BRIDS Market Pulse: Chart of the week – Banking Sector P/B band chart (5-year)

BRIDS Market Pulse

In the spotlight

Market review: JCI underperformed regional EM peers for a second straight week, down -0.1% w-w, while other EM markets posted gains w-w. This brought YTD performance to -2.6%, still ahead of ASEAN peers Thailand’s SET index -22.7% and Malaysia’s FBMKLCI index -7%. The week’s sector performance was brought down by energy-related sectors (O&G: -7.3%, coal: -6.2% w-w), aligned with correction in oil price following the de-escalation of Iran-Israel conflict. The large cap sectors outperformed with Telco +1.8%, Consumers +0.8% w-w and Banks managing to record +0.6% w-w post the announcement of May25 earnings. Foreign investors were net outflow of -US$6mn (all market), broadly in-line with the trend seen across the region.
Banks May25 results:
SOE Banks: BMRI (Buy, TP Rp5,900) and BBNI (Buy, TP Rp5,100) recorded improved earnings m-m from Apr25’s low, but growth remains subdued on y-y basis. Liquidity conditions stayed tight in May25, with all banks continuing to report elevated CoF. As a result, NIM continued to remain under pressure with BMRI recording the lowest NIM in recent years. While the margin pressure and slowing loan growth was well anticipated, we noted that 5M25 net profits for SOE banks (of 32-38% of FY25F) were behind the achievements in 5M24 when compared to consensus expectations, implying possibility for estimated downgrade.
BTPS (Buy, TP Rp1,500): Among the banks, BTPS reported the strongest May25 net profit of Rp115bn in May25 (+3% mom, +10% yoy), supported by further improvement in asset quality, as CoC dropped to one of its lowest levels in the past two years.
Overall, we maintain our Neutral rating on the banking sector on the back of our cautious view on asset quality. Our picks in the sector remain BBCA (Buy, TP Rp11,900) and BTPS (Buy, TP Rp1,500).
ANTM (Buy, TP Rp3,000): on track for another good quarter in 2Q25. We hosted a meeting with ANTM’s management, who indicated strong production volumes for nickel ore (i.e., close to 10mn wmt as of Jun25) and gold (Apr-May25 averaging above its 1Q25 monthly average). While Gag Nikel remains under temporary production halt, management reiterated that it is currently in the process of applying additional 4mn wmt of production quota, of which 2mn wmt is indicated to be in advanced stages.