Bank Syariah Indonesia (BRIS.IJ Rp 2,880; HOLD TP Rp 2,900) FY24 Results: Above; Solid Financing Growth and Asset Quality Offseting the Higher Opex

Stock Code	Last Price	Change	Change %
DSSA	40,225	625	1.58%
RDTX	13,150	550	4.37%
MKPI	25,350	375	1.50%
MSIN	940	185	24.50%
BNLI	2,440	140	6.09%
LINK	1,800	100	5.88%
SMIL	432	86	24.86%
MASB	3,350	80	2.45%

Bank Syariah Indonesia (BRIS IJ)

FY24 Results: Above; Solid Financing Growth and Asset Quality Offseting the Higher Opex

BRIS reported a net profit of Rp7.0tr in FY24 (+23% yoy), beating our and consensus’ FY24F due to lower-than-expected CoC.
Despite the higher opex, 4Q24 net profit of Rp1.9tr (+11% qoq, +26% yoy) was supported by higher asset yields and lower CoC.
Maintain Hold on BRIS with an unchanged TP of Rp2,900, as we believe that the robust growth has been priced into its premium valuation.

Solid NP growth driven by financing growth and lower CoC

BRIS posted Rp7.0tr (+23% yoy) in net profit, beating our estimate (at 104% of FY24 est.) and consensus (at 102%) due to lower-than-expected CoC, despite slightly weaker PPOP. Loan growth of 16% yoy compensated for a 30bps drop in NIM, resulting in 8% NII growth. NIM declined to 5.7% (FY23: 6.0%) as CoF rose 32bps to 2.5% due to tight liquidity, though EA yield remained stable at 8.1%. Asset quality remained sound with CoC dropping to 0.8% (FY23: 1.2%), NPL coverage remaining steady at 196% (FY23: 197%), and the NPL ratio improving from 2.1% in FY23 to 1.9% in FY24. However, CIR increased to 51% (FY23: 50%) as opex rose 15% yoy, driven by elevated 4Q24 expenses.

Record-high quarterly NP amid elevated opex

BRIS booked a record-high NP of Rp1.9tr (+11% qoq, +26% yoy), despite a sharp increase in opex (+18% qoq, +26% yoy). NIM improved to 6.1% (3Q24: 5.7%) due to higher loan yields (8.5%, +41bps qoq, +66bps yoy), while CoF remained stable at 2.6%. CIR reached 56% as opex rose due to the development of 1) a data center, 2) new core banking applications, and 3) ATMs. Asset quality improved, allowing a provision expense reduction (-48% qoq, -21% yoy) as NPL improved to 1.9% (3Q24: 2.0%). Hence, CoC remained low at 0.4%.

FY25F guidance: remaining optimistic on the bank’s unique business model

Management is aiming for loan growth of 14-16% (FY24 15.9%), CoC below 1% (FY24 0.83%), and NIM of 5.5-5.9% (FY24 5.63%). The bank’s growth drivers in FY25F are its gold business (which has a high yield and low CoC), deposit growth from its Wadiah and Haj SA, and growth in fee-based income supported by insurance fees and treasury income. We tweak our FY25-26F NP by 5-7% to cater for the better-than-expected FY24 results.

Maintain Hold with an unchanged TP of Rp2,900

Despite the growth potential in its niche market segment, we believe its robust performance has been priced into its premium valuation. We maintain our Hold rating with an unchanged TP of Rp2,900. We use a CoE of 8.0% (inverse CoE since the merger, 7.8% prev.) and an LTG of 3% but increase our FY25F ROE to 16.5% (from 16.1% prev.), resulting in a higher FV PBV of 2.8x (2.7x prev.). Risks to our view include tight liquidity affecting funding costs and a drop in asset quality.

… Read More 20250207 BRIS