BBTN
Contact our analyst Lingga
8% Upside. HOLD.
26 May 2020
Price Rp765
Target price Rp830
Increase in Restructured Loan
Restructured loans are 3% of total loans and are estimated to increase to 18% of total loans of IDR. 45 trillion. Restructuring is from the debtors with both subsidized and non-subsidized mortgages. To help the restructuring process, the bank has provided an online platform.
Loan growth to slow
Loan growth was 4.14% YoY and loans remain dominated by Subsidized Mortgages which increased 10.57% YoY, Non-Subsidized Mortgages grew 0.19% YoY, and Construction Loans fell -4%. Loan growth slowed due to a slowdown in disbursement during the current pandemic. We estimate Loan Growth in 2020 will be 4%.
Net Interest Margin fell
In 1Q20 the Net Interest Margin was 3.13% compared to 3.32% in the 4Q19. The decline occurred due to a decrease in loan yields as Gross NPLs rose to 4.91% while Net NPLs were more than 2%.
CASA worsened
Third-Party Funds grew 2.73% YoY, but decreased -1.6% from the previous quarter. This was partly as CASA fell to 42% due to a decrease in saving accounts which moved to more expensive Time Deposits. BTN has gradually shifted to low-cost funds by reducing the portion of Prime Savings Account as well as Time Deposits held by Institutions that have high-Interest Expenses
Valuation: 8% Upside, Hold.
Based on our DDM Valuation, we have a target price within one year of IDR 830 or trading at 0.4x PBV which gives 8% potential upside, Hold.
