BBRI Stock Projected to Continue Rising Due to the Success of Transformation

Jakarta, Tangerangtalk.Online - The positive and sustained performance of PT Bank Rakyat Indonesia (Persero) Tbk, or BRI, throughout the first half of 2023 is considered by capital market analysts to be the primary catalyst for the growth of the bank's stock, which holds the largest ESG credit portfolio in Indonesia.

Analysts from PT Verdhana Sekuritas Indonesia, Nicholas Santoso and Raymond Kosasih, stated in their research that BRI's consolidated performance in the first half of 2023 exceeded their projections for the full year 2023.

"Slightly higher than our full-year 2023 projection. BRI's profit in the first half of 2023 reached IDR 29.6 trillion, contributing 52% to our full-year profit projection of IDR 56.4 trillion," the analysts wrote in their recently released research.

Therefore, Nicholas and Raymond recommend buying BBRI shares with a target price of IDR 6,150. Over the past month, BBRI shares have traded at their highest level of IDR 5,700 and their lowest level of IDR 5,300.

Their recommendation for BBRI is also based on their projections for the future. In the second half of 2023, the analysts believe that BRI's performance will be better than in the first half of this year. Several factors will drive this improvement. First, the banking credit market is recovering, with commercial credit from BRI, such as Kupedes, expected to grow. Consequently, net interest income will also increase. Second, the transition of non-subsidized microcredit growth, such as Kupedes, should reduce risk for BRI.

"Third, asset quality improvement that minimizes credit risk. In the first half of 2023, BRI projected an increase in the cost of credit (CoC) by 250 basis points, above the management's projection of 2.2%-2.4% for the full year 2023. However, with the ongoing improvement in asset quality, we expect CoC to decrease below the management's projection. This will minimize the liquidity tightening risk that may arise in the fourth quarter of 2023," the analysts continued.

Furthermore, the two analysts are optimistic that the SME-empowering bank has demonstrated the importance of its role as a transactional bank. This is reflected in the performance of low-cost funds, or CASA, that have been collected. It has even become the highest in the Indonesian banking sector.

BRI's data shows that Third-Party Funds (DPK) collected by the company reached IDR 1,245.12 trillion in the first semester of 2023. This collection was dominated by CASA, accounting for 65.49%. CASA BRI grew by 10.1% annually (year on year) during that period.

"We attribute this growth to BRI's successful digital transformation, combined with its strategy to increase its focus on the micro and ultra-micro sectors," the analysts wrote.

Transformation Success

Separately, BRI President Director Sunarso, who was one of the speakers at the international ASEAN-Indo Pacific Forum (AIPF) last Tuesday (September 5, 2023), revealed that BRI itself has core competencies in solving and empowering SMEs. Sunarso stated that the bank has been involved in this sector for 128 years. Nevertheless, exploring the SME segment is not an easy task.

"We face high operating costs due to our extensive infrastructure and human resources to serve the public. To address these challenges, BRI began a sustainable transformation journey we call BRIvolution in 2016, focusing on digital transformation and cultural transformation," he said.

There are several strategies that BRI has employed to drive digital transformation. First, by promoting the digitalization of internal business processes. In this regard, BRI seeks to simplify business processes and improve efficiency. Then, BRI encourages new business models to drive value creation.

He continued, digital transformation and innovative financing are key to supporting the ASEAN economy.

"In summary, from a BRI perspective, we believe that the most relevant key subtheme in the context of Asia and the Indo-Pacific is digital transformation and innovative financing by BRI in support of the national economy, with a focus on serving the micro and SME segments," concluded Sunarso. (Pres Release)