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Solid 1Q25 performance backed by strong loan growth and efficiency. In line with our forecast (25.8% of FY25 estimate) and consensus, BBCA revealed at its analyst meeting consolidated 1Q25 net profit of IDR 14.1tn (+2.8% QoQ and +9.8% YoY). This was partly supported by improved cost efficiency and sustained loan growth. Net interest income (NII) rose to IDR 21.1tn (+6.6% YoY), backed by 18bps YoY increase in loan yields and 12.6% YoY (+2.1% QoQ) loan expansion, primarily due to corporate segment (+13.9% YoY), followed by commercial (+12.9% YoY) on continued efforts to strengthen value chain financing and partnerships across sectors. Cost of credit (CoC) stood at 0.5% in 1Q25, up slightly from 0.4% in 1Q24, exceeding the 0.3% guidance. Meanwhile, NPL ratio was higher at 2.0% from 1.8% in prior quarter, while LAR rose to 6.0% in 1Q25 from 5.3% in 4Q24, mainly caused by one-off (restructurization of a textile-related account). Excluding this one-off item, LAR would have dropped to 5.4%.
Eyeing growth in key segments while prioritizing assets quality. Going forward, BBCA intends to focus on growth opportunities from SME and consumer sectors, particularly in downstream industries and renewable energy. In addition, the mangement aims to boost CASA by improving its ecosystem and strengthening integration between online and offline channels. Nonetheless, maintaining good assets quality remains BBCA’s top priority. While the bank has room to increase loan yields, credit quality would not be compromised in this process which would be implemented cautiously.
2025F guidance with moderate loan growth of 7-8% and 30 bps CoC. BBCA stated that it would not make changes to its 2025F guidance, reiterating loan growth loan growth to moderate at 7–8% (FY24: 13.8%). BBCA also plans to raise loan yields this year, particularly in consumer segment. With the highest CASA ratio in our banking universe at 82% (compared to the sector’s average of 65%), 2025F NIM is projected to rise slightly to 5.9%, up from 5.8% in FY24. Meanwhile, 1Q25 CoC of 50bps is expected to normalize in the coming quarters, bringing full-year figure in line with BBCA’s guidance of 30bps.
Top pick in the sector with TP of IDR 11,500 (4.8x PBV) - BUY. We retain our positive view on BBCA on the back of low credit risk and positioning as one of Asia's strongest liability franchises, as reflected in robust FY25F ROAE of 21.2% (Sector: 19.6%). In the current macro environment, we favor private banks with high CASA ratios and strong assets quality, as they are better equipped to sustain low CoC levels. BBCA stands out as our top pick in the sector, with BUY rating and TP of IDR 11,500 per share, implying 2025F PBV of 4.8x (Industry: 2.5x) and reflecting warranted 92% sector premium. Key downside risks: rising NPL (2024: 1.8%, 2025F: 1.5%) and falling NIM (2024: 5.8%, 2025F: 6.0%).
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