XA Update Report | PT Bank Mandiri Tbk. (BMRI) | 3Q26 : Resilient Earnings Despite Rising Funding Costs, Supported by Loan Repricing, CASA Growth, and Operating Efficiency

 

 

By Leonardo Lijuwardi

27-October-2026

 

 

BMRI delivered resilient earnings in 9M26, with net profit reaching IDR 45.53T (+20.7% YoY; Quarterly Basis: +13.9% YoY, +0.6% QoQ, 3Q26: IDR 15.12T), supported by PPOP growth of +17.5% YoY to IDR 65.65T, reflecting effective operating cost management. Net Interest Income (NII) grew +6.5% YoY to IDR 69.81T (Quarterly Basis: +3.4% YoY, -3.6% QoQ, 3Q26: IDR 21.97T), despite rising funding costs following benchmark rate hikes. Meanwhile, loan yields began recovering in 3Q26, increasing 12 bps QoQ to 7.03% following loan repricing, although Cost of Funds (CoF) rose to 2.34% (2Q26: 2.04%), compressing consolidated YTD Net Interest Margin (NIM) to 4.43% (1H26: 4.56%; 9M25: 4.78%).

 

Non-interest income remained a key earnings buffer, growing +14.3% YoY to IDR 35.45T (Quarterly Basis: +13.3% YoY, +10.0% QoQ, 3Q26: IDR 12.67T), partially offsetting NII pressure from elevated funding costs. Operating efficiency improved, with operating expenses declining -1.6% YoY, primarily driven by lower G&A expenses, bringing the Cost-to-Income Ratio (CIR) down to 38.0% (9M25: 43.8%). Meanwhile, Cost of Credit (CoC) remained manageable at 0.63%, despite rising Loan at Risk (LaR) from higher performing restructured loans. Overall, stronger non-interest income, recovering loan yields, and operating efficiency continued to support BMRI’s profitability amid elevated funding costs and emerging asset quality risks.

 

 

🔹FY26 Guidance Revision: Higher Loan Growth Target and Improved Cost Efficiency

 

• Upward Revision to Loan Growth Guidance and Lower CIR Target. Management raised its FY26 loan growth guidance to 9%–11% (previously 7%–9%), while maintaining an LDR target below 95%. CIR guidance was revised downward to 37%–39% (previously 39%–41%), supported by cost discipline and operational automation. Meanwhile, NIM and CoC guidance remained unchanged at 4.3%–4.5% and 0.6%–0.8%, respectively.

 

• Earnings Remain in Line with Expectations. We maintain our FY26 net profit forecast at IDR 58.9T, with 9M26 earnings of IDR 45.53T representing 77.3% of NHKSI’s full-year estimate. We expect resilient loan growth, further loan yield recovery in 2H26, stronger non-interest income, and operating efficiency to support profitability. Nevertheless, elevated CoF and rising LaR remain key downside risks, prompting BMRI to adopt a more conservative lending approach while prioritizing profitability.

 

 

🔹 Lending Side: Loan Growth Moderates Sequentially, with Wholesale Remaining the Key Driver

 

• Resilient Loan Growth Despite Sequential Moderation. Consolidated loans reached IDR 1,693.6T in 9M26 (+15.4% YoY; +1.0% QoQ), representing 7.45% YTD growth, primarily supported by wholesale and business banking segments. Consolidated LDR improved to 91.2% (2Q26: 92.7%), while bank-only LDR stood at 93.5%. Management continues to balance loan expansion with liquidity management, maintaining its LDR target below 95%.

 
 
• Corporate Lending Remains the Backbone, While Commercial Loans Drive Sequential Growth. Corporate loans reached IDR 836T (+22.5% YoY; -0.55% QoQ), while commercial loans increased to IDR 352T (+16.8% YoY; +2.52% QoQ), collectively accounting for approximately 70.1% of total loans. Following benchmark rate hikes, BMRI’s repricing strategy began gaining traction, with corporate loan yields increasing 22 bps QoQ to 6.17% and commercial loan yields rising 12 bps QoQ to 7.04% in 3Q26. Further yield improvement from ongoing repricing could support stronger NII in subsequent quarters.
 
 
• Retail Lending Remains Moderate, While SME and Mortgage Show Recovery. Micro & payroll loans grew +2.0% YoY to IDR 200T, while consumer loans increased +3.37% YoY to IDR 127T in 9M26. SME lending showed signs of recovery, growing +11.2% YoY (+6.6% QoQ), followed by mortgage loans at +8.6% YoY (+4.9% QoQ). However, auto financing contracted -21.4% YoY, reinforcing management’s selective approach to retail lending expansion.

 

 

 

🔹 Funding Side: Deposit Repricing Following Unexpected Rate Hikes Drives Higher CoF

 

• CASA Growth Supports a Healthier Funding Mix. Total customer deposits increased to IDR 1,804.6T (+17.5% YoY; +2.35% QoQ) in 9M26, supported by CASA growth to IDR 1,273.4T (+16.0% YoY; +4.4% QoQ). Current accounts grew +20.6% YoY (+6.7% QoQ), while time deposits declined -2.22% QoQ, lifting the CASA ratio to 70.6% (1H26: 69.2%). This reflects BMRI’s efforts to optimize its funding mix toward lower-cost deposits.
 
 
 
• Higher Funding Costs Compress NIM Despite Loan Repricing. Bank-only CoF increased 30 bps QoQ to 2.34% (2Q26: 2.04%), reflecting higher deposit rates following benchmark rate hikes. Although loan yields improved to 7.03% (+12 bps QoQ), consolidated YTD NIM declined to 4.43% (1H26: 4.56%), as funding costs rose faster than asset yields. Stronger CASA growth, continued loan repricing, and reduced reliance on expensive time deposits will be crucial to stabilizing margins in the coming quarters.
 
 
 

🔹 Asset Quality: NPL Remains Stable, but Rising LaR Warrants Close Monitoring

 

• Stable NPL, but Loan at Risk Continues to Rise. Consolidated gross NPL remained relatively stable at 1.02% (2Q26: 1.01%), while Loan at Risk (LaR) increased to 6.76% (2Q26: 5.83%). The increase was primarily driven by higher performing restructured loans, which rose to 2.83% (2Q26: 1.89%). Despite relatively stable special mention loans at 2.91%, rising restructuring exposure remains a key asset quality risk to monitor.

 

 

• Provisioning Remains Manageable, Although Coverage Ratios Decline. Provisioning expenses declined -5.84% YoY to IDR 7.81T in 9M26, while CoC remained manageable at 0.63%, within management’s 0.6%–0.8% guidance. However, NPL coverage declined to 235% (2Q26: 237%), while LaR coverage fell to 35.1% (2Q26: 40.5%). Rising LaR and declining coverage ratios warrant close monitoring, given the potential for higher credit costs in subsequent quarters.

 
 
 

🔹 Maintain “Buy” but with a Lower Target Price of IDR 5,000 (27.9% Upside Potential)

 

• Maintain BUY, with TP Revised Down to IDR 5,000, Implying 1.3x FY26F P/BV (-1SD Below the Three-Year Historical Average). We remain constructive on BMRI’s fundamentals, supported by resilient loan growth, potential NIM recovery, stronger non-interest income, and improving operating efficiency. However, we lower our target price to reflect heightened market risks, particularly the potential reclassification of Indonesia’s equity market next year especially JCI position in MSCI Classification and associated selling pressure, while maintaining confidence in BMRI’s underlying business quality. Key downside risks include macroeconomic and political uncertainty, intensifying banking competition, weaker-than-expected loan growth, and further NIM compression.

 

 

 

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NH Korindo Sekuritas Indonesia berizin dan diawasi Otoritas Jasa Keuangan (OJK). Untuk informasi lebih lanjut, anda dapat menghubuni CS kami via email CSO@nhsec.co.id