Banking Sector Projected Still Prospective, Analyst: BMRI Shares Potential To Grow Up To IDR 7,200

JAKARTA - Foreign investors still don't seem comfortable placing their investment money on the Indonesia Stock Exchange (IDX) for the long term. Throughout this week, the Composite Stock Price Index or JCI experienced a downward trend. In fact, on Thursday, February 6, 2025, the JCI experienced a correction of 2.12 percent, and closed at the level of 6,875.

Based on IDX data, until yesterday, foreigners were still out of the Indonesian stock market, recording net sell transactions of Rp2.34 trillion. The sale action made foreigners accumulate net sales of monthly to date shares of Rp3.29 trillion on the Indonesia Stock Exchange. Meanwhile, year to date, foreigners recorded net sell of Rp7.00 trillion.

A number of parties assessed that the decline in the JCI was a market response to concerns about Indonesia's economic growth, after the 2024 growth which only reached 5.03 percent. This growth is lower than the realization in 2023 of 5.05 percent and far below the achievement of 2022 of 5.31 percent.

Another factor that makes foreigners sell jumbo in the capital market, there will be deflation of 0.76% in January 2025, as well as performance in 2024, a number of large issuers, especially in the banking sector, which are considered under market expectations.

However, according to capital market analyst from PT Rumah Para Pedagang, Kiswoyo Adi Joe, banking shares, especially Bank Mandiri, still have considerable growth potential. Even though the global economy is colored by trade wars, the domestic economy is considered capable of surviving, along with the policy of saving the ministry's budget, in supporting development.

"I estimate that Bank Mandiri's management this year can more freely distribute credit to prospective sectors with a high level of profitability. This can encourage an increase in the net interest margin and interest income, as well as better profits," said Kiswoyo, Friday, February 7.

BMRI is considered to have been tested, able to record positive performance every year. It is proven that during the previous 10 years of President Joko Widodo's administration, Mandiri consistently achieved profit growth while maintaining the level of problematic credit well below the regulator's provisions. In fact, during the last 10 years, the Indonesian economy was marked by global and domestic pressures that were no less severe.

Last year, Bank Mandiri's credit realization on a consolidated basis reached IDR 1,670.55 trillion, up 19.5 percent year on year (YoY). The company's core business credit continues to be the main driver of lending. Likewise, Bank Mandiri's credit quality is very good, reflected in the ratio of non-performing loans at the level of 0.97 percent, down 5 basis points (bps) from the previous year.

In terms of non-interest income, Bank Mandiri managed to achieve IDR 42.32 trillion, growing 4.12 percent on a consolidated basis (yoy) basis. Bank Mandiri recorded a consolidated net profit of IDR 55.8 trillion, up 1.31 percent YoY. This achievement reflects the effectiveness of digital-based expansion strategies, increased operational efficiency, and diversified increasingly strong sources of income.

To support credit expansion this year, Kiswoyo sees the importance of BMRI paying attention to liquidity. Thus, the ratio of credit disbursement compared to deposit or loan to deposit ratio (LDR) of BMRI can be maintained at the optimal level.

"I estimate that the shares in the banking sector will continue to increase. Especially BMRI's shares still have the potential to grow to IDR 7,200 per share until the end of 2025," concluded Kiswoyo.