$AMAR - NEW JOURNEY, NEW VALUE

AMAR, a digital bank serving the retail and MSME, has achieved remarkable growth in savings accounts with a CAGR of 73% from 2019 to 2022, savings accounts reached IDR150 bn. AMAR aims to sustain annual growth rates over 50%, increasing cheap funding through CASA from 18% in 2022 to over 25% by 2025. Restructuring in 2022 reduced reliance on TD and boosted NII. TD is expected to grow conservatively at 25% over three years, reaching IDR1.5 tn by 2025. Total customer deposits are estimated to surpass IDR2.2 tn by 2025, providing a foundation for lending via the 'Tunaiku' online lending application.

AMAR stands out with an average savings per customer of IDR1.3 mn, surpassing competitors. Despite stringent loan criteria, accelerated loan disbursement is expected with a projected 12% annual growth. Loan yield remains around 30% since 2018, independent of central bank rates. With robust growth in fee and other income, AMAR aims for profitability. Estimated net profit in 2023 is IDR111 bn, with further growth anticipated. This positive outlook may result in a higher share price, potentially leading to a re-rating from a P/B ratio of 1x to 3-year mean, suggesting a 45% upside potential to our 12-month TP of IDR410. Indonesia is a leader in digital banking development in ASEAN, with several purely digital banks in operation. Digital banks in Indonesia comply with existing regulations and capital requirements, fostering acquisitions and partnerships between fintech and traditional banks. Indonesia's market offers opportunities with its large population and low financial penetration. Growth is driven by limited financial literacy, increasing smartphone ownership, and the potential to improve banking access. Intense competition necessitates sustainability and funding access for new players. Learning from successful global digital banks like WeBank, Kakao Bank, Nubank, and Monzo can provide valuable insights for Indonesia's digital banking market. Effective technology utilization by Indonesian digital banks can enhance financial inclusion and reshape the banking landscape.