State-Owned Bank Stocks Continue to Face Foreign Sell-Off

Shares of state-owned banks remain a primary target for foreign investors’ sell-offs.

Over the past week, PT Bank Mandiri Tbk (BMRI) led the sell-off with a net sell of Rp 756.38 billion. PT Bank Rakyat Indonesia Tbk (BBRI) followed in second place, with a net sell of Rp 663.8 billion, while PT Bank Negara Indonesia Tbk (BBNI) ranked third with Rp 383.54 billion in net sell.

Even PT Bank Syariah Indonesia Tbk (BRIS), the state-owned Islamic bank, experienced significant foreign selling, recording a net sell of Rp 80.91 billion for the week.

Foreign Investors Continue Selling Bank Stocks Throughout the Year

Foreign sell-offs in banking stocks have been ongoing for the past year. BBRI suffered the largest foreign net sell, totaling Rp 42.14 trillion in the past year. BMRI followed, with Rp 8.55 trillion, while BBNI saw Rp 2.43 trillion in net foreign selling.

According to Maybank Sekuritas Indonesia analyst Jeffrosenberg Chenlim, in a March 10, 2025 research note, macroeconomic uncertainty and the weakening rupiah against the U.S. dollar are the primary reasons for foreign investor concerns.

"Additionally, most banks are expected to experience slower profit growth," he stated.

The slowdown in banking sector performance is evident, with loan disbursement growth in January 2025 decelerating. While the industry recorded 11.8% credit growth in 2024, January 2025 only saw a 10.3% year-on-year increase.

Jeffrosenberg predicts that tight liquidity conditions will continue to impact loan growth through Q1 2025. However, the Bank Indonesia rate cut of 25 bps to 5.75% since 2024 is expected to gradually improve liquidity conditions.

Mixed Bank Performances, BRIS Emerges as Top Pick

Banks under Maybank Sekuritas' coverage showed varied performance. BBNI and BRIS recorded the strongest net profit growth compared to other banks.

• BBNI posted a net profit of Rp 1.63 trillion in January 2025, increasing 16.9% month-on-month and 9.8% year-on-year.
• BRIS saw a 14.8% year-on-year net profit increase, though it declined 26.8% month-on-month, totaling Rp 1.63 trillion.
• BMRI posted moderate profit growth, rising 4.5% year-on-year and 1.1% month-on-month, reaching Rp 4 trillion.
• PT Bank Central Asia Tbk (BBCA) recorded a 5.8% year-on-year profit increase, reaching Rp 4.73 trillion, with an 11.6% month-on-month rise.
• Meanwhile, BBRI and BNGA saw net profit declines due to higher provisioning costs.

Jeffrosenberg favors banks with lower funding costs and strong growth drivers, naming BRIS as the top pick. He believes these factors will be more advantageous in the current challenging market conditions.

He recommends buying BRIS with a target price of Rp 3,600 per share. Despite market uncertainties, he remains positive on Indonesian bank stocks, with buy recommendations for:

• BBRI: Rp 5,400
• BMRI: Rp 6,825
• BBNI: Rp 6,100
• BBCA: Rp 11,675
• BNGA: Rp 2,400