Research

BBNI: Sell On Lacking Catalysts

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Algo Research Team

Company | Jul 26, 2023 | Views: 109

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Key Summary:

  • Miss on loan growth (+5%) vs. guidance +7-9%
  • Bottoming provision. Wary of window dressing in 2024
  • Contraction in NIM to persist in 2023

BBNI recently posted its 1H23 result, whereby earnings grew +17% YoY to IDR10.3tn (2Q23: +5% YoY, -3% QoQ) that was slightly below market estimate (48% of FY23 consensus). The miss came from contraction in net interest margin (NIM) from 4.7% in 1H22 to 4.58% in 1H23 as funding cost (CoF) rose from 1.4% to 2% during the same period. Consequently, 1H23 net interest income was up only +5% YoY as interest expense (+64% YoY) grew faster than interest income (+19% YoY).


Pre-provision operating profit (PPOP) increased by merely +0.3% YoY (2Q23: -0.7% YoY, flat QoQ). Meanwhile, provision expense was down -30% YoY in 1H23, driving almost all (97% contribution) of operating profit growth and bringing cost of credit (CoC) from 2.2% to 1.4%. But, sequentially, we saw higher provision in 2Q23 at +10% QoQ, which might indicate bottom provision this year that could potentially reverse going forward.

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