PR Newswire
JAKARTA, Indonesia , June 3, 2024 /PRNewswire/ -- PT. Bank Rakyat Indonesia (Persero) Tbk (IDX: BBRI) remains Indonesia's leading MSME (Micro, Small and Medium Enterprise) financier, with its credit portfolio growing to IDR 1,308.65 trillion by March 2024 , up 10.89% year-on-year. Over 83% of this, or IDR 1,089.41 trillion , was allocated to MSMEs.
Supported by an extensive branch network and empowerment initiatives, BRI has achieved an impressive Return on Equity (ROE) and maintained a Net Interest Margin (NIM) consistently above 7%, exceeding the industry average of around 6%. "Therefore, we expect the ROE to be maintained above 20%, relatively in line with the average of other major banks," quoted from Edward Lowis of Sucor Securities' research on Monday (5/27/2024).
BRI's ultra-micro portfolio through Pengadaian and PNM is on a growth trajectory, with this segment achieving higher margins and outpacing typical bank credit growth. "The total asset contribution of these subsidiaries has reached almost 10% of the total in the first quarter of 2024 (compared to 6% in 2020), while the contribution to net income has also grown to 14% of the total (compared to 10% in 2022)," he wrote.
Edward acknowledges challenges in managing BRI's asset quality but expects moderate revenue growth of 5% to 10% YoY in 2024 and 2025. He expects BBRI to maintain above-average NIM and growth due to its dominance in microloans. "Adequate loan loss coverage and a strong capital position will help the bank weather near-term challenges," he added. Therefore, Sucor Securities recommends buying BBRI shares with a target price of IDR 6,400 , reflecting a 2.8x PBV for 2024, based on a sustainable ROE of 23% and a cost of equity of 12%.
Similarly, Jayden Vantarakis of Macquarie has a target price of IDR 7,100 for BBRI shares, while Victoria Venny of MNC Securities has a Buy rating with a target price of IDR 6,300 . A Bloomberg consensus of 35 analysts sets a 12-month price target of IDR 6,175 , with 33 analysts unanimously recommending a buy on a bullish outlook.
BRI's Finance Director Viviana Dyah Ayu R.K . said management's focus is to ensure the company can grow better and healthier in the long run, even if it requires small corrections in the short run. "For long-term shareholders, the refinements and improvements we are making now should provide greater benefits."
For more information on BRI, please visit www.bri.co.id
SOURCE PT Bank Rakyat Indonesia Tbk (BRI)