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YoY profit up strongly, but NIM softens on funding normalization. In 3Q25, ARTO posted net profit of IDR 72bn (+7.9% QoQ, +100.9% YoY), lifting 9M25 earnings to IDR 199bn (+132% YoY), broadly in line with our estimate (73.8% of FY25F) and consensus (72.8%). 9M25 NII surged 65% YoY, supported by robust loan growth of 36% YoY to IDR 23.5tn. Deposits also expanded 41% YoY as ARTO’s customer base reached 18.6mn (+22% YoY). Nevertheless, NIM stayed flat at 8.1% in 3Q25 (2Q25: 8.1%; 1Q25: 8.8%), pressured by higher CoF of 4.4% (vs. 4.1% in 2Q25). Assets quality remained healthy with NPL stable at 0.4% and CoC at 3.8%, although LAR went up to 5.9% (vs. 5.2% in 2Q25) following revision in insurance coverage from 100% to 75%, requiring delinquent accounts to remain on the books for 90 days prior to write-offs.
Ecosystem-led strategy with product innovations driving fee growth. ARTO continued to strengthen its ecosystem and value-chain lending strategy, as reflected in the stable GoTo-linked exposure (~21% of total loans). The bank maintained its focus on risk-adjusted lending, supported by several new product launches in 3Q25, including Visa Digital Pro Card for digital entrepreneurs, Jago Dana Cepat (digital cash loan), and the pilot of Consolidated Asset View, KSEI-linked investment dashboard designed to enhance cross-selling and engagement across key customer segments. Further upside is expected from upcoming gold investment, wealth management, and insurance-linked digital lending products, which should broaden ARTO’s non-interest income base and strengthen ecosystem monetization.
2025F guidance: loan growth 35–40%, NIM >8%, CIR ≤60%. Management reiterated its FY25 loan growth guidance of 35–40%, reflecting balanced approach to growth and risk. Risk-adjusted NIM is expected to remain above 8%, supported by lower CoF in 4Q25 and ongoing loan repricing, while the bank maintains its disciplined risk appetite. CIR is guided at ≤60% for FY25 (vs. >70% in FY24), and is expected to trend toward <40% over the medium term as ARTO benefits from scale and more moderate opex growth (high-teens in 2026, mid-teens in the following years). Steady-state LAR is projected at ~6–7% with NPL <1% and CoC at ~4–5%, as provisioning and write-off policies now fully reflect updated insurance mechanics.
Maintain BUY rating with TP of IDR 2,700. We reiterate our BUY call on ARTO with TP of IDR 2,700/share (implying 2026F PBV of 4.2x), supported by its sustained above-industry loan growth and increasing platform monetization. With easing funding costs, expanding fee income streams, and disciplined provisioning, ARTO is well-positioned for margin recovery and sustainable growth through 2026. Key downside risks include asset quality management control amid direct lending expansions, slower-than-expected cost-to-income ratio improvement, and broader macroeconomic challenges.
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