Bank Negara Indonesia Persero: Stay OW on the AT1 after 2Q results

研报英文原文证据摘录

J P M O R G A N

Asia Pacific Credit Research

06 August 2026

Overweight

Bank Negara Indonesia Persero

BBNIIJ

Stay OW on the AT1 after 2Q results

Slightly lower capital ratios and an uptick in credit costs are manageable aspects

of the 2Q results from Bank Negara Indonesia (bond ticker: BBNIIJ). Such credit

considerations are offset by continued strong balance sheet metrics, including a

common equity Tier 1 (CET1) ratio of 15.5% and a 198% NPL coverage ratio. We

continue to see value in the issuer’s 7.15% additional Tier 1 (AT1) instrument,

which is offered at a yield to call of 7.1%. We think the risk of an AT1 issued by

a state-owned enterprise is different from that of AT1 issued by a private-sector

lender, and we often have a higher comfort level. The yield is attractive in our view

and we keep this on our top trade list.

2Q26 results showed solid revenue momentum but weaker bottom-line

performance due to higher operating costs and provisions. Return on

equity (ROE) fell to 13.1% in 2Q26 from 13.6% in the prior quarter. Net interest

income increased 2.1% q/q to IDR11 trillion, while the net interest margin

(NIM) remained stable at 3.6%. Non-interest income also improved 3.5% q/q

to IDR6 trillion. However, pre-provision operating profit declined 1.6% q/q to

IDR9 trillion, mainly due to a 7.8% q/q rise in operating expenses. Net profit

declined 10% q/q to IDR5 trillion, as provisions increased 22.6% q/q to IDR3

trillion. The bank revised its FY26 NIM guidance lower to 3.3-3.5% from 3.53.8% to reflect deposit competition in 2Q26.

Consolidated loans expanded 5.4% sequentially. Growth was led by the

business banking segment (+6.3% q/q) with corporate SOE loans up 6.7% q/q,

while the consumer segment also grew 1.8% q/q. Third-party funds remained

largely flat, although the CASA ratio declined by 1% pts q/q to 65.4% as time

deposits grew 3% q/q, reflecting more intense deposit competition and a

higher-rate funding environment. The bank maintained its FY26 loan growth

target of 8-10%

Asset quality remained stable, with the non-performing loan (NPL) ratio

unchanged from 1Q26 at 1.9%. NPL formation and write-offs in 1H26

…