April 24, 2025

One Day Closer to Better

Market Commentary

0 comments

Looks like the JCI has been smiling lately, closing in the green for several days in a row. We're finally seeing signs of the long-awaited recovery.

No surprise here, especially with the banking sector back in the driver’s seat, once again becoming the backbone of the market. BBCA is leading the charge.

Not only has its share price started to accelerate, but its performance has also remained solid, with earnings growth boosting investor confidence to hold the stock.

BBCA continues to prove itself as a resilient bank amid challenging economic conditions.

In 1Q25, BBCA booked a net profit of IDR 14.1 tn, up 10% yoy, which is on track to meet 24% of the FY earnings target set by analysts.

So, what makes BBCA so resilient in times like these? One key factor lies in its lending.

While many banks are holding back, BBCA is stepping on the gas, growing its loan disbursement by 13% yoy.

But it’s not just about aggressive lending. BBCA is also adept at maintaining a stable NIM, which stood firm at 5.8%.

This demonstrates BBCA’s ability to preserve margins despite the current high interest rate environment.

Another factor supporting its NIM is its CASA base.

BBCA’s CASA grew 8.3% yoy, while time deposits were nearly flat.

This gives BBCA room to place cheap funds into short-term instruments like SRBI, which have been yielding strong returns recently.

As a result, BBCA can sustain its high NIM without overly relying on aggressive lending.

However, despite the solid performance, there are still challenges worth noting. The NPL ratio edged up slightly to 2.0% from 1.8% in 2024.

This is understandable, given the modest qoq loan growth and the weakening purchasing power of consumers.

Additionally, LAR increased to 6.1%, driven by several syndicated loans in the mining and processing sectors currently undergoing restructuring.

The good news is that this restructuring is projected to be completed by May 2025, so LAR is likely to decline again.

Looking ahead, our analysts maintain a conservative stance, projecting 2025 net profit to reach IDR 58.3 tn, up 6.3% yoy.

Why not more aggressive? The macro environment remains uncertain, posing potential pressure on both credit growth and NIM.

Nonetheless, with a strong funding base, ample liquidity, and well-managed asset quality, BBCA remains well-positioned to weather any turbulence.

We reiterate our BUY rating on BBCA with a target price of IDR 11,500, reflecting a valuation of 5.0x PBV 2025F, assuming a stable ROE of 24% and cost of equity at 10%.

Comments

April 24, 2025

April 24, 2025

April 23, 2025