Bank Neo Commerce (BBYB IJ)
2Q25 Earnings Beat Supported by Lower Provisions but Cautious on 2H25 Outlook
- BBYB booked net profit of Rp276bn in 1H25, reaching 102% of our FY25F ests., a sharp turnaround from a Rp6bn net loss in 1H24.
- Mgmt guides outstanding loans to reach Rp8.5-8.6tr, NIM to be around 15-16% and CoC to stay below 20% for FY25F.
- We revised our FY25/26F NP by +39.7/-1.6% and maintained our Buy rating with an unchanged TP of Rp400, based on 3-stage DDM.
1H25: Earnings Recovery Driven by Lower Provisions
BBYB reported net profit of Rp276bn in 1H25, a reverse from a Rp6bn net loss in 1H24 and reaching 102% of our FY25F, thanks to substantially lower provisions. CoC dropped to 16.9% (-922bps yoy), while PPOP declined 22% yoy to Rp988bn due to a 16% yoy drop in NII. NIM contracted to 15.5% (-178bps yoy) as lower yields offset the 38bps CoF decline to 5.8%. CIR rose 212bps yoy to 29.9% despite a 13% opex reduction, driven by weaker NII and fee income. Write-offs improved, with the ratio to total loans falling to 18.2% from 28.3% in 1H24, indicating better credit quality.
2Q25: Profitability Held Despite Lower NIM and Loan Contraction
BBYB posted net profit of Rp116bn in 2Q25 (-27% qoq), a sharp turnaround from a Rp20bn net loss in 2Q24. NIM dropped to 15.2% (-97bps qoq, -57bps yoy) due to a 5% qoq decline in the loan book, driving LDR down to 60.6%. CoC rose slightly qoq to 17.5% (vs. 16.3% in 1Q25), but remained well below 2Q24’s 26.6%. Asset quality improved, with NPL and LaR falling to 3.1% and 10.9%, and coverage increasing to 222% and 63%, respectively. Loan book contraction continued, with total loans at Rp8.1tr (-5% qoq, -10% yoy) with room to grow pending OJK approval.
FY25F Guidance: Stable NIM, Cautious CoC Outlook
Management targets FY25F year-end loan book of Rp8.5–8.6tr, primarily driven by growth in consumer segments outside AkuLaku. NIM is guided to remain within the 15–16% range for FY25F. CoC is expected to stay below 20%, although still higher than the 16.9% recorded in 1H25. This reflects mgmt’s cautious stance amid softening consumer confidence and retail sales.
Maintain Buy with an unchanged TP of Rp400
We maintain our Buy rating with an unchanged TP of Rp400 based on 3-stage DDM. We revised our 25/26/27F estimates by +39.7/-1.6/+2.9%, incorporating lower-than-expected loan growth, lower NIM, but lower CoC. The risks to our view are higher delinquency risk, especially in the wholesale segment, and delayed approval to grow its loan book.
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