XA Update Report | PT Bank Mandiri Tbk. (BMRI) – 2Q26 : Loan Yield Pressure and Deposit Repricing Moderate NIM, While Strong Non-Interest Income Supports Earnings
By Leonardo Lijuwardi
28-July-2026
BMRI delivered another solid set of results in 1H26, posting net profit of IDR 30.41T (+24.4% YoY; quarterly basis: +33.5% YoY, -2.3% QoQ; 2Q26: IDR 15.03T), supported by resilient operating performance and continued growth in Pre-Provision Operating Profit (PPOP). Although Net Interest Income (NII) continued to expand, its growth moderated in 2Q26 as loan yields contracted following the repricing of the loan portfolio—particularly in the corporate and micro & payroll segments—amid weaker credit demand. Meanwhile, the surprise Bank Indonesia rate hike also exerted pressure on funding costs through time deposit repricing, resulting in YTD NIM declining to 4.56% (1Q26: 4.70%), albeit still within management’s revised guidance range. Non-interest income emerged as the key earnings cushion, growing 14.9% YoY to IDR 22.78T in 1H26 (quarterly basis: +25.1% YoY, +2.2% QoQ; 2Q26: IDR 11.51T), offsetting the moderation in NII growth. Operational efficiency remained well maintained, with operating expenses growing below operating income, allowing the Cost-to-Income Ratio (CIR) to improve to 37.9% (1Q26: 38.2%; 1H25: 44.2%), reflecting continued cost discipline. Credit costs also remained under control, with CoC at 0.61%, comfortably within management’s guidance of 0.6%–0.8%, supported by healthy asset quality. Overall, BMRI’s resilient operating performance continued to preserve earnings despite ongoing pressure on interest margins.
🔹 FY26 Guidance Revised: NIM Remains the Key Adjustment
• NIM Guidance Revised Lower. Management revised FY26 NIM guidance to 4.3%–4.5%, from the previous 4.5%–4.7%, reflecting expectations of continued pressure on loan yields amid slowing economic activity, intensifying competition, and elevated funding costs driven by deposit repricing and tighter system liquidity. Besides the impact from BRIS deconsolidation, management also expects margin pressure as asset repricing continues to outpace funding cost normalization. Meanwhile, management maintained its loan growth target at 7%–9% and CoC guidance at 0.6%–0.8%, while keeping NPL coverage above 230% to provide a comfortable buffer against potential asset quality normalization.
• Maintaining FY26 Earnings Forecast. We maintain our FY26 earnings forecast despite management’s NIM guidance revision. As of 1H26, BMRI has achieved 51.6% of our FY26 net profit estimate (NHKSI Estimate: IDR 58.9T). Although earnings growth in 1H26 benefited from a low base in 2Q25, we believe pressure on NIM will continue to be offset by solid loan growth, resilient asset quality, disciplined operating efficiency, and sustained growth in non-interest income.
🔹 Lending Side: Quarterly Loan Growth Begins to Moderate
• Loan growth remained healthy in 2Q26 but started to moderate sequentially, with total loans reaching IDR 1,677T (+19.2% YoY; +3.92% QoQ), supported primarily by BMRI’s core business banking segments, particularly corporate and commercial lending. Loan expansion remains aligned with management’s strategy of prioritizing wholesale banking and ecosystem-based financing, while retail loan demand remains relatively subdued amid weaker consumer purchasing power.
• Corporate Loans Remain the Primary Growth Driver. Corporate loans increased 4.99% QoQ and 33.6% YoY to IDR 840T, while commercial loans grew 5.55% QoQ and 15.1% YoY to IDR 343T, highlighting continued financing demand from business customers.
• Retail Loan Growth Remains Soft Amid Weak Consumer Demand. Micro & payroll loans recorded modest growth of 0.15% QoQ and 1.97% YoY to IDR 198T, while consumer loans increased 3.40% QoQ and 2.48% YoY to IDR 85T. The relatively muted retail loan growth reflects BMRI’s prudent underwriting approach amid a more challenging macroeconomic environment.
🔹 Funding: Deposit Repricing Following Surprise Rate Hike Drives Higher Cost of Funds
• Tighter Liquidity Shifts Funding Mix Toward Time Deposits. Industry liquidity tightened further in 2Q26, in line with the impact of Bank Indonesia’s policy rate hike, resulting in a gradual shift in BMRI’s funding mix. CASA grew only 0.41% QoQ (+5.69% YoY) to IDR 1,220T, significantly slower than time deposits, which increased 5.42% QoQ (+54.4% YoY) to IDR 543T. Consequently, the CASA ratio declined to 69.2% from 70.2% in 1Q26, reflecting a greater reliance on higher-cost funding amid intense industry-wide deposit competition.
• Deposit Repricing Raises Cost of Funds and Weighs on NIM. The growing share of time deposits, coupled with deposit repricing following the BI rate hike, pushed bank-only deposit CoF higher to 2.04% from 1.97% in 1Q26. Meanwhile, funding costs on low-cost deposits remained well contained, with current account CoF stable at 1.83% and savings account CoF improving to 0.30%, underscoring the resilience of BMRI’s CASA franchise. Nevertheless, the increase in deposit funding costs became one of the key drivers behind the contraction in NIM to 4.56% in 1H26, alongside pressure from loan yield compression resulting from loan repricing and softer credit demand.
🔹 Asset Quality: Remains Healthy and Resilient
• Asset Quality Remains Sound. BMRI’s asset quality remained healthy throughout 2Q26. Consolidated LAR stood at 5.83%, while gross NPL remained low at approximately 1.01%, reflecting a resilient loan portfolio despite slowing economic conditions. Asset quality improvements were supported by lower restructured loan exposure and increasingly disciplined underwriting standards. Management continues to maintain a conservative risk management approach, with NPL coverage remaining above 230%, while CoC of 0.61% remains comfortably within the 0.6%–0.8% guidance range, providing sufficient buffer against potential normalization in retail credit quality.
🔹 Maintain BUY Rating with a Lower Target Price of IDR 5,300 (27.4% Upside)
• NHKSI Research maintains its BUY recommendation on BMRI with a lower target price of IDR 5,300, based on 1.4x FY26F P/BV, equivalent to -1 standard deviation of its three-year historical average. Potential catalysts include stronger-than-expected loan growth and improvements in profitability metrics, particularly NIM and overall earnings generation. Although NIM is expected to remain under pressure due to loan yield compression and higher funding costs, we believe BMRI’s resilient operating performance—supported by continued growth in non-interest income—will provide a meaningful earnings buffer amid challenging industry conditions. Key downside risks include macroeconomic and political uncertainties, intensifying competition within the banking sector, and weaker-than-expected loan growth and NIM performance.
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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
