Bank Syariah Indonesia (BRIS IJ)

Inline 4M24 net profit supported by financing growth and lower provisions

• BRIS’ 4M24 net profit reached Rp2.2tr (+15% yoy), inline, supported by lower provisions amid a declining NIM.
• Despite the lower mom CoF, NIM was lower due to seasonality in the EA yield. On a yoy basis, NIM was lower mainly due to the higher CoF.
• We maintain our FY24F forecasts and TP of Rp2,700; reiterate our Buy rating with superior earnings growth vs. its peers as the key catalyst.

4M24 net profit up 15% yoy, inline

In 4M24, BRIS recorded net profit of Rp2.2tr (+15% yoy) due to a 30% yoy drop in provisions, resulting in a lower Cost of Financing of 0.9% (-59bps yoy) despite the flat NII. The 4M24 net profit amounted to 34% of FY24 net profit, i.e., inline (4M23 was at 34% of FY23). Despite the lower NIM and higher CIR, PPOP remained flat (+2% yoy) supported by higher financing growth (+18% yoy) and other operating income (+30% yoy).

Sequentially lower net profit, inline with seasonality

On a monthly basis, Apr24 net profit fell 19% mom due to an 81bps mom decline in NIM, as the EA yield dropped to 7.6% (-96bps mom) offsetting the 16bps lower CoF. The lower NIM is inline with seasonality as BRIS always reports higher NIM during the quarter-end month. Aside from lower NIM, the Apr24 net profit was also affected by provisions which increased 15% mom. CoC, however, remained at a comfortable level at 0.9% in Apr24 (vs FY24F’s 1.1%). Apr24 net profit reached Rp531bn (+9% yoy) as provisions fell 35% yoy, offsetting the 3% yoy decline in PPOP caused by a 95bps yoy decline in NIM.

Strong financing growth and higher LDR but not enough to sustain NIM

The financing balance grew 2% mom to Rp251tr resulting in 18% yoy growth as of Apr24. The deposits balance declined slightly (-1%) mom to Rp293tr (+9% yoy). Hence, the LDR was higher at 85.6% (+622bps yoy). Despite the higher LDR, NIM was lower at 5.5% (-76bps yoy) in 4M24 as the EA yield decreased to 7.9% (-26bps yoy) and the CoF increased to 2.5% (+51bps yoy).

Maintain Buy rating on superior earnings growth vs peers as the key catalyst

We keep our FY24F projections and TP unchanged, utilizing a GGM-based model with a fair value PBV of 2.6x applied to the average BVPS of Rp1,023 for FY24/FY25. We believe this premium valuation is justified given the bank's sustainably higher growth prospects compared to its peers. However, potential risks to our outlook include slower financing growth, a higher-than-anticipated cost of funds, and worsening assets quality.

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