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BBNI

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 Author(s):  Jovent Muliadi  ;Anthony 

• BBNI
  's 1Q24 net profit of Rp5.3tr (+2% yoy) was slightly below estimates at 23%. However, NII/PPOP declined by -10/-5% yoy.
• Steep drop in NIM to 4% (-70bp yoy) amid lower loan yield (-20bp yoy) and rising CoF (+90bp yoy). This was despite elevated LDR at 89%.
• We cut our FY24-26F EPS by 8-9% amid the miss in NII/PPOP and also downgrade our recommendation to Hold with lower TP of Rp5,600.

1Q24 results: below from weak PPOP but offset with lower provision

BBNI

posted 1Q24 net profit of Rp5.3tr (+2% yoy), slightly below ours/consensus FY24F estimates at 23%. The miss was largely attributed to declining PPOP at -5% yoy as NII dropped by -10% yoy (both NII/PPOP missed our estimates at 21%) while opex was benign at +2% yoy. Provision declined by -19% yoy which translates to CoC of 1% in 1Q24 (vs. 1.4% in 1Q23/FY23), in-line with FY24F target of <1.4%.
Steep drop in NIM from lower loan yield and rising CoF
Overall NIM fell to 4% (vs. 4.7/4.6% in 1Q23/FY23) as a result of lower loan yield (-20bp yoy/-30bp qoq) and higher CoF (+90bp yoy/+30bp qoq) despite elevated LDR of 89% (vs. 85/86% in 1Q23/4Q23). Deposit grew by +5% yoy (-4% qoq) largely from

CASA

at +6% yoy (-6% qoq) while TD was slower at +2% yoy (+1% qoq). It maintains FY24F NIM guidance at c.4.5% though we think this shall be hard to achieve amidst elevated rate environment; as such, we lower our NIM estimates from 4.6% to 4.1%.
In-line loan growth supported by corporate and consumer
Loan rose by +10% yoy (flat qoq), in-line with its FY24F guidance of 9-11%. The growth was driven by corporate and consumer, while SME slowed amidst d asset quality deterioration.
Rising LAR on qoq basis but improvement on yoy basis
NPL ratio improved to 2% in 1Q24 (vs. 2.8/2.1% in 1Q23/4Q23), while LAR dropped -280bp yoy but increased +40bp qoq to 13.3% due to downgrade in pharmaceutical company to Col2. LAR coverage stood at 50% in 1Q24 (vs. 49/53% in 1Q23/4Q23).
Downgrade to Hold amidst miss in NII/PPOP
We cut our EPS by 8-9% for FY24-26F but also downgrade to Hold amidst the miss in NII/PPOP and we think the future growth may come at the expense of margin. We also think that the 1% CoC is a bit aggressive considering that it's on par with

BMRI

. Our new TP of Rp5,600 - implies 1.1x FY25F P/B ( ROAE of 14% and Ke of 13.5% - note that FY24-26F ROAE at 13.5%). It is currently trading at 1.2x FY24F P/B (vs. 10Y average of 1.1x) and 9.3x FY24F P/E (vs. 10Y average of 10.7x). Upside risk is NIM.


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