Bank Negara Indonesia (BBNI.IJ Rp4,790; BUY TP Rp5,100) FY24 Results: in line NP driven by loan growth and lower CoC, offsetting the lower NIM and higher CIR

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Bank Negara Indonesia (BBNI IJ)

FY24 Results: in line NP driven by loan growth and lower CoC, offsetting the lower NIM and higher CIR

BBNI booked NP of Rp21.5tr (+3% yoy), in line with our estimate, with lower qoq 4Q24 NP driven by higher CoC and CIR, offsetting higher NIM.
Management expects moderating loan growth of 8-10%, stable NIM of 4.0-4.2%, and improving CoC of 1.0% for FY25F.
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.

FY24 net profit: in line with ours but slightly missing street’s estimate

BBNI posted a net profit of Rp21.5tr in FY24, meeting our estimate (100%) but slightly missing consensus (97%). The bank booked loan growth of 12% but reported a 2% yoy decline in NII, as NIM fell to 4.2% (from 4.5% in FY23). CoF rose by 57bps to 2.9%, while loan yield remained flat at 7.7% due to tight liquidity and competition in lending rates. FY24 PPOP stayed flat yoy at c. Rp35tr, as 13% yoy growth in other operating income balanced a 7% yoy rise in opex. Provision expenses declined by 11% in FY24, resulting in a CoC of 1.1% (vs 1.4% in FY23), slightly above the guidance of 1.0%.

Higher NIM offset by higher CoC resulting in a qoq decline in 4Q24 net profit

BBNI reported a net profit of Rp5.2tr in 4Q24, an 8% qoq decline (flat yoy), attributed to a 17% qoq increase in opex (+6% yoy) and a jump in CoC to 1.5% (+46bps qoq, +5bps yoy). This NP decline was in-line with our expectations but contrasted with consensus’ higher growth estimates. Rising CoC was driven by the write-off of Sritex (remaining exposure: Rp550bn) and a conservative accounting approach, which booked Rp515bn windfall from 4Q24 KUR subsidy as provision expenses. NIM rose to 4.5% in 4Q24 (+16bps qoq, +12bps yoy), driven by a temporary increase in loan yield to 8.0% (+26bps qoq, +22bps yoy), primarily due to a one-off effect from KUR. Excluding the one-off, core NIM stood at 4.2%.

FY25 guidance: focus on NIM over loan growth

Management expects moderating loan growth to 8-10% (FY24 11.6%), stable NIM of 4.0-4.2% (FY24 4.2%), and a lower CoC of 1.0% (FY24 1.1%). It also highlighted that CoF and liquidity remain key challenges and is eyeing lower NIM in 1H25 compared to 2H25.

Maintain Buy with an unchanged TP of Rp5,100

We maintain Buy rating with an unchanged TP of Rp5,100, implying 6.5% upside and 6.8% dividend yield. 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 rate cuts impacting EA yield, due to the bank’s floating rate loan portion, and asset quality deterioration.

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