Bank Neo Commerce (BBYB.IJ Rp322; BUY TP Rp400) 1Q26 Earnings: In Line; Loan Book Contraction Weighs on NIM and Earnings

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Bank Neo Commerce (BBYB IJ)

1Q26 Earnings: In Line; Loan Book Contraction Weighs on NIM and Earnings

BBYB posted 1Q26 net profit of Rp137bn (+35% qoq, -14% yoy), forming 24% of our FY25F (in line) and 21% of consensus (below).
Loans declined to Rp7.0tr (-2% qoq, -17% yoy) with management lowering loan target to Rp8.0tr by year end driven by digital loans.
We keep our forecast and valuation unchanged, hence maintaining our Buy rating with an unchanged TP of Rp400.

1Q26: In line with ours but below consensus as loan balance declined

BBYB posted a net profit of Rp137bn in 1Q26 (+35% qoq, –14% yoy), forming 24% of our FY25F (in line) and 21% of consensus (below). The yoy decline was mainly driven by weaker PPOP performance amid pressure on the top line due to loan book contraction. NII declined 3% qoq and 11% yoy to Rp548bn, in line with weaker loan growth and lower LDR, while other operating income also fell 5% qoq and 7% yoy on lower loan-related fee. NIM declined to 13.2% (–9bps qoq, –294bps yoy) as the higher loan yield was offset by a lower LDR due to continued loan contraction, despite some improvement in CoF. Management expects NIM to improve to around 14% supported by higher loan balance, driven by consumers.

Slight increases in opex while revenue remained under pressure

On the cost side, opex increased 5% qoq (+1% yoy) to Rp212bn, pushing CIR higher to 32.9% (+244bps qoq, +383bps yoy). However, lower provisions helped support earnings, with provision expenses declining 18% qoq and 16% yoy, bringing CoC down to 16.7% (–310bps qoq, +41bps yoy). Overall, weaker revenue and higher cost pressures continued to weigh on PPOP, partially cushioned by lower credit costs.

Digital loan to drive responsible growth in FY26F

Loan contraction persisted, with loans down 2% qoq and 17% yoy to Rp7.0tr, lower balance in commercial loans. Meanwhile, deposits also declined 4% qoq and 2% yoy. Asset quality was mixed, with NPL improving to 3.1% (–43bps qoq, flat yoy) but LaR rising to 13.4% (+31bps qoq, +201bps yoy), indicating lingering pressure. Management expects loan balance of Rp8tr by FY26-end (down from Rp9tr prev. and vs. our forecast of Rp7.8tr), driven by digital loans, while it maintains CoC and NPL ratio at around 16% and 3%. Mgmt sees commercial loans as less of a growth priority this year.

Maintain Buy with an unchanged TP of Rp400

We maintain our Buy rating and 3-stage DDM based TP of Rp400 implying 1.1x FY26F PBV. Risks to our view are delayed OJK approval and worse-than-anticipated asset quality. Tactical (3M) view: N. Potential asset quality issue deterioration and uncertainties in loan book growth amid current macro backdrops.

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