Bank Mandiri (BMRI IJ)
In Line 1Q25 Results: Positive PPOP growth despite lower NIM
- BMRI recorded net profit of Rp13.2tr (-4%qoq, +4% yoy) in 1Q25, forming 23% of both our and consensus FY25F i.e., in line.
- is aiming to boost retail lending, which should normalize loan growth, NIM, CIR, and CoC towards its FY25 guidance.
- Maintain our FY25-27F estimates and Buy rating for BMRI with an unchanged TP of Rp5,900.
NIM remained under pressure on lower yield and steady CoF
BMRI reported a net profit of Rp13.2tr (-4% qoq, +4% yoy) in 1Q25, forming 23% of both our and consensus FY25F, in line. Positive growth in PPOP, which rose 4% both qoq and yoy, partly offset a sharp increase in provisions. However, NIM continued to decline to 4.7%, driven by weaker loan yields, especially from USD corporate loans, while funding costs remained high. The decline in the CASA ratio to 73% also contributed to the elevated CoF, as time deposits grew faster than CASA.
Loan growth remained high, driven by the wholesale segment
Despite the rise in provisions, CoC remained low at 0.9%, supported by a strong 17% yoy loan growth and an improvement in NPL formation. Opex rose 16% yoy, as BMRI shifted its business focus toward retail value chains in 2025. The bank maintained a relatively low bank-only LDR at 93.5% due to stronger deposit growth. Loan expansion was mainly driven by the corporate and commercial segments, while growth in the consumer and SME segments remained modest. NPLs were stable yoy at 1.2%, with minor seasonal upticks from the corporate and micro segments.
Maintaining FY25 target, normalization expected in subsequent quarters
Management reaffirmed its FY25 guidance, targeting 10–12% loan growth, a NIM of 5.0–5.2%, and CoC of 1.0–1.2%. Mgmt expects NIM to stay tight in 1H25, CoC to normalize without reversals, and loan growth to follow deposits, keeping LDR within the 90–95% range. BMRI is also maintaining its long-term ROE target of 20% and a DPR of 60–70%. The bank indicated that it is not currently involved in the government’s new program but remains open to supporting it if aligned with its strategy. Investors should monitor the continued pressure on NIM and the sustainability of asset quality as the bank transitions to its more retail-focused strategy.
Maintain Buy with a TP of Rp5,900
We maintain our Buy rating and TP of Rp5,900, based on an unchanged -0.5SD 5-year average CoE and forecasts. This valuation, which we derived from GGM with an 11.9% CoE and a 19.1% FY25F ROE, implies an FV PBV of 1.8x. Risks to our view include lower asset yields and possible asset quality deterioration.
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