Calmer Growth Outlook

Retain BUY with TP of IDR 5,700 (1.7x 2026F PBV) on lower CoC. Underpinned by disciplined funding and risk management, BMRI continues to execute well across its wholesale, corporate, and transaction banking franchise. Looking ahead, management guides for 2026F loan growth of 7–9%, NIM of 4.6–4.8%, and credit cost of 0.6–0.8%, versus FY25 loan growth of 13.4% YoY, NIM at 4.9%, and credit cost at 58 bps. While margin pressure and credit cost normalization remain near-term headwinds, these are partly offset by Mandiri’s scale, diversified income base, and solid liquidity position. Thus, we maintain BUY on BMRI with TP of IDR 5,700, implying 1.7x 2026F PBV, supported by sustainable ROE in the high-teens, coupled with the bank’s delivery of higher-than-expected FY25 earnings, supported by sharply lower provisioning and solid loan growth.

1Q26 results expectations: Net profit -25.0% QoQ, +5.5% YoY. Looking ahead, we expect BMRI to book 1Q26 net profit of IDR13.9tn (-25% QoQ, +5.5% YoY). In 4Q25, BMRI posted consolidated net profit of IDR 18.6 tn (+39.8% QoQ, +34.9% YoY), bringing FY25 earnings to IDR 56.3 tn (+0.9% YoY), which came above our expectation (111.6% of FY25F) and consensus (109.7%). The strong quarterly performance was driven mainly by lower provisioning, while FY25 NII rose 4.4% YoY to IDR 106.2 tn and PPOP was broadly flat YoY at IDR 87.6 tn, reflecting resilient core profitability amid margin pressure. In 4Q25, NIM remained stable at 4.9%, as declining loan yields were largely offset by improving cost of funds, while non-interest income jumped 23.6% QoQ to IDR 15.2 tn, supported by stronger fees and treasury income.

Liquidity remains manageable into FY26 despite CASA normalization. We expect 2026F liquidity conditions to remain adequate (LDR: 89.6%), supported by Mandiri’s broad funding franchise. In FY25, total deposits expanded 23.9% YoY to IDR 2,106 tn, driven mainly by time deposits, while CASA grew 12.6% YoY to IDR 1,431 tn, bringing the CASA ratio to 68.0%. Loan growth remained strong at 13.4% YoY (+7.4% QoQ), led by wholesale and corporate segments, while retail lending stayed selective. Despite the lower CASA ratio, funding costs improved, with deposit cost of funds declining to 2.3%, helping to stabilize margins. Transaction banking and digital activity continue to support operating efficiencies and fee generation, reinforcing funding flexibility into FY26.

Assets quality remains healthy, with ample buffers. Going forward, we expect 2026F assets quality to remain broadly stable (FY26F NPL: 0.8%). In 4Q25, BMRI’s NPL ratio stood at 0.96%, while loan-at-risk improved to 6.51%, supported by effective risk management and write-offs. NPL coverage remained strong at 231%, providing solid buffer. FY25 credit cost came in at 58 bps, below management guidance, benefiting from write-backs and lower NPL formation. However, management has guided for normalization in credit costs to 0.6–0.8% in FY26. Looking ahead, capital remains solid, with total CAR at 20.4%, providing sufficient headroom to support growth.