Building Momentum

Shifting from remediation to disciplined, scalable growth. After successfully navigating a period of crisis, BBKP has now moved decisively from balance-sheet repair to disciplined growth, supported by strong oversight and guidance from KB Financial Group. Recent quarters have seen robust expansion in high-quality wholesale and retail lending, alongside successful launch of new digital platforms such as Next Generation Banking System (NGBS) and KBstar app, which have driven double-digit growth in CASA (39.1% YoY in 9M25) and broadened BBKP’s reach across both consumer and SME segments. Strategic alliances with leading conglomerates have begun to unlock supply chain financing and dealer funding, setting the stage for more resilient, scalable business model. Operationally, efficiency initiatives and tighter risk controls are translating into improved margin and healthier asset quality.

Looking ahead: Margin recovery and asset quality improvement. BBKP is setting ambitious yet credible targets for the next phase of its turnaround. The bank is guiding for continued double-digit loan growth in 2025, supported by both corporate and MSME portfolios. By 2026, management aims to lower gross NPLs to below 7% (from 10.9% in 9M25) while lifting its CASA ratio to above 30% through digital enhancements and deeper ecosystem integration. Margin recovery is also on track, with NIM projected to climb above 3% in 2026 as the loan book shifts toward higher-yielding segments, risk-adjusted pricing improves, and CoF trends lower in line with CASA gains. Looking ahead, with expectations of firmer macro backdrop in 2026, we forecast BBKP to return to positive growth and deliver 154% YoY rebound in net profit, anchored by gradually improving NIM and sustained asset-quality normalization.

Strong growth stemming from margin recovery – SPEC-BUY with 42.9% upside. We see meaningful upside for valuation re-rating as BBKP progresses toward sustained profitability, supported by ongoing margin normalization, healthier asset quality, and improving returns. We initiate coverage with SPEC-BUY recommendation and TP of IDR 100/share, implying 2.5x PBV, driven by catalysts such as continued asset-quality improvement, stronger digital-led CASA gains, and visible progress in core earnings. Key risks include the pace of legacy asset clean-up, potential funding-cost volatility, and broader macro uncertainties; however, we believe the risk–reward profile is increasingly attractive as the turnaround story gains traction.