Bank Syariah Indonesia (BRIS IJ)
In Line 1Q25 Results: Solid Earnings Supported by Gold Business; Lowered Rating on Valuation
- BRIS posted net profit of Rp1.9tr in 1Q25 (-1% qoq, +10% yoy), forming 24%/23% of our/cons. FY25F i.e., in line.
- Loan grew 16% supported by all business segments, driving LDR to 90%. Gold business portion rose, contributing to higher yield and low CoC.
- Downgrade rating to Hold on BRIS with an unchanged TP of Rp2,900, as the stock trades at its fair value after rising 31% in a month.
Positive earnings momentum continues supported by high loan growth
BRIS posted a net profit of Rp1.9tr in 1Q25 (-1% qoq, +10% yoy), reaching 24% of our and 23% of consensus FY25F, i.e., in line. The bank booked robust PPOP of Rp2.9tr (+16% yoy) in 1Q25, supported by 16% loan growth that drove a 9% increase in NII, and strong fee-based income growth of 36%, both offsetting a 16% increase in opex. The rising opex is mainly due to higher promotional and other expenses. As a result, CIR increased to 49% in 1Q25 from 48% in 1Q24.
Gold business drove asset yield higher while maintaining CoC
NIM declined to 5.5% in 1Q25 (-57bps qoq, -3bps yoy), driven by higher CoF at 2.6% (+21bps qoq, +17bps yoy), despite improved EA yield yoy, partly due to the higher portion of gold business. The gold business also drove BRIS to book solid fee-income growth (+36% yoy) and resilient CoC at below 1.0%. Despite higher provisioning, monthly CoC declined to 0.7% in Mar25, bringing 1Q25 CoC to 0.9%, higher than 4Q24’s low base but relatively stable yoy.
LDR reached 90% as loans grew across business segments
Loans grew +3% qoq / +16% yoy, while deposits declined 1% qoq but still rose +7% yoy, pushing LDR up to 90% in 1Q25 from 85% in 4Q24. Loans grew across all segments, i.e., consumer, SME, and wholesale grew 16%, 15%, and 17% yoy, respectively. The consumer loan growth was driven by auto (+26% yoy), payroll (+15% yoy), and gold business (+82% yoy), of which the latter was supported by the soaring gold prices.
Downgrade to HOLD on valuation, unchanged TP at Rp2,900
Since our rating upgrade at the end of Mar25, share price has risen 31%. Despite the robust performance, resilient outlook, and attractive business model, we downgrade our rating from Buy to Hold, as the stock is now trading at its fair value, in our view. We maintain our TP at Rp2,900, based on a CoE of 8.0% (inverse CoE since the merger), LTG of 3%, and FY25F ROE of 16.5%, resulting in an FV PBV of 2.8x. Risks to our view are improving CoF and higher-than-expected earnings growth.
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