Bank Mandiri (BMRI.IJ Rp3,900; BUY TP Rp6,400) 3Q26 Earnings: Beat; Non-Interest Income and Cost Efficiency Offset NIM Pressure

Bank Mandiri (BMRI IJ)

3Q26 Earnings: Beat; Non-Interest Income and Cost Efficiency Offset NIM Pressure

BMRI posted 3Q26 net profit of Rp15.1tr (+1% qoq, +14% yoy), bringing its 9M26 NP to Rp45.5tr (+21% yoy), above ours and cons.
Non-II growth and lower opex offset NIM compression, while LaR rose to 6.8% on SOE construction restructuring.
Management raised loan growth guidance to 9-11% and lowered CIR to 37-39%. Maintain Buy rating with a higher TP of Rp6,400

Earnings beat driven by non-interest income and cost efficiency

BMRI reported a net profit of Rp15.1tr in 3Q26 (+1% qoq, +14% yoy), bringing its 9M26 NP to Rp45.5tr (+21% yoy), above expectations at 79% of our FY26F and 80% of consensus. NII fell 4% qoq (+3% yoy) to Rp22tr, as bank-only NIM compressed 34bps qoq to 3.9%. The 30bps qoq rise in CoF to 2.3% outpaced the 12bps qoq increase in loan yield to 7.0%. This was offset by non-interest income (+10% qoq, +13% yoy), led by treasury income (+28% qoq, +40% yoy) and recurring fees (+8% qoq, +13% yoy). 9M26 opex declined 2% yoy, bringing CIR down to 38.0% (-580bps yoy).

Better loan mix, with LaR rising on SOE construction restructuring

Loans grew 1% qoq/ 15% yoy to Rp1,694tr. Related-party loans declined 4% qoq after peaking in 2Q26, while SME (+6.6% qoq) and commercial (+2.5% qoq) loans grew. NPL was stable at 1.0%, but LaR rose to 6.8% (+74bps qoq), as restructured loans increased by Rp16.3tr qoq, mainly from Rp13-14tr of SOE construction and logistics exposure. CoC edged up to 0.7% in 3Q26, while LaR coverage fell to 35.1% (2Q26: 40.5%).

Guidance raised on loan growth and CIR; we lift our FY26-28F forecasts

Management raised its FY26 loan growth guidance to 9-11% (from 7-9%), backed by a visible pipeline, better pricing and an improving related/ non-related party mix. CIR guidance was lowered to 37-39% (from 39-41%), on flat opex in FY26 and low single-digit opex growth in FY27. NIM guidance of 4.3-4.5% was maintained, as new loans are priced 100-200bps above the existing book. CoC guidance of 0.6-0.8% already incorporates 10-15% provisioning for the Rp13-14tr SOE construction and logistics exposure. Hence, we raise our FY26-27F net profit estimates by 2-4% to reflect stronger loan growth and better cost efficiency.

Maintain Buy rating with higher TP of Rp6,400

We maintain our Buy rating with a higher TP of Rp6,400 (vs. Rp6,200 prev.), to reflect our higher earnings projection. Our TP is based on 5-year inverse CoE of 11.6% and TG of 3%, implying an FV PBV of 1.9x. Tactical (3M) view: N. Risks to our view are higher funding costs, asset quality deterioration, macro uncertainties, and foreign outflow.

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