While FY23 results came in strong, 2024 recovery will not be as fast as anticipated
BBNI booked a very strong FY23, despite formidable challenges that they faced during 1H23, with IDR20.9 tn in FY23 profit, translating to around 97%/98% of our consensus and that of the street. That number seems to be within market consensus, although we suspect BBNI could actually bring it closer to a market number. The strong number in 4Q23 was driven by higher loan growth in 4Q23, especially from existing and new corporate and commercial accounts. Gross loans grew by 3.6% QoQ, bringing their total loan book to +7.6% YoY. Both corporate private and SOE rose, by 14.3% and 11.8% YoY, respectively, as well as a strong mortgage-driven consumer book. The key segment BBNI lacked over FY23 was the medium and small segment, where loan growth was in negative territory during the year, despite reviving in 4Q23. Management guidance is between 9% - 11% in loan growth for FY24 and we tentatively maintain our expectation at between 8.5% - 9%, considering tight competition - especially in the corporate segment.

Tighter Competition Means Loan Yield and CoF will Gradually Revive
While talk of a pivot has been very strong since 4Q23, it has recently muted slightly, as talk of US economic and inflationary conditions picks up again. Therefore, the expectation that a first rate cut will be happening in 1Q24 will likely vanish. We thus conclude that the ability of BBNI to reprice its CoF will likely be delayed further. In a previous report, we suggested that BBNI might be able to improve its NIM throughout repricing in CoF, as their LDR is seems to be improving and they are still able to compete partially in the corporate segment, as the big 4 will usually underwrite credit together. With the delay in pivot, we expect their NIM can likely only improve by 10-20bps in FY24, below than our previous prediction that it could go beyond 30bps, due to improved CoF. Therefore, we only expect BBNI NIM to hover around 4.7% for FY24

BBNI - Awaiting Brighter Skies in 2024

BBNI - Awaiting Brighter Skies in 2024

Mardy Sutanto

29 January 2024 - 02.23pm

BBNI - Awaiting Brighter Skies in 2024

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