BBRI Earnings Flash: Solid Performance Supported with The Forthcoming Positive Sentiment
Key Takeaways:
◼ BBRI 1H23 recorded a net profit of IDR29.4tn (+18.7% YoY) or IDR13.9tn (-10.2% QoQ) in 2Q23, in line with the consensus & our FY23F target of 50%/51%. Nonetheless, BBRI’s NII has stagnated at only +1.4% YoY growth, triggered by the rapid increase in interest expense with +63.7% YoY.
◼ BBRI booked a NIM of 7.85%, aligned with the management target of 7.7%-7.9%. However, NIM has decreased by -40 bps YoY due to the slowing loan growth and the rising interest rates. We expect in the future, BBRI cost of fund and NIM will be maintained at 3%/8% respectively for FY23.
◼ Loan grew at +1.86% QoQ, +8.8% YoY to IDR1,202tn in 1H23, lower than the management target with an expectation of +10-12% YoY, affected by the slower growth in the small (+5.1% YoY) and corporate (+1% YoY) segment. We project BBRI loan growth reached +10.2% YoY for FY23, supported by the positive sentiment from the future election period.
◼ Similar to the other banks, NPL also experienced a slightly better credit quality with an NPL of 2.95% (-31 bps YoY) and an NPL Coverage of 248.54% in 1H23.
◼ On the funding side, BBRI’s deposit grew at +9.5% YoY to IDR1,245tn, supported by the growth in the current account (+24.3% YoY). Meanwhile, the savings accounts and time deposits also recorded a positive growth with +3.3%/+8.4% YoY, respectively.
◼ We maintain our BUY rating with a slightly higher DDM-based TP of IDR6,200/share which implies a 1.5x FY24F P/B. Downside risks to our call include slower than expected loan growth and asset quality deterioration.
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