Bank Syariah Indonesia

Aug24 results: Improved NIM and cost efficiency offseting the higher CoC

• BRIS delivered solid Aug24 net profit growth, despite higher operating costs, driven by 14% loan growth, as solid asset quality is maintained.
• NIM slightly improved mom to 5.6% in Aug24 thanks to the higher LDR, with CoF remaining flattish at 2.6%.
• Maintain our Hold rating despite the still positive growth outlook, as valuation has reached its fair value, in our view.

Solid 8M24 performance with robust loan growth

BRIS reported solid performance in 8M24, with net profit up 21% yoy to Rp4.5tr, forming 68%/67% of our/cons FY24 forecasts, slightly surpassing the 65% achievement in 8M23. NII continued its positive trend, growing 4% yoy, despite a lower NIM, thanks to strong loan growth of 14% yoy. On the expense side, operating costs rose 11% yoy, leading to an increase in CIR to 48.9% (+111bps yoy). Nonetheless, BRIS maintained solid asset quality, with a low CoC at 0.9% in 8M24 compared to 1.5% in 8M23.

Flat mom NP in Aug24 amid higher provisions

Net profit reached Rp541bn in Aug24, reflecting a 17% yoy increase but flat mom. This flat performance was largely due to a 99% mom rise in provision expenses, which offset the 15% mom growth in PPOP. The other operating income grew by 24% mom and 25% yoy, driven by strong non-interest income. Additionally, BRIS' LDR increased to 87.6% (+141bps mom), supporting a higher NIM of 5.6% (+13bps mom), aided by a higher EA yield and a stable CoF. Overall, BRIS delivered a solid Aug24 performance, with strong loan growth and slight NIM improvements. The rise in monthly CoC remains within expectations, while higher other operating income and decent LDR are positive indicators for future performance.

Steady growth in both assets and liabilities

Loans grew 1% mom to Rp261tr (+14% yoy) in Aug24 while deposits remained flattish mom at Rp298tr (+16% yoy). This results in a higher LDR mom to 87.6% from 86.2% in the previous month, but still below Aug23's LDR of 88.9%.

Maintain Hold with a TP of Rp2,800

We maintain our TP of Rp2,800, with a GGM-based valuation with a 5-year inverse CoE of 7.9%, FY25F ROE of 15.9%, and LTG of 3.0%, resulting in an FV PBV of 2.6x. Despite the robust growth in the Sharia market and a solid mgmt. to drive the growth, we maintain our Hold rating as we see that the bank has traded at its fair valuation. Our TP implies an 8.8% downside and a 0.7% div. yield. Risks to our view are higher earnings growth and higher free float.

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