Bank CIMB Niaga ($BNGA) recently recorded a net profit of 1.7 trillion rupiah in Q4 2024 (in addition, its growth reached +7.6% YoY but decreased by -1.9% QoQ). This performance shows that net profit for the whole of 2024 grew +5.4% YoY to 6.8 trillion rupiah, which is in line with market expectations as it reached 101% of the consensus estimate. This achievement is supported by credit cost (CoC), credit growth, and Net Interest Margin (NIM), each of which is in line with the predetermined guidance.

NIM Targets and Development

Bank CIMB Niaga has set the NIM target in the range of 3.9%–4.2% in 2025. In Q4 2024, NIM was recorded at the level of 3.9% (-17 bps YoY, -19 bps QoQ). Thus, NIM during 2024 is projected to decline to 4.1% (-31 bps YoY), in line with management guidance which is in the range of 4.1%-4.2%. The loan yield in Q4 2024 was recorded at 8.23% (+9 bps YoY, -20 bps QoQ), continuing the downward trend on a quarterly basis since Q1 2024. Meanwhile, cost of funds (CoF) increased to 3.58% (+41 bps YoY, +12 bps QoQ) due to the company’s strategy to increase liquidity through an increase in time deposit rates.

CoC Projections and Asset Quality

BNGA management targets CoC in the range of 1% by 2025. Currently, the CoC in Q4 2024 is recorded at the level of 0.8% (+26 bps YoY, -19 bps QoQ), so that the CoC during 2024 is maintained at the level of 0.8% (-19 bps YoY). This is in line with the management’s guidance which wants to reach <1%. The decrease in provisioning expenses in 2024 was recorded at -16% YoY, although there was an increase of +18% YoY in Q4 2024 due to the low-base effect. In terms of asset quality, Gross Non-Performing Loans (NPL) and Loan-at-Risk (LAR) decreased to 1.8% (-20 bps YoY) and 8.6% (-260 bps YoY) respectively.

Growth of Credit and Third-Party Funds

Bank CIMB Niaga projects credit growth in the range of 5%-7% YoY in 2025. Credit growth in 2024 will reach +6.9% YoY (compared to 2023: +8.5% YoY), which is at the upper limit of management guidance. The automotive segment increased by +26% YoY while small-medium enterprises increased by +9.1% YoY. Meanwhile, third-party funds (DPK) grew +10.5% YoY in 2024 (compared to 2023: +3.8% YoY), marking the highest growth since Q1 2022. The high growth of deposits that exceed loans has made the Loan-to-Deposit Ratio (LDR) fall to the level of 86.3% in 2024 (compared to 2024: 89.3%).

Dividends and Returns for Investors

BNGA’s management provides a guidance dividend payout ratio for the 2024 financial year of 50% of the bank-only net profit (compared to the 2023 financial year of 60%), which indicates a dividend yield of 7.5% based on the price as of Thursday (20/2) at the level of 1,720 rupiah per share. In the future, BNGA management has launched a dividend payout ratio of up to 60% for the 2025 financial year.

Conclusion

We assess BNGA’s performance in 2024 as a good performance, especially with NIM, CoC, and credit growth in line with the guidance that has been set. The decline in LDR is also a positive point in the tight liquidity conditions seen in other banking issuers. Investors are advised to continue to monitor the development of the CoF BNGA in 2025, given its important role in the formation of NIM and the company’s profitability.