Notes from Analyst Gathering

We attended BBRI’s analyst gathering, which focused on its digital initiatives in consumer banking. During the event, the bank discussed its strategies to enhance its hybrid banking model by digitizing business processes, which is expected to improve productivity. In addition, BBRI outlined its plans to improve the digital ecosystem to capitalize on new liquidity opportunities and sources of growth. Moreover, the bank is set to deepen the integration and synergy of BRIbrain across all of its apps, to enhance service efficiency and reduce processing time for loan and customer approvals.

 

Keeping the customer base active to lower CoF

With ~29.8mn registered users and a transaction volume of IDR 2,984tn as of Sep-23 (BBCA: 25.1mn, IDR 18,440tn; BMRI: 21.0 mn, IDR 2,400tn; BBNI: 15.6mn, IDR 874 tn), BRImo stands out as one of the most successful mobile banking super apps in Indonesia. A key tactic in achieving this goal involves the advancement of Sabrina, a chatbot that functions as a virtual financial advisor with capabilities in conversational banking. BBRI's plan includes the integration of a large language model (LLM) into the chatbot, enhancing its ability to interact smoothly with customers by addressing complex queries and accommodating local languages (e.g., Javanese and Balinese). As of now, without the implementation of LLM, Sabrina is already equivalent to 254 call agents, leading to an annual cost savings of approximately IDR 22 billion.

 

QRIS usage in Singapore

BBRI has recently rolled out a new feature enabling BRImo users to make payments to merchants in Singapore conveniently through QRIS, particularly at places where the Singapore Quick Response Code (SGQR) is available. The service offers not only user-friendly functionality but it also converts transactions based on BBRI's exchange rates to SGD. Although the impact of QRIS cross border in Singapore is still relatively small, with a total transaction value of IDR ~400 mn as of Nov 17, we see the massive potential of the service, and we expect BBRI to introduce the service to other countries when the opportunity arises. This strategic move is expected to contribute to a sustained increase in BRImo's overall transaction volume in the long term.

Improving productivity and efficiency through BRISPOT

BBRI aims to enhance productivity and efficiency by integrating BRIbrain into BRISPOT, specifically focusing on reducing processing time for loan and customer approvals. Initially developed in late 2020, BRIbrain is an AI platform designed to improve credit scoring and loan approval processes, making them faster. The integration will extend to BRISPOT, where the AI scoring system will be further refined to streamline processing times for loan approvals to under 15 minutes through an automated pre-screening and disbursement method.

Maintain BUY, TP of IDR 6,100

We maintain our BUY rating for BBRI and our TP at IDR 6,100/share, based on a 2024F PBV of 2.8x on the back of the solid 2023F outlook. We anticipate that BBRI will book double-digit loan growth throughout 2024, supported by their strategic digital initiatives within their applications, facilitating smoother disbursement processes for loans to their customers. Downside risks: worse-than-expected economic recovery, lower-than-expected NIM and loan growth, higher cost of credit, and higher opex.