Mandiri's Strategic Buyback: Investor Confidence Boost Amid Economic Challenges

Positive Market Signal in Challenging Economic Conditions

PT Bank Mandiri (Persero) Tbk (BMRI), Indonesia's largest state-owned bank, has received shareholder approval for a Rp1.17 trillion share buyback program following its Annual General Meeting of Shareholders on March 25, 2025. This strategic move is seen as a positive signal for investors, particularly as the bank navigates through challenging economic conditions in 2025 that have impacted the banking sector.

Analyst Perspective on Valuation and Market Impact

Frederik Rasali, an analyst from Artha Sekuritas Indonesia, noted that Bank Mandiri's current valuation is attractive with a price-to-book value (PBV) of 1.57x, which is below one standard deviation from its five-year average. This valuation level was last seen during the COVID-19 pandemic in late 2021, indicating that the stock is currently undervalued. The buyback program is expected to have a positive psychological impact on investors, potentially boosting confidence in the bank's stock.

Supporting ESOP and Market Dynamics

The primary purpose of the buyback is to support the bank's Employee Stock Ownership Plan (ESOP) program. By repurchasing shares, Mandiri can accommodate the ESOP requirements effectively. While the immediate impact may be psychological, the reduction in outstanding shares could lead to an increase in earnings per share (EPS), making the stock more attractive to investors.

Economic Context and Investor Considerations

The banking sector faced significant challenges in 2025 due to economic pressures. Despite these challenges, the buyback signals management's confidence in the bank's fundamentals. Investors are advised to monitor the execution of the buyback program, including the funds allocated and the purchase price, as these factors will determine the overall impact on the company's financial metrics.