Bank Mandiri (BMRI.IJ Rp4,510; BUY TP Rp5,000) 3Q25 Earnings In-Line: Rebounding from 2Q25’s low base but still pressured by higher opex

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Bank Mandiri (BMRI IJ)

3Q25 Earnings In-Line: Rebounding from low 2Q25’s base but still pressured by higher opex

BMRI booked 3Q25 net profit of Rp13.3tr (+18% qoq, -14% yoy) bringing its 9M25’s NP tp Rp37.7tr (-10% yoy), in line with our and cons. FY25F.
BMRI is looking at higher loan growth and lower CoF, but remains cautious on the loan yield. One-off opex will remain until FY25F.
We adjusted our FY25/27F net profit est. by -0.6/-0.2% and maintain Buy rating with an unchanged GGM-based TP of Rp5,000.

9M25: Double digit negative bottom line has been priced in

In 9M25, BMRI booked Rp37.7tr net profit (-10% yoy), achieving 74% of our and 75% of consensus FY25F, in line. NIM softened to 4.7% (from 5.0%) as CoF rose to 3.0% (+24bps yoy), offsetting the one-off mortgage yield gain. CoC stood at 0.8% thanks to lower NPL at 1.2% and high coverage of 243%, with credit costs mainly driven by subsidiaries, particularly in the auto segment. Wholesale asset quality improved while retail NPLs rose, though recovery is expected in 4Q25.

3Q25: Earnings driven by other operating income

BMRI’s 3Q25 net profit rose 18% qoq to Rp13.3tr, rebounding from 2Q25’s low base but still 14% lower yoy. The recovery was mainly driven by a 35% increase in other operating income, supported by an 80% jump in loan-related fees. Opex remained elevated at Rp17.3tr (+25% yoy), down only 1% qoq, as one-off costs persisted from Jun25. Loan yield fell 48bps qoq to 8.1% due to the absence of prior one-off gains and easing benchmark rates. Provisions stayed manageable at Rp3.2tr, keeping CoC low at 0.7% despite 11% yoy loan growth.

Expect better loan growth with potential recovery in retail segment

Management remains focused on managing opex after two consecutive quarters of elevated expenses. Loan growth is expected to stay wholesale-driven in 4Q25, while retail momentum should gradually recover as consumer confidence strengthens. CoC is guided to stay below 1% for FY25 with stable asset quality, supported by prudent provisioning. Key points to watch include opex normalization and maintaining margin stability amid easing rate conditions. We adjusted our net profit forecasts by -0.6%/-4.2%/-0.2% for FY25F/26F/27F. The revisions reflect lower NIM forecasts amid lower EA yield expectations and higher loan growth.

Maintain Buy with an unchanged TP of Rp5,000

We maintain our Buy rating and TP of Rp5,000, based on -0.5SD 5-year average CoE and revised forecasts. This valuation, which we derived from GGM with a 12.2% CoE (12.4% prev.) and a 17.2% FY25F ROE (17.3% prev.), implies an FV PBV of 1.5x. Risks to our view include possible asset quality deterioration and significant drop in loan yields.

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