Bank Negara Indonesia (BBNI.IJ Rp 4,190; BUY TP Rp 5,100) In line 1Q25 Earnings: NIM Contraction Offset by Lower CoC on Resilient Asset Quality

Stock Code	Last Price	Change	Change %
DSSA	45.800	950	2,12%
MFIN	3.350	670	25,00%
DCII	168.400	400	0,24%
DATA	1.535	225	17,18%
PACK	2.470	220	9,78%
LIFE	6.500	200	3,17%
PNGO	1.845	195	11,82%
AMMN	7.050	175	2,55%

Bank Negara Indonesia (BBNI IJ)

In line 1Q25 Earnings: NIM Contraction Offset by Lower CoC on Resilient Asset Quality

BBNI reported a NP of Rp5.4tr in 1Q25 (+4% qoq, +1% yoy) with a lower CoC of 0.9% (-8bps yoy) offsetting the lower NIM of 3.8% (-6bps yoy).
Mgmt is confident in asset quality with improving NPL formation but expects to raise CoC in the subsequent quarter to build buffers.
Maintain Buy rating for BBNI with an unchanged TP of Rp5,100 based on -0.5SD 5-year inverse CoE GGM, implying FV PBV of 1.1x.

In line net profits despite NIM contraction

BBNI booked a net profit of Rp5.4tr in 1Q25 (+4% qoq, +1% yoy), relatively in line with our (24%) and consensus’ (23%) FY25F estimates. 1Q25 earnings was supported by a low CoC of 0.9% (-8bps yoy), which offset the lower NIM of 3.8% (-6bps yoy). Bank-only NIM stood at 3.9%, below the 4.0–4.2% guidance, mainly due to lower yields in the corporate and medium segments. Mgmt. expects liquidity to stay challenging amid global tightening, with BI likely prioritizing IDR stability. Management does not anticipate a meaningful liquidity boost from the new DHE regulation. LDR improved to 93% in 1Q25 from 96% in 4Q24, as loans contracted 1% qoq while deposits grew 2% qoq.

Better CoC but normalization expected

CoC improved to 0.9% in 1Q25, outperforming the 1% target, but management expects a normalization towards guidance to build additional buffers. The lower CoC in 1Q25 was supported by a -30% yoy decline in write-offs to Rp2.8tr. Management is comfortable with reducing write-offs as NPL formation improved to Rp2.5tr (-22% yoy), with two-thirds of the formation stemming from pre-2022 vintages. Consumer NPL ratio rose to 2.0% in 1Q25 (vs. 1.8% in 1Q24), mainly attributable to credit card (2.5%) and auto (1.7%) loans.

Maintain FY25F guidance with possible change post 2Q25

Loan grew 10% yoy in 1Q25 led by the corporate (+16%) and consumer (+13%) segments. Management maintained its FY25F of 8-10% loan growth, 4.0-4.2% NIM, and around 1% CoC for now while planning to revisit them post 2Q25. Currently, only NIM falls below the FY25 target.

Maintain Buy with an unchanged TP of Rp5,100

We maintain Buy rating with an unchanged TP of Rp5,100 as we maintain our FY25F and valuation matrix unchanged. Our TP is derived from GGM with a 12.2%, -0.5SD, CoE (from 12.1% prev.) and 13.1% FY25F ROE, implying an FV PBV of 1.1x. Risks to our view include continuing NIM compression and asset quality deterioration.

… Read More 20250429 BBNI