KONTAN.CO.ID - JAKARTA. Several analysts recommend buying blue chip stocks in the banking sector, BBRI. The price of BBRI shares is predicted to rise high and break new records.

Blue chip stocks are top-tier stocks on the stock exchange because they have strong fundamentals and large market capitalization. Blue chip stocks are not easily manipulated by speculators.

On the Indonesia Stock Exchange (IDX), blue chip stocks are usually included in the LQ45 Index. BBRI shares are one of the 45 stocks in the LQ45 Index.

On Tuesday, February 6, 2024, the price of BBRI shares closed at a level of 5,825, up 50 points or 0.87% compared to the previous day. Since the beginning of the year or year to date, the price of BBRI shares has risen 150 points or 2.64%.

The trend of rising BBRI share prices is expected to continue. Therefore, many analysts recommend buying this blue chip stock.

Baca Juga: Stock Recommendations for HMSP, PTBA, BANK, and SMRA from RHB Securities

Recommendations to buy BBRI shares were among those given by OCBC Securities Analyst Budi Rustanto. Budi suggests a Buy with a target price of Rp 6,500 per share for BBRI.

Head of Research at Aldiracita Securities Agus Pramono also recommends a buy for BBRI with a target price of Rp 6,800 per share.

Ciptadana Securities Analyst Erni Marsella Siahaan suggests a Buy with a target price of Rp 6,250 per share for BBRI.

RHB Securities Analyst Andrey Wijaya maintains a Buy recommendation for BBRI with a target price of Rp6,450 per share.

PT Bank Rakyat Indonesia Tbk (BBRI) is expected to maintain solid performance in 2024. BBRI will primarily be supported by loan growth from the micro segment through Kupedes.

OCBC Securities Analyst Budi Rustanto believes that BBRI can maintain the Net Interest Margin (NIM) with a better asset mix and Cost of Fund (CoF) in 2024.

Baca Juga: GLOBAL MARKETS - Stocks Inch Higher, Treasury Yields Ease; China ETFs Gain

This is in line with the strong growth prospects of the micro credit sector, improvement in NIM, controlled asset quality with adequate coverage ratio, increased fee-based income through digital transformation, and conservative liquidity and capital management.

Budi projects, BBRI loans will increase about 11% year on year (YoY) in 2024, in line with solid economic growth supported by the micro and ultra micro ecosystem. Kupedes is expected to remain the main driver of BBRI loan growth of about 35% by the end of 2024. Meanwhile, non-KUR will contribute about 60% to the total micro loans.

As known, BBRI loan growth of 11.0% YoY to Rp1,197.8 trillion in 2023, mainly sourced from the micro, corporate, and consumer segments. The micro segment rose 10.9% YoY to Rp 611.2 trillion, contributing 48.3% to the total portfolio in 2023. Kupedes rose 64.3% YoY to Rp212.3 trillion in 2023.

“We remain optimistic about BBRI's prospects driven by strong micro credit sector growth, especially from Kupedes along with solid economic growth,” Budi revealed in research on February 5, 2024.

Furthermore, Budi predicts BBRI's NIM will be around 8.0% in 2024, driven by an improvement in the mix of productive assets and CoF.

Baca Juga: US STOCKS - S&P 500 Closes Up, Focus on Earnings and US Interest Rates

The Cost to Income Ratio (CIR) will be around 41% in 2024 with controlled opex growth at the banking and pawnshop level. In addition, the cost of credit or cost of credit (CoC) is expected to be controlled at around 2.4% in 2024.

Meanwhile, BBRI predicts that credit write-offs in 2024 will be the same as last year, around Rp 34 trillion. Bank BRI is still in the process of accelerating covid restructuring, especially in the micro and SME segments.

But BBRI is confident it can manage a recovery rate above 50% this year, supported by insurance on Kupedes products.

Meanwhile, BBRI's Non Performing Loan (NPL) is expected to be at 2.8% in 2024. The bank remains vigilant about the deteriorating quality of micro and small segment assets, so it is reviewing the credit scoring model.

Budi anticipates, BBRI is likely to be cautious about funding costs during the first half of 2024. This is partly due to dividend payments and the amount of money supply increase during Ramadan. However, CoF is likely to be lower in the second semester along with the potential for a decrease in the benchmark interest rate.

“Increased government spending, subsidies, and election expenditures will increase CASA and asset quality,” Budi explained.

Baca Juga: Puradelta Lestari (DMAS) Targets Marketing Sales of Rp 1.81 Trillion in 2024

Head of Research at Aldiracita Securities Agus Pramono sees that BBRI offers a somewhat flat guide in 2024. However, the political year should be a blessing for BBRI's credit distribution. Therefore, Bank BRI is considered fair in targeting the distribution of People's Business Credit (KUR) funds worth Rp 165 trillion in 2024.

“The expected election spending and government incentives for MSMEs, which are launched during the campaign period, should benefit BBRI,” Agus told Kontan.co.id, Tuesday (6/2).

Agus explained, BBRI has booked solid performance during the past year with net profit growth of 17.5% yoy to Rp 60.1 trillion. This achievement is driven by a slightly higher Net Interest Margin (NIM) from 7.9% to 8.0%, adjusted non-interest income growth of 9.7% yoy, recovery of net interest margin (NIM), and a decrease in Loan Loss Provision (LLP) by 11.5%yoy.

“The results achieved by BBRI reflect the macroeconomic challenges caused by the high Cost of Fund (CoF), but the bank was able to switch to assets with higher returns,” Agus revealed.

He highlighted, BBRI's Cost of Credit (CoC) or funding cost slightly decreased to 2.38% at the end of 2023 because Bank BRI continues to clean up loans restructured due to Covid-19. As known, BBRI wrote off credit of Rp 34 trillion in 2023, and projected loan write-offs of Rp 33 trillion - Rp 34 trillion in 2024.

BBRI's Loan to Deposit Ratio (LDR) fell to 93.23% in December 2023 along with deposit growth of 5.3% qoq in the fourth quarter of 2023. BBRI added its savings to anticipate the need for higher cash in the first half of 2024 along with the Ramadan and Eid al-Fitr period, as well as for dividend payments.

Baca Juga: Peek at Nelly's (NELY) Sailing Tactics to Boost Performance This Year

Current Account Saving Account (CASA) stable at 64.35% at the end of the fourth quarter of 2023 compared to 63.64% per third quarter of 2023. Therefore, the Cost of Fund (CoF) is expected to remain high in the first quarter of 2024 which may put pressure on NIM in the first half of 2024.

Meanwhile, from the asset quality side, BBRI improved in the fourth quarter of 2023 with Loan At Risk (LAR) falling to 12.47% and Non Performing Loan (NPL) to 3.07%.

That's the recommendation to buy BBRI shares for today's trading, Wednesday, February 7, 2024. Remember, the decision to buy and sell shares is in your hands and is your own responsibility.

Editor: Hasbi Maulana