Bank CIMB Niaga (BNGA.IJ Rp1,850; BUY TP Rp2,300) Portfolio Rebalancing and Income Diversification Drives Structural ROE Recovery; Initiate with Buy

Stock Code	Last Price	Change	Change %
BOGA	1,790	355	24.74%
BALI	1,750	345	24.56%
BBSI	3,950	230	6.18%
NICK	1,390	155	12.55%
STAR	780	155	24.80%
CLAY	2,950	100	3.51%
INDF	6,800	100	1.49%
LUCY	915	80	9.58%

Bank CIMB Niaga (BNGA IJ)

Portfolio Rebalancing and Income Diversification Drives Structural ROE Recovery; Initiate with Buy

We expect BNGA’s portfolio shift toward consumer and midsize SME to support yield, benefiting from its scale and differentiated positioning.
We forecast net profit growth of 6.4-11.3% in FY26-27F and higher ROE of 12.8-13.4%, supported by stable margins and income diversification.
Initiate coverage with a Buy rating and a GGM-based TP of Rp2,300, with improving ROE as potential catalyst for re-rerating.

Portfolio rebalancing to support earnings resilience

BNGA has been reshaping its loan portfolio by accelerating growth in higher risk-adjusted return segments, particularly consumer and medium-sized SME loans. Consumer lending, especially four-wheeler auto loans, has gained traction and we expect it to support earnings resilience in a lower BI rate environment. While NIM has trended down, we expect portfolio mix shifts and gradually easing funding costs to help stabilize margins relative to peers, whose NIM we estimate will decline by ~20 bps yoy due to their heavy focus on corporate loan segments. Asset quality remains well managed, with declining NPLs and a low CoC, although we expect a gradual normalization in CoC to 1.0-1.1% in FY26-27F as exposure to higher-yield segments increases.

Earnings and ROE recovery underpinned by stable margins

We expect FY25/26F net profit growth of +1.6/+6.4%, reflecting a short-term earnings normalization in FY25F followed by a recovery from FY26F onward. We forecast NIM to remain broadly stable in FY26F, as a gradual decline in CoF offsets corporate loan repricing while EA yields to be supported by an ongoing shift toward higher-yielding consumer loan segments. We expect earnings recovery to be supported by income diversification, with a rising contribution from non-interest income reducing reliance on margin expansion alone. We expect this to translate into an improvement in ROE to 12.8-13.4% in FY26-27. Importantly, we view this ROE recovery to be structural rather than cyclical, as it is increasingly underpinned by a more balanced income mix rather than reliance on margin expansion alone.

Initiate coverage with a Buy rating and TP of Rp2,300

We initiate our coverage on BNGA with a Buy rating and a TP of Rp2,300, which is based on a 10-year inverse CoE GGM model with a CoE of 13.2%, LTG of 3%, and FY26F RoE of 12.8%, implying a fair value PBV of 1.0x. We believe BNGA offers attractive exposure to a large private bank, with improving earnings and ROE outlook. We expect potential catalysts from resilient NIM to drive a valuation re-rating. Risks to our call include a slower-than-expected decline in CoF and asset quality risks from higher-yielding, riskier segments. Tactical (3M) view: N. While we expect NIM to remain broadly stable in FY26F, we see potential for near-term margin pressure in 1Q26, as the benefits of portfolio rebalancing are unlikely to be fully reflected at that stage.

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