Bank BTPS Syariah (BTPS IJ)
2Q26 Earnings: Inline; Supported by Loan Growth Expansion and Solid Asset Quality
- BTPS booked 2Q26 net profit of Rp336bn (+5% qoq, +1% yoy), bringing its 1H26 NP to Rp655bn (+2%yoy), inline vs. ours and cons
- Management raised FY26F earnings expectations to double-digit growth post 1H26 achievements.
- We keep our FY26-28 forecasts and valuation unchanged resulting in an unchanged TP of Rp1,400, implying fair value PBV of 1.0x.
Robust earnings supported by both top line and provisions
BTPS reported a net profit of Rp336bn in 2Q26 (+5% qoq, +1% yoy), bringing its 1H26 NP to Rp655bn (+2% yoy), relatively inline at 48% of our FY26F estimate and 49% of consensus. The 2Q26 earnings was supported by a sequential recovery in NII and lower CoC qoq. However, operating expenses remained elevated, increasing 3% qoq and 7% yoy, resulting in a CIR of 52.0%, broadly stable qoq but 406bps higher yoy.
Improving asset quality as disaster-related portfolio stabilized
Asset quality remained solid, with the NPL ratio stable at 2.3%, while the LaR ratio improved to 5.0% (-118bps qoq; -22bps yoy). In addition, on-time payment remained healthy at 95.2%, supporting the continued decline in CoC during the quarter. Management also noted that the disaster-related restructuring portfolio is nearing resolution, with total flagged restructured loans declining to Rp171bn (vs. Rp282bn in Mar-26), of which Rp155bn is related to the Sumatra disaster, while around two-thirds of affected borrowers have resumed normal repayments.
More optimism for 2H26
Looking ahead, management remains constructive on earnings despite expecting only marginal further improvement in CoC as it continues to maintain prudent provisioning. The impact of the recent BI rate hike is expected to be broadly neutral, as higher funding costs should be largely offset by increased treasury income from the repricing of Rp11.9tr of short-tenor liquid assets. In addition, management raised its FY26 net profit growth guidance from high-single-digit to double-digit, reflecting stronger confidence following the 1H26 achievements, while newer initiatives such as Individual Financing, Wealth Management, and NBFI financing are expected to provide small contribution in the near term.
Maintain BUY with an unchanged TP pf Rp1,400
We keep our forecast and valuation unchanged, hence maintain our TP at Rp1,400 and Buy rating for BTPS. Our TP is based on 2-year avg. CoE of 12.9% and FY26F RoE of 13.2%, implying an FV PBV of 1.0x Tactical (3M) view: OW. We upgrade from N previously as we see clearer asset quality direction in the disaster-related loan portfolio.
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