Bank Rakyat Indonesia ($BBRI) has just recorded a decline in net profit in the fourth quarter of 2024, which reached only 15.1 trillion rupiah (-6.3% YoY, -1.8% QoQ). Likewise, net profit during 2024 was recorded at 60.2 trillion rupiah (+0.1% YoY), although slightly below market expectations which characterized around 98.5% of the consensus estimate. There are several factors that affect this performance:

• Net Interest Margin (NIM) which is in line with the 2025 guidance target at the level of 7.3% – 7.7%
  BBRI recorded a decrease in NIM to 7.4% in the fourth quarter of 2024 (compared to 4Q23: 8.3%, 3Q24: 8%). NIM during 2024 decreased to 7.74% (compared to 2023: 8.2%) and in accordance with management guidance which is estimated to range from 7.6% – 8%.
• Cost of Credit (CoC) that is worse than guidance; target for 2025 at 3% – 3.2%
  BBRI recorded a CoC improvement to 2.8% in the fourth quarter of 2024 (compared to 4Q23: 2.2%, 3Q24: 3.2%), although the annual CoC in 2024 swelled to a level of 3.2% (compared to 2023: 2.4%) which is much higher than the management guidance which should be below 3%. This is the result of lower-than-target credit growth.
• Credit Growth Under Guidance; The 2025 target at +7% – 9% YoY
  BBRI recorded credit growth of +7% YoY in 2024 (compared to 2023: +11.2% YoY, 3Q24: +8.2% YoY), lower than management guidance which estimates in the range of +10% – 12% YoY.

In the context of asset quality, BBRI’s Loan-at-Risk (LAR) improved to 10.7% in the fourth quarter of 2024 (compared to 4Q23: 12.5%, 3Q24: 11.7%), while Gross NPL also decreased to 2.8% (compared to 4Q23: 3%, 3Q24: 2.9%). This shows that BBRI’s management is trying to maintain NPLs below 3%.

An increase in CoC during 2024 contributed to a deviation in net profit growth, the results of which looked almost flat. Despite various indicators showing challenges, BBRI remains optimistic to increase its CoC in 2025 in the range of 3% – 3.2% in line with the subsidiary’s front load provisioning plan.

Dividend Plan and Ratio Increase

The Dividend Payout Ratio (DPR) for 2024 is expected to reach a minimum of 85%, higher than 80% in 2023. This shows strong expectations for shareholders with a potential dividend yield in the range of 8.3% (including interim dividends in December 2024).

Conclusion

We assess BBRI’s performance as a mixed performance. With the challenges faced in early 2025, management has provided guidance that conditions will improve from the second to fourth quarters of 2025. BBRI shares are an object of concern for investors, especially related to NIM and credit costs which will be important factors in future performance.