BNI and BRI Prepare Share Buyback

JAKARTA, KOMPAS - Banking issuers plan to repurchase shares owned by the public in 2025. This strategy is being undertaken to respond to the decline in the company's stock prices and the sluggish capital market conditions over the past year.

PT Bank Negara Indonesia (Persero) Tbk or BNI, on Tuesday (4/2/2025), issued a statement to the public through the Indonesia Stock Exchange regarding the plan to buy back shares with an estimated fund of IDR 905 billion, from the company's free cash flow. This plan will subsequently be decided at the General Meeting of Shareholders on March 13, 2025.

Corporate Secretary of BNI, Okki Rushartomo, revealed that the action aims to reduce selling pressure in the market due to fluctuations in BBNI's stock price. Additionally, it also serves to indicate to investors that the company views the current stock price as not reflecting the company's fundamentals.

"The pressure on BBNI shares is starting to be felt as a result of investor concerns over geopolitical instability and Indonesia's macroeconomic conditions surrounding liquidity and currency depreciation," said Okki, quoted on Thursday (2/6/2025).

BNI shares at the close of trading on Thursday (6/2) were priced at Rp 4,290 per share. Compared to the price at the beginning of 2025, which was Rp 4,590 per share, there has been a correction of 1.6 percent. The current price is also significantly lower than the highest price in 2024, which was Rp 6,250.

The decline in BNI's stock price has become more apparent towards the end of 2024, primarily due to negative sentiment following the election results in the United States in November 2024. Additionally, there is the policy direction of the US Central Bank, The Fed, which signals a cut in interest rates to only 25-50 basis points (bps) in 2025, compared to last year's forecast of 100-125 bps, accompanied by high geopolitical dynamics that exert pressure on the Composite Stock Price Index (IHSG).

Okki ensures that BNI's actions will not have a significant impact on the company's operational costs, so the profit and loss are expected to remain in line with the company's targets. BNI's net profit throughout 2024 is projected to reach IDR 21.5 trillion, an increase of 2.7 percent compared to the achievement in 2023 of IDR 21.11 trillion.

"The company has sufficient capital and cash flow to carry out transaction financing in conjunction with the company's business activities," he said.

PT Bank Rakyat Indonesia (Persero) Tbk (BRI) recently announced a buyback plan after its shares, coded BBRI, recorded a 38 percent decline over the past year, reaching IDR 3,970 per share on Thursday (6/2).

The Corporate Secretary of BRI, Agustya Hendy Bernadi, in the disclosure of information to the Indonesia Stock Exchange, Friday (31/1/), stated that the company has prepared funds for a share buyback amounting to IDR 3 trillion. This plan will be decided at the General Meeting of Shareholders on March 11, 2025.

"The 2025 buyback will be carried out through PT BEI or outside the stock exchange, either in stages or at once and will be completed 12 months after the GMS that approved the 2025 buyback," said Agustya.

Head of Customer Literacy and Education Kiwoom Sekuritas Indonesia, Oktavianus Audi, told Kompas, that the buyback action by issuers is driven by the belief in intrinsic value that is discounted from the market price. As believed by issuers or companies listed on the stock exchange, this can also drive a positive market perspective on the stock price.

"However, this strategy will also be less effective if external sentiment, such as increasing economic uncertainty, is unable to drive stock prices in the market," he said.

Currently, the market is still dominated by negative sentiments, such as economic uncertainty due to the potential trade war between the US and other countries, the tendency for interest rates to be kept high for a long time which has the potential to suppress purchasing power and thus suppress economic growth. Finally, there is also the potential for the realization of issuer performance below market expectations which needs to be a concern for investors.