Green Shoots

Hi, it’s BRIS again!

Commencing the year on a high note, the 11M23 result reflects consistent growth, with net income reaching IDR5.06 tn, a 26% yoy increase. Cohesively, factors contributing to rapid profit growth for BRIS include a predominant composition of low-cost third-party funds (DPK), which has experienced a 17% yoy growth. This growth is accompanied by an increase expansion in the top-line and total asset increase by 12.86% yoy.

 Source: Sucor Sekuritas

BRIS's loan disbursement rose by 13.7% yoy to IDR 20.99 tn, outpacing the 9.7% growth seen in conventional banks. The consumer loan segment exhibited strong performance with ~14% yoy growth, enhancing BRIS's profitability through higher yields and lower credit risks.

In bird's eye perspective, the continuous growth of Islamic financial assets in Indonesia has reached IDR 2,461.1 tn as of July 2023, indicating a noteworthy 13% yoy increase and a market share of 10.89% in the total national financial sector.

The total assets of Islamic banks amounted to Rp819.10 tn, reflecting a growth of 13.55% yoy in July 2023. In terms of market share, the proportion of total assets held by Islamic banks in the national banking industry reached 7.30%.

Source: OJK

Given that Indonesia boasts the world's largest Muslim population, the Islamic banking sector in the country is still in its early growth sprout. Religious sentiments notably influence consumer choices in Indonesia, as evident from recent boycotts related to Hamaz, the same sentiment is anticipated to shape banking preferences.

The challenge lies in the absence of a Shariah bank that matches the maturity and security of conventional banks. This is the juncture where BRIS steps in, positioning itself among the ranks of major banks.

To offer a comparison, it's like to strolling through PANI a few years back, when there were only one or two clusters, and Pantjoran PIK stood out as the primary attraction...

BRIS is also strategizing hand in hand with OJK to enhance the competitiveness of Islamic Banking in Indonesia. In November 2023, they unveiled a roadmap  for the 2023-2027 period to accelerate Islamic banking growth.

The primary objectives involve establishing a supportive regulatory and supervisory framework, issuing regulations and guidelines to ensure a level playing field for IBs, accelerating digitalization, thus ultimately aiming to enhance IB contribution to the overall national economy.

Simultaneously, the government also implemented various regulations and incentives to encourage the development of IB, including the Master Plan Industri Halal Indonesia 2023-2029.

This plan incorporates the halal industry as part of the RPK. There is an opportunity for IB to promote loans using halal financing. As of 2022, the share of halal financing is still at a modest 4.5% for micro and 12.5% in the SME segment.

The dedication to digitalization is evident in the BSI mobile app, which in terms of services and UI aim to be on par with Mandiri Livin app. It provides extra features such as Islamic services, gold purchases, and prayer schedules.

Take note, this isn't the final version of BRIS's app. The eagerly awaited launch later this year is bound to make waves, especially among millennials and the younger generation. Get ready for something big!

In summary, the growth trajectory BRIS is more than just promising; and it is just starting. It offers different values that complements to conventional banking, expanding the market by adding new deposits to the banking industry.

With BRIS still at the beginning of its growth spurt and showcasing an attractive 11M23 ROE of 13.3%, it screams an obvious buying opportunity for us!