BUY with IDR 5,700 TP (1.7x 2026F PBV) on lower CoC and high dividend yield. While we maintain our relatively positive view on BMRI, there are various investment risks given current macroeconomic condition. At the operating level, management has revised FY26F guidance post-BSI deconsolidation: lower NIM of 4.5-4.7% (from 4.6-4.8%), LDR of 92-93% (from 95%), while loan growth is unchanged at 7-9% with CIR of 40% (improved from 42-43%), and credit cost guidance of 60-80bp (unchanged). Looking forward, present economic challenges could see disappearance of lower provisioning and solid loan growth which provided support for the bank's delivery of higher-than-expected 1Q26 earnings. For now, BMRI is a BUY with TP of IDR 5,700, implying 1.7x 2026F PBV, supported by high dividend yield of 8.5% in 26F (due to Danantara).

2Q26 results expectations: Net profit -0.2% QoQ, +36.4% YoY. We expect BMRI to book 2Q26 net profit of IDR15.3 tn (-0.2% QoQ, +36.4% YoY) on slightly lower NIM. In 1Q26, BMRI posted consolidated net profit of IDR 15.4tn (+16.6% YoY, -17.1% QoQ), 26.5% of our FY26F and 26.9% of consensus, driven mainly by lower provisioning (-20% yoy) and solid NII growth (+11% yoy). In 1Q26, NIM eased to 4.7%, as declining loan yields were largely offset by improving cost of funds (-42bp yoy), while non-interest income grew modestly at +5% yoy, weighed down by lower recoveries (-40% yoy). PPOP grew a solid +10% yoy, and provision charges declined -20% yoy, translating to CoC of 58bp -- at the lower end of FY26F guidance of 60-80bp.

Liquidity remains manageable into FY26 despite CASA normalization. Supported by Mandiri's broad funding franchise, 2026F liquidity conditions should remain adequate (LDR: 89.6%). In 1Q26, total deposits expanded +21% yoy to IDR 1,730tn, driven mainly by time deposits (+45% yoy), while CASA grew +13% yoy, bringing the CASA ratio to 70%. Loan growth remained strong at +16% yoy (+2% qoq), led by corporate (+29% yoy, driven by Agrinas loans) and commercial (+13% yoy), while retail lending stayed selective. LDR stood at 91% (vs. 94% in 1Q25). Despite some CASA ratio moderation, funding costs improved materially, with current account CoF declining to 1.8% (-40bps qoq), returning to c. 2022 levels and suggesting easing competition on special rates.

Assets quality remains healthy, with ample buffers. Going forward, we expect 2026F asset quality to remain broadly stable (FY26F NPL: 0.8%). In 1Q26, BMRI's NPL ratio stood at 1.0% (flat yoy), while LAR improved to 6.0% (vs. 7.2% in 1Q25), supported by effective risk management and disciplined write-offs of Rp1.3tr (-20% yoy). NPL coverage stood at 237%, providing a solid buffer. Recovery/write-off ratio reached 80% in 1Q26 (vs. 104% in 1Q25), suggesting continuous improvement in asset quality. Looking ahead, capital remains solid, with total CAR at 19.7%, providing sufficient headroom to support growth.