Robust Financing Growth in the Consumer Segment
Key Takeaways:
▪Net profit stood at IDR1.4 tn in 2Q23 (-6.4% QoQ, +19.3% YoY) bringing 1H23 net profit to IDR2.8 tn (+32.4% YoY), slightly above of our FY23E & consensus estimates.
▪Loans grew by 16% YoY (+4% QoQ) to IDR221 tn in 1H23. We expect that loans from the consumer segment will continue to remain robust, considering BRIS has already successfully entered the captive market of payroll-based and pension financing catering both ASN & SOE employees.
▪Meanwhile, we also note strong CASA balance (+4% YoY) and better credit quality with an NPL of 2.3% in 2Q23 (vs 2.8% in 2Q22).
▪There is a strategic intention for BRI to conduct a placement with the goal of enhancing the current free float, which stands at a mere 9.91%. Currently, BRI holds 15.38% of shares, while BNI holds 23.2%. It is anticipated that BRI might divest its entire stake in BSI, whereas BNI might opt to divest only a partial portion. Efforts are underway to attract strategic investors, including those from foreign nations, with a current focus on potential investors from the UAE. With a market cap of IDR74 tn (2x PBV; 15%-17% ROE), BRIS falls below the big-4 banks but surpasses the typical mid-sized conventional bank, yet we view it as an attractive prospect at this valuation.
▪We maintain our BUY rating with higher GGM-TP of IDR2,100/share implying 2.2x of FY24F PBV (7.0% of COE). Management FY23F guidance: 1) 13%-15% of loan growth; 2) 7%- 9% of TPF; 3) 5.7%-6.0% of NIM; 4) 2.1%-2.3% of NPL ratio; 5) IDR5-5.5 tn of NPAT.
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