1Q25 Results: In-line with ours and cons

Fee-based income supported earnings; NIM fell under pressure. In 1Q25, BRIS posted consolidated net profit of IDR 1.8 tn (-0.9% QoQ, +10.1% YoY), in line with our forecast (23.5% of FY25F) and consensus (22.8%). PPOP grew 12.4% QoQ and 12.2% YoY, supported by strong non-interest income growth (+9.6% QoQ and +36.5 YoY) driven by robust gold fee income (+52% YoY growth in gold pawning fees) and initial contributions from bancassurance (started in 2H24). However, NIM fell to 5.3% (4Q24: 5.7%), down 35bps QoQ, due to higher funding costs and QoQ decline in assets yield. Financing expanded 3.0% QoQ and 16.2% YoY, exceeding the ~15% target. Meanwhile, deposits slipped 2.5% QoQ but increased 7.4% YoY.  Non-Wadiah savings decreased 3.0% QoQ and 7.0% YoY, while Wadiah savings rose 1.0% QoQ and 8.0% YoY. Assets quality improved, with FAR ratio declining to 7.19% (-142bps YoY), while CoC remained healthy at 0.9%, supported by ample provisioning.

Gold business gaining traction, providing solid support to fee-based income. Fee-based income surged 52% YoY, making up over 20% of the bank’s total net interest income, driven by strong growth in gold-related services. Gold financing also showed robust growth, with installments rising 170% YoY and pawning up 35% YoY. The gold segment now accounts for over 5% of total loans and is expected to contribute further going forward. Nonetheless, BRIS will continue to prioritize lending to the consumer segment in the near-to-medium term.

2025F guidance: Financing growth of 14–16% on gold/consumer segments. BRIS maintains its 2025F financing growth target of 14–16%, supported by expansions in consumer and gold segments. It is worth highlighting that the newly approved Saudi Arabia branch is expected to enhance the Muslim pilgrim ecosystem. While 1Q25 NIM came under pressure, management expects recovery in 2H25 driven by easing funding costs and improved loan yields thanks to better portfolio mix. The bank expects its 2025F NIM to rise moderately to 5.5–5.9% (from 5.3% in 1Q25), while credit cost is projected to stay below 100bps, in line with 1Q25 figure of 93bps.

BUY with TP of IDR 3,300 (2.9x PBV) on robust financing growth. We reiterate our BUY rating on BRIS with 12-month target price of IDR 3,300/share, reflecting 2025F PBV of 2.9x and potential upside of 15.8% from current levels. We expect sustained growth in gold lending, projected to reach 8% of total financing by end-2025F (current: 5%), potentially helping to offset high funding costs due to higher yields. Downside risks for the bank include the following: slower economic recovery, weaker-than-expected NIM and financing growth as well as higher-than-expected credit costs.