17 December 2024
When to Act, When to Pause
Market Commentary
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Here’s some good news for BBRI shareholders. BBRI just announced an interim dividend of IDR 135/share, totaling IDR 20.3 tn. This is a 61% increase compared to last year’s interim dividend of IDR 84/share.
Based on BBRI’s estimated net profit of IDR 57.9 tn in 2024, this dividend payout equals 35% of its earnings, up from just 21% last year.
At the current stock price, this dividend gives a yield of 3.2%. Not bad, right? It’s a sweet bonus to kick off the new year.
Here are the important dates to remember so you don’t miss out:
But while this is great news for shareholders, there are still short term challenges to keep an eye on.
The current economic situation isn’t exactly easy. Rupiah is weakening, U.S. Treasury yields are rising, consumer spending is still under pressure, market liquidity is tight, and geopolitical tensions are heating up. All these factors mean the banking sector needs to stay extra cautious.
Foreign capital outflows from Indonesia’s stock market remain significant. Over the last 20 trading days, an average of IDR 352 bn in foreign funds has exited daily. YTD, total foreign outflows have reached IDR 35.5 tn.
There’s also concern about BBRI’s profit growth slowing down in 4Q24 due to three main factors, slower loan growth, persistently high funding costs, and rising credit costs. These issues could make the performance in the final quarter less impressive than expected.
However, looking at BBRI’s journey in 10M24, there are still some positives. The bank recorded a net profit of IDR 45.7 tn, up slightly by 5% yoy.
This growth was largely supported by PPOP, which reached IDR 89.5 tn, growing 15% yoy. Unfortunately, this was offset by a 36% yoy increase in provisioning expenses, as the bank prepared for potential risks in a challenging economic environment.
While BBRI’s dividend feels rewarding, it’s clear that short term challenges remain.
We believe investors should “wait and see” until market sentiment improves. Honestly, the current environment is still tough for BBRI’s stock price movement.
Before committing further to the stock, it is important to monitor key factors such as the improvement in credit quality, as this will determine BBRI’s ability to minimize bad loans.
Lowering funding costs will also be critical, as high costs will squeeze margins, while better liquidity will help the bank disburse more loans.
On a broader scale, a supportive macroeconomic environment is needed, including a stable rupiah, lower global interest rates, and improved consumer purchasing power.
Despite these short term headwinds, BBRI’s long term outlook remains strong. The bank has a robust CAR, reflecting its ability to absorb risks. It also maintains sufficient reserves to anticipate potential non-performing loans.
On top of this, BBRI’s profitability remains solid, supported by strong and growing PPOP, which highlights its operational efficiency.
With such strong fundamentals, we maintain a BUY recommendation for BBRI with a target price of IDR 6,000.
Based on BBRI’s estimated net profit of IDR 57.9 tn in 2024, this dividend payout equals 35% of its earnings, up from just 21% last year.
At the current stock price, this dividend gives a yield of 3.2%. Not bad, right? It’s a sweet bonus to kick off the new year.
Here are the important dates to remember so you don’t miss out:
- Cum date: December 24, 2024
- Ex-date: December 27, 2024
- Dividend payment date: January 15, 2025
But while this is great news for shareholders, there are still short term challenges to keep an eye on.
The current economic situation isn’t exactly easy. Rupiah is weakening, U.S. Treasury yields are rising, consumer spending is still under pressure, market liquidity is tight, and geopolitical tensions are heating up. All these factors mean the banking sector needs to stay extra cautious.
Foreign capital outflows from Indonesia’s stock market remain significant. Over the last 20 trading days, an average of IDR 352 bn in foreign funds has exited daily. YTD, total foreign outflows have reached IDR 35.5 tn.
There’s also concern about BBRI’s profit growth slowing down in 4Q24 due to three main factors, slower loan growth, persistently high funding costs, and rising credit costs. These issues could make the performance in the final quarter less impressive than expected.
However, looking at BBRI’s journey in 10M24, there are still some positives. The bank recorded a net profit of IDR 45.7 tn, up slightly by 5% yoy.
This growth was largely supported by PPOP, which reached IDR 89.5 tn, growing 15% yoy. Unfortunately, this was offset by a 36% yoy increase in provisioning expenses, as the bank prepared for potential risks in a challenging economic environment.
While BBRI’s dividend feels rewarding, it’s clear that short term challenges remain.
We believe investors should “wait and see” until market sentiment improves. Honestly, the current environment is still tough for BBRI’s stock price movement.
Before committing further to the stock, it is important to monitor key factors such as the improvement in credit quality, as this will determine BBRI’s ability to minimize bad loans.
Lowering funding costs will also be critical, as high costs will squeeze margins, while better liquidity will help the bank disburse more loans.
On a broader scale, a supportive macroeconomic environment is needed, including a stable rupiah, lower global interest rates, and improved consumer purchasing power.
Despite these short term headwinds, BBRI’s long term outlook remains strong. The bank has a robust CAR, reflecting its ability to absorb risks. It also maintains sufficient reserves to anticipate potential non-performing loans.
On top of this, BBRI’s profitability remains solid, supported by strong and growing PPOP, which highlights its operational efficiency.
With such strong fundamentals, we maintain a BUY recommendation for BBRI with a target price of IDR 6,000.
Written by Boris, the Broker
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