Rebrand, Recalibrate & Refresh

Strengthening franchise through rebranding, digital push & expanded partners. Reinforcing its position as one of Indonesia’s leading mid-tier banks, BNLI is in the midst of accelerating customer acquisition, boosting low-cost deposits (higher CASA), strengthening funding resilience, and supporting declining NIM due to challenging liquidity environment. As part of these efforts, in September 2024, BNLI began enhancing its deposit franchise and modernizing customer engagement through new logo creation and the Permata ME mobile app launch, introducing cross-border features such as QR payments and FX transactions. With CASA ratio steady at ~55% in FY24, management targets to reduce funding costs over the next 2–3 years by leveraging stronger brand identity, refreshed mobile interface, and expanded retail partnerships (e.g., Indomaret, AirAsia co-branded cards).

Recalibrating to high-yield growth segments while retaining ecosystem synergies. Allocating more capacity to high-yield areas such as mortgages and commercial loans while remaining disciplined in lending to its corporate ecosystem clients, BNLI managed 1H25 loan disbursement of IDR 163tn (+7.4% YoY), supported by diversification into commercial and consumer segments. This strategic operational recalibration, combined with improved assets quality (gross NPLs dropped to 2.1% in 2Q25 vs. 2.4% in 2Q24), allows the bank to pursue growth without compromising prudence. By embedding itself deeper into client value chains and expanding consumer penetration, BNLI aims to rebalance earnings mix towards higher-yielding segments, augment fee-based income, and solidify its role as primary ecosystem partner for various businesses.

Efficiency gains and earnings outlook – Speculative BUY with IDR 4,500 TP. BNLI’s continuous operating expense rationalization is evident in its improving CIR (2Q25: 48.5% vs 50.1% in FY24), driven by process automation, digital onboarding, and branch modernization. Strong capital adequacy (CAR: 34.6%) provides ample headroom for loan expansion and risk absorption. We project BNLI’s earnings to grow at 2025F–27F CAGR of 9.5% on the back of margin improvement from lower CoF, stronger loan yields, and cost efficiency. We assign Spec-BUY to BNLI with future potential-acquisition based target price of IDR 4,500 (P/BV of 3.5x vs. Bangkok Bank’s purchase at 3.0x). Key risks include tighter liquidity pressuring NIM, residual NPL risk in commercial portfolios, and higher-than-expected CoF escalation.