Maybank IB keeps its Buy call on Bank Of Indonesia with a TP of IDR6,100, based on a target 1.3x FY25E P/BV. According to Maybank the interest rate cuts should ease funding cost pressure providing upside to the outlook for BBNI's margins.

The house feels BBNI's continued efforts to improve asset quality, Maybank IB expects steady improvement in NIM and credit costs, and consequently a gradual expansion in ROE. Downside risks to our call include: 1) opex rising sharply; and 2) loan quality worsening.

Earnings in-line; accelerating profit growth
9M24 net profit of IDR16.3t (+4.7% QoQ; +3.5% YoY) achieved 74% of house/consensus FY24E forecasts. Earnings were driven by lower provisions (-19.7% YoY) and higher non-interest income (+14.9% YoY) despite slightly lower net interest income (-5.5% YoY). However, the house sees marginal improvement QoQ in net interest income (+7.1% QoQ) and expect this trend to continue as funding cost pressure should start to subside, providing upside for margins.'

Loan growth picks up; increasing leverage
Loan growth started to improve as 9M24 loans grew by 9.5% YoY on the back of strong corporate (+15.1% YoY) and consumer lending (+14.6% YoY). New corporate loan disbursement was mainly to corporates with strong ratings, which should translate into lower credit costs in the future.

Meanwhile, deposit growth lagged at 3.0% YoY, resulting in LDR of 95.3%. Maybank IB believe higher leveraged loans should improve overall NIM as interest rates trend lower.