Bank Syariah Indonesia (BRIS IJ)

Potential implications of ownership change

• BRIS share price tanked by 7% coinciding with the news that Danantara will take direct control of BRIS, making it a legitimate SOE bank.
• We believe the negative impact from losing synergy with BMRI will be limited and there is possibility of higher free float for BRIS.
• However, we maintain our Hold rating on BRIS on valuation and earnings risk. We maintain our TP at Rp2,900, implying FV PBV of 2.8x.  

Potential to become a new SOE bank

BRIS share price dropped 7% on June 2, 2025, driven by market sell-off (big 4 banks dropped 2.7–5.6%) and coinciding with the news that Danantara will take direct control of BRIS, making it a legitimate SOE bank. While the former is somewhat justified given the weak monthly numbers, we believe the latter is rather excessive. For BRIS, the potential spin-off is unlikely to result in significant incremental costs, as the bank already operates with its own infrastructure, independent of BMRI. However, separation could eliminate existing group-level synergies such as syndication loans.

Potential impact on BMRI as the controlling shareholder

As the major shareholder of BRIS, BMRI would no longer consolidate BRIS’s assets, liabilities, revenue, and profit. BRIS would instead become an associated company (if <50% stake retained), or completely outside the BMRI group (if 100% sold). If fully sold, BMRI would see its assets and liabilities drop by c. 16%, while net profit would decrease by 7.3% based on the 1Q25 results. However, BMRI would likely book a one-time gain on BRIS disposal depending on the selling price. We estimate a potential gain of Rp42tr if sold at the current market price (75% of our FY25F NP). Assuming the gains are distributed as special dividends, with the latest 78% payout ratio, this will translate to a 6.9% dividend yield for investors. However, potential risks arise as to whether BRIS can be divested at the current market price given its relatively expensive valuations.

Potential higher liquidity but positive impact is unwarranted

Assuming Danantara will not acquire the whole 90% from the SOE banks, this could potentially lead to higher free float for BRIS, which in theory will be positive for the share price. This has been true in the past two years with unique business models and strong growth outlooks compared to its peers. As growth moderated, valuations have become lofty, and with potential street’s earnings downgrade, there is no warranty that the higher free float can translate to more demand from investors.

Maintain HOLD on valuation, unchanged TP at Rp2,900

Given the relatively Neutral impact if the divestment happens, we maintain our HOLD call with TP at Rp2,900 based on a FV PBV of 2.8x. Risks to our view are improving CoF and better-than-expected earnings growth.

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