Bond Valuation

New Issuance of Shelf-Registered Social bonds I Phase I Year 2025. Currently BBRI plans to issue new social bonds tranches, with a target proceeds of Rp5,000bn. The instrument will offer 2-yr, 3-yr and 5-yr tenors, with the proceeds exclusively allocated for the financing of existing social projects. The book-building period runs 10-16 Jun 2025, with offering coupon ranges of 6.20-6.65% for 2-yr, 6.25 6.75% for 3-yr tenor and 6.35- 6.90% for 5-yr tenor, implying -1 to 44 bps, -8 to 42 bps and -1 to 54 bps risk premiums above the current risk free rate, respectively. Looking at the average AAA rated category which we estimate at an average risk premium of 37 bps, thus the new bond offerings will be attractive if they give coupon rates of 6.58% for the 2-yr tenor, 6.70% for the 3-yr tenor and 6.73% for the 5-yr tenor, respectively or at the upper range of offering coupon.

Key Credit Update:

Prudent loan growth and manageable asset quality. BBRI is the second-largest systemic bank in Indonesia, with total assets of Rp1,993.0 tn and a superior market position of 16.0%. In 2024, the Bank’s consolidated loan portfolio (Gross Loans, sharia financiang and financial lease) expanded prudently by 7.0%, reaching Rp1,354.7tn, driven by growth in the corporate and consumer segments. Despite the challenging economy, BBRI successfully improved its asset quality in 2024. BBRI’s loan at risk (LAR) improved from Rp157.9tn in 2023 to Rp144.9tn in 2024, translating to an LAR ratio decrease from 12.47% in 2023 to 10.7% in 2024. The Bank’s special mention loans (SML) stood at Rp65.3tn, marking a 5.2% year-over-year increase, while the total non-performing loans (NPL) were stable at Rp37.3tn. The NPL ratio improved from 3.0% in 2023 to 2.8% in 2024. BBRI projects a loan growth of ca. 7.0-9.0% and estimates the NPL ratio to remain at <3.0% in 2025.

The most profitable bank in Indonesia. BBRI stands out as one of Indonesia’s most profitable banks, as reflected by its earning asset yield of 10.9% and net interest margin (NIM) of 7.7% in 2024. Still in 2024, BBRI achieved a net interest income of Rp199.3tn, marking a 10.0% YoY growth, and a net interest income of Rp142.1tn, reflecting a 3.4% YoY growth. The Bank’s good asset quality and efficient operations (reflected by a cost-to-income ratio of 41.6%) led to a net profit of Rp60.4tn in that same year. BBRI aims to maintain its NIM in the range of 7.3-7.7% in 2025.

Strong capitalization. BBRI is highly capitalized, as reflected by its capital adequacy ratio (CAR) of 26.6% on a consolidated basis and 24.4% on a bank-only basis in 2024. This strong capitalization provides BBRI with the flexibility to manage key banking risks. Additionally, it provides ample room for sustainable business expansion in the future.

Stronger commitment to ESG and sustainability finance. BBRI continues to increase its sustainable loan portfolio. By 2024, BBRI’s green financing portfolio amounted to Rp86.6tn, reflecting a 7.7% YoY growth. The social financing portfolio stood at Rp698.7tn, with a 0.9% YoY increase, while the ESG-based corporate bond investments amounted to Rp4.4tn, a 2.2% YoY decline. BBRI has good ESG ratings, including a low-risk score of 17.8 from Sustainalytics, an A rating from MSCI, and a Corporate Sustainability Assessment score of 75 from S&P Global. Additionally, BBRI has a Corporate Governance Rating of 110.2 from ASEAN Corporate Governance.

Key risks: An adverse macroeconomy might result in slower loan growth, whereas increased credit risk might deteriorate debtors capacity to repay their debts, which would lead to a higher NPL ratio. Rising competition in the industry, pressure on interest rates, and the inability to maintain the CASA ratio are also key risks to NIM.

Bond Name	Obligasi Berwawasan Sosial Berkelanjutan I Bank BRI Tahap I Tahun 2025
Rating	idAAA by Pefindo
Tenor & Coupon Indication	2 years: 6.20% – 6.65%
	3 years: 6.25% – 6.75%
	5 years: 6.35% – 6.90%
Issuance size target	IDR 5 trillion
Book Building Period	10 – 16 June 2025
Payment Date	25 June 2025 (Tentative)