Banking Sector Update - Overall inline 2M25 bank only earnings

KBVS Update
Tuesday, 8 April 2025

Banking - Overall inline 2M25 bank only earnings
(Maintain Overweight)

* The average banks under our coverage reported an average net profit of 3.0% yoy in the period of 2M25, while in February, the stand-alone PATMI grew by 14.8% yoy and 21.5% mom. In all, the 2M25 bank only PATMI result arrived in line with our expectation at a run rate of 14.3%/14.0%.

* BBCA reported PATMI growth of 8.4% yoy, helped by soft interest expenses growth, manageable operating expenses, and provisions, with an inline run rate of 15.3%/15.1%. We also like BRIS (our top picks) 2M25 net profit growth achievement of 10.1% yoy, supported by 7.7% yoy and 46.1% yoy growth in net interest income and non-interest income.

* Banking sector total loans grew by 10.3% yoy, slightly higher than 10.2% yoy in the previous month. Investment loans grew by 14.6% yoy, while working capital and consumption loans grew by 7.6% yoy and 10.31% yoy, respectively.Our bank under coverage (ex-BBTN) noted an average total loan growth of 13.0% yoy and still above the OJK (9-11% yoy) and our 25F expectation of 9-10% yoy (BI: 11-13% yoy).

* Continuing NIM pressure seems acceptable (-0.1% yoy, from 5.0% to 4.9%). We expect cost of credit to remain manageable and overall will become the main catalyst for PATMI growth in the remaining period of 25F (CoC slightly declines 0.1% yoy and 0.3% mom, respectively).

* We believe 1Q25 consolidated net income will become a crucial key to assess the FY25F achievement. The latest stock drop has made several banks under our coverage valuation stood slightly below its -1SD historical mean. Maintain Overweight, with BBCA, BMRI and BRIS (syariah banking) as our picks.

Regards,
Akhmad Nurcahyadi - KBVS Research