By Amanda Lee

Bank Mandiri shares fell by their most in more than a decade after the Indonesian lender flagged pressures stemming from tight liquidity conditions while delivering lackluster first-quarter results.

Shares were 11% lower at 6,175.00 rupiah ($0.38) on Thursday afternoon, on track for their biggest one-day percentage loss since 2011.

The drop came after Indonesia's largest bank by assets posted just a 1.1% rise in first-quarter profit and trimmed its full-year net interest margin guidance by 20-30 basis points. It said "continuous tight liquidity" in the banking system had pressured the cost of funds.

Nomura analysts called the results "a slow start to the year," with profit surprising to the downside, coming in at 22% of their full-year projection.

"We do not expect liquidity in the banking sector to improve for the remaining 2024," they said in a research note, adding that they expect selling pressure on the stock given its year-to-date outperformance.

They kept a buy rating, however, citing Bank Mandiri's low funding costs and overall healthy asset quality.

DBS Group Research kept a buy rating but lowered its target to IDR7,800 from IDR8,300 and trimmed earnings forecasts through 2025 by 7%-8% due to higher cost of funds amid tightened liquidity conditions.

Trimegah Sekuritas Indonesia analysts said that Bank Mandiri's decision to leave its loan growth guidance unchanged despite a 19% year-over-year rise in loans in the first quarter appeared to be an effort to control costs amid tight liquidity conditions.

"We think the guidance is quite sensible given the backdrop, and should continue to get the bank to selectively increase market share in specific segments," they wrote in a note.

Write to Amanda Lee at

(END) Dow Jones Newswires

05-02-24 0454ET