Bank Negara Indonesia to lodge 7% net profit growth in 2024

UOBKH slashed the bank’s profit and NIM estimates, however.

Bank Negara Indonesia (BBNI)’s net interest margins (NIM) will be weighed down by competition from tighter liquidity and an expected lack of central bank rate cuts in the second half of 2024.

In a report, UOB Kay Hian (UOBKH) cut the Indonesian bank's net profit growth estimates for the next two years as it lowered its NIM assumptions.

Despite its lower estimates, BBNI is still expected to log a net profit growth of around 7% in 2024 and 8.8% in 2025. 

UOBKH noted that the bank’s loan growth accelerated 12.6% year-on-year (YoY) in May, compared to a single digit loan growth in 2023.

BBNI’s SME-focused digital bank Hibank also posted a strong loan growth of 76% in April.

Net interest margin improved by 14 basis points (bp) in the first five months of 2024, compared to the Q1 period, according to UOBKH.

However, cost of fund (CoF) remained high at 3.1% in the first 5 months of 2024. 

“We expect CoF to stay high due to tight competition from gathering third-party funds from high government bonds issuance, Rupiah Securities of Bank Indonesia (SBRI) and Foreign Exchange Securities of Bank Indonesia (SVBI),” Pakpahan said.

Pakpahan does see an “encouraging trend” on money supply (M2) growth, which accelerated to 7.6% YoY in May 2024, from a 3-4% growth in Q4 2023.