Bank BTPN Syariah (BTPS IJ)
2Q25 Earnings: Solid Profit Growth on Robust Asset Quality; Downgrade to Hold on Valuation
- BTPS booked a net profit of Rp644bn in 1H25 (+17% yoy), outperforming our/cons ests. at 54/53%, driven by a lower CoC at 8.1%.
- Mgmt remains cautious on loan growth, monitoring macro conditions, and expects NIM to stay stable in the coming quarters.
- We downgrade our rating to Hold with a TP of Rp1,500. Key risk to our call is potential shift in asset quality.
1H25 Results: Resilience Driven by Lower CoC
BTPS posted a solid 1H25 net profit of Rp644bn (+17% yoy), outperforming both our (54%) and consensus (53%) FY25F estimates. This strong bottom line was underpinned by a 42% yoy drop in provisions, which offset a 13% yoy decline in PPOP. The PPOP contraction stemmed from a lower NIM of 23.9%, due to weaker EA yield, and a 5% yoy rise in opex. Despite margin compression, the bank managed to deliver earnings growth thanks to improved asset quality. CoC dropped significantly to 8.1% (vs. 13.1% in 1H24), supporting the overall performance.
2Q25 Performance: Margin Rebound and Asset Quality Gains
BTPS recorded Rp333bn in 2Q25 NP (+7% qoq, +16% yoy), mainly driven by further provision cuts. NIM rose slightly qoq to 24.0%, supported by higher financing yields and a stable CoF, though still down 75bps yoy. CIR fell 43bps qoq but rose 421bps yoy on the back of lower NII and other operating income. CoC improved to 7.7%, backed by better NPL and LaR ratios and stronger coverage. Loans and deposits declined slightly qoq and yoy, reflecting a deliberate focus on quality amid macro uncertainties.
Outlook: Focus on Asset Quality Remains
BTPS remains cautious on loan expansion, as seen in the 1% qoq contraction, and may maintain this stance if conditions remain weak. The bank expects further CoC improvement in 2H25, helped by favorable vintage trends. NIM is expected to stay broadly stable, anchored by current yield and funding dynamics. Write-offs are on a downward trajectory, with the Rp209bn in 2Q expected to decline further in 2H25. Overall, BTPS is positioned defensively, with growth readiness contingent on improved market visibility.
Downgrade rating to Hold with a TP of Rp1,500
We maintain FY25-27F estimates as we expect CoC to normalize in the coming quarters, and keep our TP unchanged at Rp1,500, reflecting a FY25F ROE of 12.3%. We downgraded our rating to Hold as we see the stock has reached its fair valuation. This valuation is based on a 2-year avg. CoE of 11.1%. The key risk to our view is resilient asset quality.
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