FROM EQUITY RESEARCH DESK

IDEA OF THE DAY

RESEARCH COMMENTARY

BBTN (Buy, TP: Rp1,500) - 1Q26 Results: Above

1Q26 Insights:

·         Solid start to FY26 with 23% NP growth: BBTN posted 1Q26 net profit of Rp1.1tr (-8% qoq, +23% yoy), accounting for 31% of our FY26F and 30% of consensus, above.

·         NII softened qoq as NIM normalised from a high base: NIM came in at 3.6% (+8bps yoy, but down 130bps qoq from 4Q25’s elevated base). The qoq decline mainly reflected lower EA yield after the strong 4Q25 base, although management reiterated plans to push more high-yield loans beyond mortgages to support yields going forward.

·         EA yield declined but CoF continued to improve on better deposit mix: EA yield declined to 6.7% (-170bps qoq, -89bps yoy), while CoF improved further to 3.1% (-31bps qoq, -101bps yoy). Management attributed this to tighter CoF monitoring, repricing down expensive deposits, limiting special-rate approvals, and continuing to shift from high-cost to low-cost CASA.

·         CASA improved sequentially: CASA ratio rose to 50.2% (+150bps qoq), although still down 90bps yoy. Management noted low-cost CASA had increased by around Rp20tr over the past year, supported by stronger digital transaction activity, while high-cost CASA was deliberately reduced.

·         Provisioning fell sharply, supporting earnings resilience: Provision expenses fell to Rp903bn (-47% qoq, -8% yoy), bringing CoC down to 0.9% (-83bps, -18bps yoy). This was supported by better booking quality and stronger collections, helped by underwriting centralisation, collection-model changes, and greater use of analytics and geotagging.

·         Asset quality remained stable: NPL ratio was flat qoq at 3.1% and improved 19bps yoy, while NPL coverage rose to 124.0% (+10bps qoq, +1,940bps yoy).

·         Loan growth remained solid: Loans were broadly flat qoq at Rp400.6tr (+10% yoy), while deposits stood at Rp422.6tr (-3% qoq, +10% yoy), bringing LDR to 94.8%. Management stated that BBTN is being more selective in non-subsidised mortgages and is shifting from developer-led growth toward a direct-to-consumer approach via payroll partnerships and institutional ecosystems to create demand.

FY26 Guidance:

·         Loan growth: 8-10% yoy (10.3% yoy)

·         Deposit Growth: 7-9% (9.9% yoy)

·         NPL: < 3.0% (1Q26: 3.1%)

·         CoC: 1.0-1.2% (1Q26: 0.9%)

·         NPL Coverage: 125-130% (1Q26: 124%)

Summary:

·         In our view, BBTN's 1Q26 results were solid, with earnings supported by lower CoC and continued improvement in CoF, despite margin normalisation from the strong 4Q25 base. BBTN’s earnings are increasingly being supported by structural improvements in funding, underwriting, collections, and digital transaction engines.

MARKET NEWS