Bank Mandiri (BMRI IJ)
FY24 Results: Below; Higher Opex in 4Q24 Eroded Net Profit Despite Improving Loan Yield
- BMRI recorded NP of Rp55.8tr in FY24 (+1% yoy), slightly missing our and consensus’ estimate on higher-than-expected CIR amid lower CoC.
- Despite the robust NII, 4Q24 NP declined to Rp13.8tr (-11% qoq, -14% yoy) as opex jumped, offsetting the higher NIM.
- Maintain Buy rating for BMRI with a lower TP of Rp5,900. Risks to our view include lower EA yield and possible asset quality deterioration.
Robust growth in wholesale segment, offset by a lower NIM and a higher CIR
BMRI recorded a net profit of Rp55.8tr in FY24, slightly missing our estimate (97%) and consensus (98%) due to higher-than-expected CIR (37.8% vs. realization of 40.0%). BMRI booked loan growth of 19.5% yoy, offsetting a 33bps decline in NIM, resulting in a 6% increase in NII. The corporate and commercial segments remained the biggest contributors, with 27% and 23% yoy growth, respectively. Deposits grew by 8%, resulting in an LDR of 98%. CoC remained low at 0.8% (FY23: 0.8%), while NPL coverage declined to 271% (FY23: 326%). The NPL ratio improved from 1.2% in FY23 to 1.1% in FY24. CIR rose to 40.0%, driven by higher opex (+9% yoy), mainly due to elevated opex in 4Q24.
Negative NP growth driven by elevated opex
BMRI posted a net profit of Rp13.8tr in 4Q24 (-11% qoq, -14% yoy), despite an NII of Rp27.1tr (+6% qoq, +13% yoy). The decline in NP was driven by high opex, which increased by 36% qoq and 22% yoy due to higher G&A and other expenses. NIM increased to 5.1% in 4Q24 from 5.0% in 3Q24, driven by higher loan yields, which offset the rise in CoF, along with a higher LDR. Loan yields increased across all segments except corporates, supported by repricing and higher yields on newly booked loans during the quarter.
FY25 guidance: moderating growth with solid asset quality expectations
The bank guides for FY25F loan growth of 10-12% (FY24 19.5%), NIM of 5.0-5.2% (FY24 5.15%), and CoC of 1.0-1.2% (FY24 0.79%). The higher CoC is due to the lower expectation of potential provision releases, while asset quality is expected to remain solid as NPL is guided to remain around 1% (FY24 0.97%). Management aims to lower LDR to the mid-to-low 90% (FY24 98%), which indicates that deposits must grow by 14% yoy at a minimum. We slightly lowered our FY25/ 26F est. by 7/ 5% to reflect mgmt’s latest guidance.
Maintain Buy with a lower TP of Rp5,900
We maintain our Buy rating and lower our TP to Rp5,900 (from Rp6,400 prev.), based on an unchanged -0.5SD 5-year average CoE and updated forecasts. This valuation, which we derived from GGM with an 11.9% CoE and a 19.1% FY25F ROE, implies an FV PBV of 1.8x. Risks to our view include lower asset yields and possible asset quality deterioration.
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