BBTN
Contact our analyst Lingga
35% Upside. Buy.
18th August 2021
Price Rp1425
Target price Rp1920
High Profit Growth
In 2Q21, Bank Tabungan Negara (BBTN) posted a net profit of IDR 920 billion, a significant 19.9% YoY increase, but lower quarterly because of higher provisions. Net Interest Income grew 28.18% as NIM increased to 3.41%. Operating Expenses rose 21.03% from higher deposit premiums. Provision expense increased significantly by 27.34% because BBTN increased its coverage level to 120.72% (+1,282bps).
Good Loan and Deposit Growth
Loan growth was 6% YoY and 2% QoQ. Good credit growth was supported by subsidized mortgages which grew 12% YoY and non-housing loans, especially consumer loans, which grew 17.47% YoY, and which contributed 53% and 66% of total loans, respectively. Deposit growth increased to 31.84% YoY supported by Time Deposit growth of 43.53% which made up 62.53% of total deposits, Current Accounts increased by 15% YoY, and Savings Accounts 17.7% YoY. Although dominated by Time Deposit growth, BBTN has maintained their Cost of Funds.
Good Asset Quality and Restructuring
In terms of asset quality, NPLs increased to 4.1% from 4.7% in 2Q20. Special Mention Loans increased to 8.6% from 12.93% in 2Q20. In terms of total restructuring, the amount decreased to IDR 56.6 trillion or 21.3% of loans from 23% in 1Q21. 70% of the potential downgrade comes from the consumer and corporate segments. Management still maintains their views on asset quality, including the strategy to increase the NPL coverage level. The potential downgrade to NPL is around 4.9% while 25% is expected to return to performing loans.
Valuation: 35% Upside, Buy.
Based on our DDM Valuation, we have a target price within one year of IDR 1,920 or trading at 0.7x PBV which gives 35% potential upside, Buy.
In 2Q21, Bank Tabungan Negara (BBTN) posted a net profit of IDR 920 billion, a significant 19.9% YoY increase, but lower quarterly because of higher provisions. Net Interest Income grew 28.18% as NIM increased to 3.41%. Operating Expenses rose 21.03% from higher deposit premiums. Provision expense increased significantly by 27.34% because BBTN increased its coverage level to 120.72% (+1,282bps).
Good Loan and Deposit Growth
Loan growth was 6% YoY and 2% QoQ. Good credit growth was supported by subsidized mortgages which grew 12% YoY and non-housing loans, especially consumer loans, which grew 17.47% YoY, and which contributed 53% and 66% of total loans, respectively. Deposit growth increased to 31.84% YoY supported by Time Deposit growth of 43.53% which made up 62.53% of total deposits, Current Accounts increased by 15% YoY, and Savings Accounts 17.7% YoY. Although dominated by Time Deposit growth, BBTN has maintained their Cost of Funds.
Good Asset Quality and Restructuring
In terms of asset quality, NPLs increased to 4.1% from 4.7% in 2Q20. Special Mention Loans increased to 8.6% from 12.93% in 2Q20. In terms of total restructuring, the amount decreased to IDR 56.6 trillion or 21.3% of loans from 23% in 1Q21. 70% of the potential downgrade comes from the consumer and corporate segments. Management still maintains their views on asset quality, including the strategy to increase the NPL coverage level. The potential downgrade to NPL is around 4.9% while 25% is expected to return to performing loans.
Valuation: 35% Upside, Buy.
Based on our DDM Valuation, we have a target price within one year of IDR 1,920 or trading at 0.7x PBV which gives 35% potential upside, Buy.
