Bank BTPN Syariah (BTPS.IJ Rp 950; BUY TP Rp 1,200) Robust start in FY25 and a more positive tone regarding asset quality improvement

Stock Code	Last Price	Change	Change %
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Bank BTPN Syariah (BTPS IJ)

Robust start in FY25 and a more positive tone regarding asset quality improvement

BTPS booked a net profit of Rp110bn in Jan25 (-12% mom, +47% yoy), reaching 10% of our FY25F and 9% of consensus, i.e., above.
Despite a weak ultra-micro segment, the improvement in asset quality is driven by an improving business model and is expected to continue.
Maintain Buy rating with an unchanged TP of Rp1,200. Key risk to our call includes changes in asset quality trend.

Robust Jan25 profits on lower provision expenses

BTPS recorded a net profit of Rp110bn in Jan25, down 12% from Dec24’s high base but up a solid 47% yoy, thanks to a halved provision expense. Jan25 NP accounted for 10% of our FY25 estimate and 9% of the consensus, above expectations. While PPOP remained weak (-3% mom, -12% yoy) due to elevated opex and contracting loan growth, BTPS reported a CoC of 9.0% in Jan25, up from 7.5% in Dec24 but significantly lower than 16.0% in Jan24. In Jan25, a positive sign was also shown in net write-offs, which stood at Rp97bn, below last year’s monthly average of Rp137bn.

More optimistic regarding asset quality but remains prudent on growth

Based on our discussion with management, the positive trend during 4Q24 continued with a slight improvement in x-days, employee turnover, on-time payment, and the NPF ratio in Jan25, which they attributed to internal improvements rather than the ultra-micro condition. They also mentioned that the provisions booked in Jan25 were higher than needed for conservative purposes while waiting for further improvement over the next few months.

BTPS shares turnover drops amid lower liquidity

BTPS’ turnover has significantly declined from its pre-COVID peak, with liquidity remaining subdued despite occasional spikes. The downturn began after 2Q20, aligning with the pandemic's impact and a sustained drop in share price. Foreign mutual funds have reduced their holdings from 0.15% in early Jan24 to 0.08% in Jan25, while BTPS’s weight in the JCI has also fallen from 0.13% to 0.07%. However, the stock has recorded Rp18bn in foreign inflows YTD (as of 21 Feb25), contrasting with the Rp579bn outflows in FY24. We expect improvement/ROE in fundamental trigger more fund, liquidity, and re rating.

Maintain Buy with an unchanged TP of Rp1,200

We believe the bank’s business model is recovering and the cheap valuation of 0.7x PBV is unjustified. We maintain our -1SD two-year avg. inverse CoE of 11.8%, reflecting concerns regarding asset growth, arriving at an FV PBV of 0.9x. Risks, in our view, include the deteriorating asset quality of newly disbursed loans.

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