Bank BTPN Syariah (BTPS.IJ Rp 1,125; HOLD TP Rp 1,200) 9M24 in line with ours/below cons., as persistently high CoC dragged down 3Q24 earnings

Stock Code	Last Price	Change	Change %
BREN	6.600	400	6,45%
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INDF	8.225	125	1,54%
INTP	5.325	125	2,40%

Bank BTPN Syariah (BTPS IJ)

9M24 in line with ours/below cons., as persistently high CoC dragged down 3Q24 earnings

BTPS booked a net profit of Rp218bn in 3Q24 (-24% qoq, -13% yoy) driven by higher qoq CoC, in line with ours but below consensus est.
Following declines in the past two quarters, CoC rose to 14.7% in 3Q24 as the bank continues to focus on asset quality.
Maintain Hold rating with a lower TP of Rp1,200 as we tweaked FY25F NP by 3%, resulting in a lower RoE and FV PBV of 0.9x (from 1.0x prev.)

Contracted 3Q24 NP, in line with ours but below consensus

In 3Q24, BTPS booked a net profit of Rp218bn (-24% qoq, -13% yoy), driven by lower NIM and persistently high provision expenses. This brings 9M24 NP to Rp771bn (-22% yoy), in line with our FY24F (73%) but below consensus (69%). NIM dropped to 24.2% (-47bps qoq, -274bps yoy) in 3Q24 as LDR continued to trend down, aligned with the bank’s focus on asset quality. Loans continued to decline to Rp10.4tr (-1% qoq, -14% yoy), while deposits stood at Rp11.8tr (+1% qoq, -7% yoy).

CoC rose again after trending down in the 1H24

CoC rose to 14.7% in 3Q24 (from 12.5% in 2Q24 and 13.6% in 1Q24) due to higher provision expenses (+14% qoq, -25% yoy) and reduced loan balances (-1% qoq, -14% yoy). NPL rose to 3.7% (2Q24/3Q23: 3.1%/3.0%) as loan write-offs decreased (from approximately Rp500bn in 1Q24 and 2Q24 to Rp350bn in 3Q24), as the bank tightened its write-off policy. This decreased the NPL coverage from 287% in 2Q24 to 257% in 3Q24. However, the LaR ratio improved to 8.1% in 3Q24 from 9.2% in 2Q24 and 13.0% in 3Q23. Repayment remains at around 93% in Sep24 (94% in 2Q24), while the trend in ‘x-days’ remains stable at 1.1%, similar to in 2Q24.

Maintain FY24F unchanged, slightly tweaked FY25F

We slightly adjusted our FY25F loan growth down and slightly increased our opex assumptions, resulting in lower NIM and higher CIR for FY25F. Hence, our FY25F net profit est. decreased by 3%, resulting in a lower FY25F ROE of 11.1% from 11.5% previously. Despite the management guidance for improving CoC in 4Q24, we see risk of downgrades in consensus FY24F numbers.

Maintain Hold with a TP of Rp1,200

Despite its low positioning by both local and foreign funds, we maintain our Hold rating on BTPS due to persistent issue with asset quality. We slightly lowered our TP to Rp1,200 (from Rp1,300 prev), which was derived using the inverse CoE (-1SD of its 2-year average) in the GGM model, with an 11.6% CoE, 11.1% FY25F ROE, and 3% LTG, resulting in a fair value PBV of 0.9x to its FY25F BV/share. Upside risks include faster improved asset quality and lower-than-expected CoC, while downside risks involve further asset quality deterioration.

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