Bank BTPS Syariah (BTPS.IJ Rp1,005; BUY TP Rp1,400) 1Q26 Eanings: In Line; Improving Asset Quality Lowers CoC; Sustaining Positive Loan Growth

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Bank BTPS Syariah (BTPS IJ)

1Q26 Eanings: In Line; Improving Asset Quality Lowers CoC; Sustaining Positive Loan Growth

BTPS posted a net profit of Rp317bn in 1Q26 (+25% qoq, +3% yoy), forming 24% of our and consensus FY26F estimates, i.e., in line.
Asset quality showed improvement, with CoC declining to a 5-year low of 5.2% amid positive loan growth in the last 2 quarters.
Maintain Buy rating with an unchanged TP of Rp1,400 as we keep our forecast and valuation, implying an FV PBV of 1.0x.

Robust earnings on lower CoC offsetting the lower NIM

BTPS posted a net profit of Rp317bn in 1Q26 (+25% qoq, +3% yoy), forming 24% of our and consensus FY26F estimates, i.e., in line. Earnings were supported by a significantly lower CoC, which helped offset the weaker NIM. NIM declined to 21.5% (–152bps qoq, –235bps yoy), mainly due to delayed repayments from the disaster-affected Sumatera portfolio, where ~50% of accounts remain under payment delay, alongside a higher mix of NBFI financing. Despite this, CoF improved to 3.7% (–39bps qoq, –51bps yoy), driven by a stronger CASA ratio of 26.8%, although management flagged limited further upside to CASA franchise.

Improving asset quality drove CoC down

Asset quality showed notable improvement, with CoC declining to a 5-year low of 5.2% (–446bps qoq, –324bps yoy), supported by better-than-expected performance from the restructured portfolio, lower write-offs, and improving underlying trends. Write-offs fell to Rp154bn, marking a record low in the last 5 years, while NPL remained stable qoq at 2.5% and improved yoy. However, the remaining affected disaster portfolio (~Rp100bn) continues to weigh on yield. Given the current economic condition, management highlighted potential seasonality risks post-Lebaran, which may surface in 3Q26.

Positive loan growth supported by group financing

Loan growth remained modest at +3% qoq, driven by group financing, while NBFI financing declined and individual lending, although growing strongly from a low base, still contributes minimally. Opex growth was contained (+2% qoq, +4% yoy), but CIR rose to 52.4% due to margin pressure.

Maintain Buy with a TP of 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: N. Short-term risk on half of the restructured loan to fall into non-performing loan, and potential inflationary risk weigh on asset quality.

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