Bank Jago (ARTO.IJ Rp1,435; BUY TP Rp3,000) FY25 Earnings: In line; Solid Growth with NIM Improvement offsetting higher CoC

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Bank Jago (ARTO IJ)

FY25 Earnings: In line; Solid Growth with NIM Improvement offsetting higher CoC

ARTO booked NP of Rp77bn in 4Q25 (+7% qoq, +81% yoy), bringing its FY25 to Rp276bn (+115% yoy), in line with ours but above cons.
is looking at moderating loan growth, steady NIM, and higher CoC for FY26 and funding diversification from term loans.
We trim our FY26/27F NP by 11/23% as we revised down NIM and inched up CoC assumption; maintain Buy with a lower TP of Rp3k.

In line with ours but slightly ahead consensus’ FY25F

ARTO’s FY25 net profit reached Rp276bn (+115% yoy), in line with our estimate (99% of FY25F) and slightly above consensus (103% of FY25F). NIM expanded to 8.5% (+121bps yoy), offsetting a higher CoC of 4.1% (+211bps yoy) as the bank pursued higher-risk growth. CASA improved to 50% (from 48% in 3Q25) as liquidity conditions improved in 4Q25. CIR declined to 58% (-1,500bps yoy) on stronger NIM, lower insurance costs, and higher fee income despite rising opex. However, asset quality weakened with NPL and LaR increasing to 0.6% and 6.6%, respectively.

Improving NIM on both higher loan yield and lower CoF

In 4Q25, ARTO booked a net profit of Rp77bn (+7% qoq, +81% yoy). NIM expanded 46bps qoq to 8.8%, supported by a 39bps decline in CoF amid improved market liquidity and a 54bps increase in loan yield following a shift in loan composition. Loans grew 4% qoq while deposits rose 8% qoq, bringing LDR down to 94%. GOTO-related loans contributed 21-22% of total loans, while direct lending remained below 5% of the portfolio. Meanwhile, other operating income rose 11% qoq and 66% yoy on stronger transactional fees, although this also contributed to higher opex.

FY26 Outlook: maintaining cautious view on asset quality

Management guides loan growth of 25-30% for FY26F (FY25: 38%) with NIM expected to remain around ~8.5%. CoC is projected to rise to 4.1-4.6% for FY26F (FY25: 4.1%). CIR is targeted to decline toward ~45% or lower over the next 2–3 years. Direct lending contribution is expected to increase from ~5% to ~10%. Comfortable NPL is guided at ~1% and LaR at 8-9%, and we remain cautious on asset quality given the recent rise in credit costs and uptrend in NPL and LaR ratio.

Maintain Buy rating with a lower TP of Rp3,000

We maintain our Buy rating with a lower TP of Rp3,000 based on a 3-stage DDM as we adjusted our FY26/27F NP by -11/-23%. Risks to our view are deteriorating asset quality and the street’s earnings downgrade. Tactical (3M) view: N. Despite a solid growth trajectory, uncertainty in macro conditions, Eid seasonality, and high street estimates could lead to ST negative sentiment.

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