Bank Rakyat Indonesia (BBRI IJ)
1Q25 Earnings: Elevated CoC Pressuring Bottom Line
- BBRI reported 1Q25 net profit of Rp13.7tr (-9% qoq, -14% yoy), dragged by CoC of 3.5%, but still relatively in line with consensus’ (23% of FY25F).
- Mgmt is confident that CoC has peaked in 1Q25 and will gradually improve towards FY25F to the upper range of the guidance of 3.0-3.2%.
- BBRI currently trades at 1.8x FY25C PBV, near -1SD of its 5-year mean, with an implied CoE of 11.9% (-2.5SD of its 5-year mean).
Lower net profits caused by elevated CoC in 1Q25
BBRI reported net profit of Rp13.7tr in 1Q25 (-9% qoq, -14% yoy), reaching 23% of consensus FY25F. NII was relatively in line at 25%, but CoC remained high at 3.5%, above the FY25 target of 3.0–3.2%. Mgmt. expects peak CoC in 1Q25 and gradual improvement toward the higher end of the FY25 guidance in FY25F. NPL improved from 3.1% in 1Q24 to 3.0% in 1Q25 (within guidance of <3.0%), as declines in the corporate, small, and consumer segments offset increases in the micro and medium segments. NPL coverage declined to 200% from 215% in 4Q24. Mgmt is looking at 190-200% NPL coverage in FY25F, as it will have a larger portion of corporate loans. Write-offs remained high at Rp11.4tr in 1Q25, which prompted mgmt to raise the budget to around Rp45tr (from Rp38–39tr).
Higher NIM, expect loan mix to drive loan yield amid micro slowdowns
NIM increased to 7.7% from 7.5% in 4Q24, supported by a lower CoF of 3.5% (vs. 3.6% in 4Q24) as the bank boosted its retail funding. CIR stood at 41% (+330bps yoy), with opex rising 12% yoy, driven by an 11% increase in personnel expenses caused by the shifting of holiday allowance. Mgmt hinted at modification losses of Rp1tr for 2Q25, affecting loan yield by 7-10bps. As loan repricing might be hard to pursue, the bank is targeting more payroll loans from private and SOE companies to boost yield.
Muted micro growth, focused on asset quality and corporate loans
Overall loan growth was 5% yoy, below the FY25 target of 7–9%. Growth was driven by corporate (+13%), medium (+21%), and consumer (+9%), while micro and SME grew by 1.5% and 0.8%, respectively. Micro loan growth was led by Pegadaian (+30%), due to strong gold prices, and PNM (+4.5%), though bank-only micro loans declined 3% yoy. Mgmt maintains their loan growth target and notes that there is limited impact from the US tariffs on their borrowers.
Attractive valuation but micro business remained challenging
BBRI’s share price has declined by 5.6% YTD, bringing its PBV valuation down to 1.8x (vs. 2.8x a year ago), which is at -1.0SD from its 5-year avg. Despite the attractive valuation, there are still downside risks to earnings from persistent tight liquidity and higher MSME delinquency risk.
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