the bank’s efforts in improving asset quality and stabilizing credit costs are noteworthy. The bank-only earnings grew modestly to IDR 18.1 trillion, marking a 4.3% YoY increase.

BBNI’s loan growth stands at 8.8% YoY, underperforming the industry average of 10.9% YoY, reflecting its strategic focus on quality over quantity. This strategy is expected to result in improved asset quality. The net interest margin (NIM) showed signs of recovery, increasing from 3.6% in September 2024 to 4.0% in October 2024, indicating a potential bottoming out.

BBNI’s deposit growth remains selective, with an overall increase of 2.9% YoY. Savings accounts, however, grew by a healthy 9.0% YoY, contributing to lower funding costs. The bank’s leverage, indicated by a loan-to-deposit ratio (LDR) of 96.1% in October 2024, suggests further margin improvements.

In terms of financial metrics, BBNI’s core net profit is projected to grow steadily, with expectations of a 16% ROE by FY26E. This growth trajectory is likely to translate into attractive dividend yields of 5.5% to 7.0% for FY24-26E.

Peer Comparisons and Market Position

The report also provides a comparative analysis of other major banking institutions, highlighting their market positions and financial metrics.

Bank Syariah Indonesia (BRIS IJ)

With a “BUY” rating and a target price of IDR 3,600, Bank Syariah Indonesia is poised for a 30.0% upside. The bank boasts a market capitalization of IDR 127.8 trillion and demonstrates strong financial health with a P/BV of 2.9 and an ROE of 16.4%.

Bank Rakyat Indonesia (BBRI IJ)

Bank Rakyat Indonesia is also rated “BUY” with a target price of IDR 5,400, indicating a 24.7% potential upside. The bank has an impressive market capitalization of IDR 656.3 trillion, supported by robust fundamentals including a P/BV of 2.0 and an ROE of 19.4%.

Bank Mandiri (BMRI IJ)

Bank Mandiri, with a “BUY” recommendation and a target price of IDR 8,000, offers a 28.5% upside. It maintains a strong market presence with a capitalization of IDR 581.0 trillion, a P/BV of 2.1, and an ROE of 22.5%.

Bank Central Asia (BBCA IJ)

With a leading position in the market, Bank Central Asia is recommended as a “BUY” with a target price of IDR 11,675, offering a 15.9% upside. The bank stands out with a substantial market capitalization of IDR 1,242.0 trillion, a P/BV of 4.9, and an ROE of 21.7%.

Bank CIMB Niaga (BNGA IJ)

Bank CIMB Niaga is another strong contender with a “BUY” recommendation and a target price of IDR 2,400, presenting a 35.6% upside. With a market cap of IDR 44.1 trillion, the bank shows promise with a P/BV of 0.9 and an ROE of 13.5%.

Conclusion

In conclusion, Bank Negara Indonesia’s strategic focus on quality lending and cost-efficient funding is expected to bolster its financial performance in the long term. The comparative analysis of its peers underscores the competitive landscape. With robust financial metrics and strategic initiatives, these banks are well-positioned to capitalize on growth opportunities in the Indonesian banking sector.