BBTN
Contact our analyst Lingga
20% Upside. BUY.
3rd November 2020
Price Rp1390
Target price Rp1670
Loans decreased slightly
Loans decreased by 0.32%, to 22.914Bn in the 3Q20 compared to 22.914Bn in 3Q19. This decrease was contributed by Other Housing Loans down by 10.15% YoY, Construction Loans -5.56% YoY, Non-Subsidized Mortgages -1.96% YoY, while Subsidized Mortgages grew by 5.84%. BBTN loan growth is low due to weak demand.
Restructuring has peaked
As of September 30, 2020, BBTN has restructured IDR 52.8 trillion or 21% of the total loans, this consists of both Non-Subsidized Mortgages, and Subsidized Mortgages. With restructuring now slowing down, it is estimated that 3-7% of the Subsidized Mortgages will now become Non-Subsidized Mortgages. Looking back, we can see that the peak of loan restructuring was in the 2Q20, in May.
NIM will increase
In 3Q20, the net interest margin (NIM) decreased to 3.13% compared to 3.41% in 3Q19. However, there is the possibility of a decrease in Cost of Funds of 20 bps. Renegotiation of the IDR 2 trillion loan interest rate is underway and opens room for greater CoF efficiency in the 4Q20. BBTN has also received another IDR 5 trillion from the Economic Recovery Program Phase II which has a lower interest rate of 2.8% and which can help to reduce reliance on Time Deposits. It is estimated that the Net Interest Margin will increase to around 3.5% in FY2020.
Valuation: 20% Upside, Buy.
Based on our DDM Valuation, we have a target price within one year of IDR 1670 or trading at 0.7x PBV which gives 20% potential upside, Buy.
Loans decreased by 0.32%, to 22.914Bn in the 3Q20 compared to 22.914Bn in 3Q19. This decrease was contributed by Other Housing Loans down by 10.15% YoY, Construction Loans -5.56% YoY, Non-Subsidized Mortgages -1.96% YoY, while Subsidized Mortgages grew by 5.84%. BBTN loan growth is low due to weak demand.
Restructuring has peaked
As of September 30, 2020, BBTN has restructured IDR 52.8 trillion or 21% of the total loans, this consists of both Non-Subsidized Mortgages, and Subsidized Mortgages. With restructuring now slowing down, it is estimated that 3-7% of the Subsidized Mortgages will now become Non-Subsidized Mortgages. Looking back, we can see that the peak of loan restructuring was in the 2Q20, in May.
NIM will increase
In 3Q20, the net interest margin (NIM) decreased to 3.13% compared to 3.41% in 3Q19. However, there is the possibility of a decrease in Cost of Funds of 20 bps. Renegotiation of the IDR 2 trillion loan interest rate is underway and opens room for greater CoF efficiency in the 4Q20. BBTN has also received another IDR 5 trillion from the Economic Recovery Program Phase II which has a lower interest rate of 2.8% and which can help to reduce reliance on Time Deposits. It is estimated that the Net Interest Margin will increase to around 3.5% in FY2020.
Valuation: 20% Upside, Buy.
Based on our DDM Valuation, we have a target price within one year of IDR 1670 or trading at 0.7x PBV which gives 20% potential upside, Buy.
