2Q25 Results: CoF Pressure Persists

QoQ and YoY drop in net profit; NIM remaining under pressure down to 4.9%. In 2Q25, BMRI reported consolidated net profit of IDR 11.3tn (-14.4% QoQ, -18.7% YoY), bringing 1H25 earnings to IDR 24.5tn (-7.9% YoY), below both our estimate (43% of FY25F) and consensus’ (44%). Operating expenses rose 25% YoY in 1H25, driven by personnel, G&A, and other costs, including one-off post-audit adjustment (~10–12% of total opex), pushing CIR to 44.5%. Despite higher expenses, NII grew 6.7% YoY, supported by 11% YoY loan growth, primarily in commercial segment (+17.7% YoY), in line with BMRI’s strategy to target higher-yield markets. Nevertheless, with deposit costs up 2.44% (+38bps YoY) amid tight liquidity, 1H25 NIM eased to 4.9% (vs. 5.1% in 1H24) as loan yields remained at 7.75%. On assets quality, CoC improved to 77bps (vs. 98bps in 1H24), LAR declined 84bps YoY to 6.92%, and coverage remained robust with consolidated LAR coverage at 44.5%.

Prioritizing ‘safe’ sectors and ecosystem-driven value chain growth. Currently, BMRI continues to focus on low-risk sectors (e.g. FMCG and CPO), corporate payroll and supply chain financing, while maintaining its LDR around 90% to ensure improvement in liquidity. The bank also aims to strengthen transactional CASA through these initiatives, which are expected to reduce CoF to 2.3% from 2.6% in FY24 and support NIM improvement in 2H25 to 5.2% (up from 4.9% in 1H25).

2025F guidance revised: loan growth 8–10%, NIM 4.8–5.0%, CoC 80–100bps. Management lowered its FY25 loan growth target to 8–10% from 10–12% (SSI Revised: 8.8%), anticipating stronger 2H disbursements supported by government spending and BI’s monetary easing. NIM guidance was revised to 4.8–5.0% from 5.0–5.2% (SSI Revised: 5.0%), incorporating BI’s 25bps rate cut to 4.75%. CoC guidance was adjusted down to 80–100bps from 100–120bps (SSI Revised: 0.9%) as assets quality remains stable. CIR is projected at ~45% in FY25 due to one-off audit adjustment, but is expected to normalize to 40–42% by FY26 as cost growth returns to low single digits.

Cut TP of IDR 5,100 but retain positive view on severe px underperformance. At this stage of the market cycle, we have reduced our 12-month tp to IDR 5,100/share (PBV: 1.5x), offering 15.9% upside and maintaining our BUY rating on BMRI, particularly given the stock’s severe underperformance of 35.6% YTD. Following the release of BMRI’s 2Q25 results, we lowered our net profit forecast by 12.3% to account for slower loan growth and softer NIM in 2025F, although we expect some margin support by optimizing product mix toward higher-yield assets. Downside risks: weaker economic recovery (potential greater-than-expected NPLs), as well as more pressure on NIM, loan growth and credit costs.