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In line with ours and cons. BBNI posted a net profit of IDR 5.6tn in 3Q23 (+10.0% QoQ and +14.3% YoY), which brought its 9M23 net profit to IDR 15.9tn (+16% YoY), in line with our expectations (76.7% of our full-year forecast) and consensus (75.6%). The low provision expense in 3Q23 (IDR 2.2tn; -6.8% QoQ, -12.8% YoY) and 9M23 annualized CoC of 1.4% (lower than the bank’s guidance of 1.5%-1.6%) were some of the primary contributors to BBNI's solid performance. Its NII experienced QoQ growth, driven mainly by the increase in loan yield (+10bps QoQ) and loan growth, which rose to 7.8% in Sep-23, supported by the private corporate segment (+19.2% YoY). Despite booking higher CoF in the quarter, BBNI managed to post higher NIM of 4.78% in 3Q23 vs. 4.48% in the previous quarter. Regarding asset quality, BBNI’s LAR ratio dropped to 14.4% in Sep-23, from 19.3% in Sep-22 and 16.1% in Jun-23, while its LAR coverage ratio improved to 51.1% vs. 42.3% in the same period last year and 47.1% in Jun-23. LAR ratio improvement was primarily attributable to the corporate sector, particularly the toll road, trading, and hospitality industries.
Guidance for 2023F. During its analyst meeting, BBNI stated that it would keep its loan growth projection for 2023F at 7.0%-9.0%, with the tier 1 private corporate segment as the main driver, as maintaining asset quality will remain BBNI’s main focus for the foreseeable future. Regarding its NIM, BBNI expressed its confidence to maintain its NIM at the current level, even though pressure on CoF might persist in 4Q23 as BI has recently raised the 7-day repo rate by 25bps, thanks to the fact that the bank still has lots of room to increase loan yield. BBNI’s CoC is projected to drop further (<1.5%, vs. 1.9% in 2022), thanks to the improvement in asset quality.
Reiterate BUY with TP of IDR 5,750/share. At this juncture, we believe BBNI’s management will continue improving its risk management system, particularly for wholesale and SMEs. In contrast to its nearest competitor (BMRI), BBNI will continue to focus on asset quality improvement in 2023F. We maintain our BUY rating for BBNI with a TP of IDR 5,750/share, implying a 2024F PBV of 1.2x. Key downside risks: higher-than-expected CoC and higher CoF, which will push down its NIM even further.
Samuel Sekuritas Indonesia is a leading Indonesian securities brokerage firm. Established in 1997, the firm has grown to become one of the most respected and trusted financial services companies in the country. With a wide range of services and products, Samuel Sekuritas Indonesia has become a trusted partner to many investors, both institutional and individual.
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