Bank BTPN Syariah (BTPS IJ)

Emerging from the Final Leg of Credit Cycle Pain

 

  • BTPS booked a net profit of Rp422bn in 4M25 (+17% yoy), driven by a lower CoC of 8.5% (-483bps yoy).
  • Loan contraction (flat mom) showed signs of bottoming out, indicating that new disbursements are catching up with maturing loans.
  • Maintain Buy rating with a higher TP of Rp1,500. Key risk to our call is potential shift in asset quality.

 

4M25 earnings bolstered by reduced CoC

BTPS posted a net profit of Rp422bn in 4M25 (+17% yoy), slightly above our FY25F (37%) and consensus (35%). The robust bottom line was primarily supported by a significantly lower CoC of 8.5% (-483bps yoy), which helped offset a 13% yoy drop in PPOP, driven by a 5% yoy decline in loan balance and a 71bps fall in NIM. Opex rose 4% yoy, pushing the CIR up to 48% (+444bps yoy), due to continued focus on collection efforts.

 

Lower NIM, but easing loan contraction

In Apr25 alone, BTPS posted a net profit of Rp112bn (-2% mom, +12% yoy). CoC increased slightly to 8.4% from Mar25’s 7.8%, yet remained well below Apr24’s 11.7%. NIM fell to 24.5%, down 95bps mom and 113bps yoy, due to a lower EA yield outweighing the benefit of a lower CoF. Opex declined 6% mom from a high Mar25 base but remained 4% higher yoy. Net write-offs reached Rp75bn, up from Mar25’s low base but still below the FY24 average of Rp137bn. Furthermore, loan contraction showed signs of bottoming out, with a flattish mom loan book despite still being down 5% yoy, indicating that new disbursements are catching up with maturing loans.

 

CoC outperforms our expectation, but we anticipate a sequential downtrend

In 4M25, BTPS’s CoC stood at 8.5% (vs. 13.3% in 4M24), better than our prev. FY25 estimate of 9.7%. We slightly lower our CoC est. to 9.2% to reflect the lower CoC in 4M25, but still expect a sequentially higher CoC ahead, as challenging macro conditions are likely to persist and may impact BTPS’s CoC going forward.

 

Maintain Buy rating with a higher TP of Rp1,500

While BTPS has rallied by 50% since our upgrade, we maintain our Buy rating as the 4M25 numbers reaffirmed our view of bottoming out asset quality issue. We raise our TP to Rp1,500 (from Rp1,300 prev.), reflecting a higher FY25F ROE of 12.3% (vs. prev. 11.7%). This valuation is based on a 2-year avg. CoE of 11.1% (prev. -1SD 2-year avg. of 11.8%). The key risk is a reverse trend in asset quality.

 

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