JP Morgan Reverses Course, Upgrades BBRI Target Price
JP Morgan has officially upgraded its recommendation for PT Bank Rakyat Indonesia (Persero) Tbk (BBRI) to Overweight from Underweight, simultaneously raising the target price to Rp3,400 from the previous Rp2,730. The move is driven by improving prospects for asset quality in the micro segment and a stock valuation deemed too cheap.
In a research report titled “Micro trumps macro; tactical upgrade to OW” dated 19 July 2026, JP Morgan assessed that asset quality risks in the micro credit portfolio are beginning to decline. Furthermore, risks associated with Agrinas loans are also considered lower, while the potential for a 10% subsidy on PNM loans could help reduce pressure on net interest margins (NIM).
In line with these improving prospects, JP Morgan raised its earnings per share (EPS) estimates for BBRI for the 2026-2028 period by 3-6%, primarily due to expectations of lower credit costs. The investment bank also noted that BBRI’s valuation has reached a very attractive level, trading at a significant discount. The stock is currently valued at approximately 7.3 times price-to-earnings (PE) and 1.31 times price-to-book value (PBV), which is around 2.2-2.6 standard deviations below its historical average. Among major state-owned banks, BBRI’s valuation is now considered cheaper than both BMRI and BBNI.
According to JP Morgan, most negative sentiment is already priced in. The firm sees room for a short-term rally in the share price as asset quality risks diminish. Operational improvements in the micro business are also supporting this optimism; BBRI has reduced the number of micro debtors handled per officer to 456 from 528 in 2022, allowing for more effective supervision and collection. The bank is even targeting a ratio close to 400 debtors per officer.
JP Morgan further noted that various government programmes, such as the free nutritious meal initiative, the formation of cooperatives, and subsidy distribution, are beginning to help improve the cash flow of lower-income communities. This is expected to support micro credit quality and drive growth in micro deposits. However, JP Morgan cautioned that pressure on NIM remains due to rising cost of funds and adjustments to PNM loan yields, though they believe this risk is already largely reflected in the current share price.