Bank Mandiri (BMRI IJ)

1Q26 Results: Robust Earnings Growth Driven by Loan Expansion and Resilient Asset Quality

• BMRI posted a net profit of Rp15.4tr in 1Q26, (-17% qoq, +17% yoy) forming 27% of our and consensus’ FY26 estimates, i.e., above.
• Solid top line and lower CoC were driven by the expansion of related-party loan which grew 56% while retail loans remain weak.
• Maintain Buy rating with an unchanged TP of Rp6,200 implying a fair value PBV of 1.8x and 8.3% dividend yield.

Loan expansion and resilient asset quality drove earnings growth

BMRI posted a net profit of Rp15.4tr in 1Q26, down 17% qoq from 4Q25’s high base but up 17% yoy, forming 27% of our and consensus’ FY26 estimates, i.e., slightly above expectations. The strong earnings were driven by robust loan growth (+16% yoy), resulting in 10% PPOP growth alongside lower CoC (–25bps). Consolidated NIM remained relatively stable at 4.70% (–5bps yoy). Management indicated that yield pressure in the wholesale segment is beginning to stabilize, although NIM guidance was revised down by 10bps to 4.5–4.7%, reflecting macro uncertainties.

Related-party loan supporting growth and asset quality

Despite 16% loan growth, provision expenses declined 20%, resulting in a CoC of 58bps (below guidance of 60–80bps). Management expects CoC to normalize toward guided level amid macro pressures, particularly in retail and lower wholesale segments. Consolidated NPL improved slightly to 0.98% (from 1.01% in 1Q25), supported by lower write-offs and fewer downgrades, alongside a skew toward related-party wholesale lending. Corporate loans grew 29% yoy, driving wholesale growth to 24% (commercial +13%). Related-party loans surged 56% yoy (35% excluding Agrinas), while non-related loans only grew 7%. Retail loans were muted at +2% yoy, with contractions in auto, payroll, and SME segments.

Revising down NIM target by 10bps, maintaining loan and CoC

The bank maintains its loan growth target of 7–9% and CoC of 0.6-0.8% for FY26F while revised down its NIM to 4.5–4.7% (from 4.6–4.8%) reflecting BRIS deconsolidation and macro uncertainties. In the event of severe macro stress (e.g., oil at US$130–150/bbl, Rp19k/USD, fiscal deficit >3%), management estimates loan growth could slow to low single digits, NIM could compress by ~100bps, NPL could rise above 3%, CoC increase to 2–3%, and CAR decline to 16–17%, excluding potential regulatory or government support.

Maintain Buy with an unchanged TP of Rp6,200

We maintain our Buy rating with an unchanged forecast and TP of Rp6,200 based on 5-year inverse CoE of 11.6% and LTG of 3%. Our TP implies an FV PBV of 1.8x. Risks to our view are prolonged war affecting NIM and asset quality. Tactical (3M) view: N. Despite robust results, the stock might see high volatility driven by macro and global uncertainties.

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