Beyond Expectation
FY21 Result : Solid Earnings & Improving Asset Quality
• BMRI booked consolidated net profit attributable to shareholder of IDR28.03tn (+67.74% YoY) throughout FY21.
• BMRI bottom line was 127.20% from our estimate for FY21. Solid earning was driven by : 1) increasing net interest income (+16.86% YoY), 2) successful cost efficient strategy and 3) lower provision expense (-21.69% YoY).
• Net interest income grew despite lowering interest earning asset by 80bps YoY due to declining yield in corporate segment (-90bps YoY) which accounted for 35% loan portfolio.
• However strengthening CASA to 73.7% (+19.8% YoY) while TD decreased -4.7% YoY helped CoF to decrease by 110bps YoY.
• Overall, BMRI NIM slightly improved to 4.8% in FY21 (vs 4.7% in FY20).
• In addition, BMRI also successfully managed its operational efficiency reflected by CIR to drop 288bps YoY in FY21.
• Meanwhile on the provisioning expense, BMRI managed to reduce CoC by 49bps YoY in FY21 along with improving asset quality.
• Throughout FY21, BMRI NPL decreased 38bps YoY to 2.72% with adequate coverage of 244%. Furthermore, LaR including Covid-19 restru was also down by 430bps YoY to 17.1% as of Dec-21.
• BMRI total loans grew 8.9% YoY above industry average of 5.3% YoY driven by disbursement in corporate and commercial segments which accounted >50% and expanded 8.0% YoY and 9.7% YoY respectively.
ESG Focus : Establishing Sustainable Banking
• In FY21, BMRI booked a sustainable financing portfolio (SFP) amounting to IDR205.4tn or equivalent to 24.8% outstanding bank only loan.
• Nearly 86.7% of its SFP was channeled to environmentally sustainable, management of living nat. resources and land use project (~42.8% from SFP) and financing MSME’s (~43.8% SFP).
• BMRI continued to increase financing to clean and renewable energy sector by disbursing IDR4.3tn through financing geothermal project (35%) and hydro power plant (65%).
• Furthermore in sustainable palm oil, 88% of debtor coming from this sector was already RSPO and/or ISPO certified, the number increased from 60% in FY19.
• In order to expand its SFP footprint, BMRI raised USD300mn funding from Green Bond issuance last year to finance environmentally and socially focused projects.
Outlook & Recommendation : Maintain BUY Rating with Upgraded TP : IDR8,900
BMRI’s management aspired for credit to grow >8% YoY. In our view 8-10% growth for credit remains achievable. BMRI focus toward higher yielding asset combined with low cost of funding mainly through CASA which is supported by its digital apps Livin’ by Mandiri will also keep NIM to be stable or even slightly increase to 4.8-5.0% in our view for FY22F. Besides that frontloading provisioning strategy will also bring room to cut CoC which BMRI management set to reduce <2% and we think it is achievable. Rerating BUY for BMRI with upgraded TP to IDR8,900 from previously IDR8,400, implying 1.4x FY22F PBV. Key risks to our call include : 1) slower than expected loan growth as well as 2) deteriorating asset quality due to unfavorable pandemic conditions.
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