Bank Tabungan Negara (BBTN IJ)
3Q25 Earnings Miss Amid Higher Opex and Credit Costs; Upgrade to Buy on Valuation
- BBTN booked Rp2.3tr (+11% yoy) net profit in 9M25, below at 68%/69% of our/cons FY25F as CoC tripled offsetting the 100bps higher NIM.
- BBTN posted a weak 3Q25 result, with a net profit of Rp596bn (-26% qoq, +3% yoy), as CoC doubled yoy and quarterly opex hit record high.
- We maintain TP of Rp1,400 and upgrade rating to Buy, as the share price has dropped 7.3% since our latest rating downgrade.
9M25: Earnings boosted by NIM expansion but hit by high CoC
For 9M25, BBTN booked Rp2.3tr net profit, up 11% yoy but still below expectation at 68%/69% of our/cons FY25F. PPOP surged 83% yoy on accounting-related NIM expansion (+101bps yoy to 3.8%), while CoC tripled to 1.6%. NPL ratio rose to 3.4%, led by non-subsidized mortgages in Eastern Jakarta, though wholesale loan quality improved. Loan grew by 7% yoy, driven by corporate (+27%) and subsidized housing (+8%) segments, while deposits grew 16% yoy, supported by SAL placement. Corporate disbursement was strong at Rp18tr (+135% yoy) with near-zero NPL contribution.
3Q25: Weak quarter as higher costs offset robust yield
BBTN posted a weak 3Q25 result, with a net profit of Rp596bn (-26% qoq, +3% yoy), as strong asset yields were offset by higher CoC. NIM normalized to 3.0% from the one-off 2Q25 high, while funding cost remained elevated at 4.1% despite a modest improvement. Operating expenses rose 13% qoq and 23% yoy to Rp3.0tr, driven by higher G&A, rent, and consulting fees. CoC eased to 0.9% from the abnormally high 2Q25 level of 2.9%, as the one-off accounting impact subsided.
Outlook: NIM recovery expected but asset quality risks persist
Management expects NIM to improve in FY26F, supported by high-yield KPP loans and declining CoF. Loan growth is guided at 10–11% in FY26F, excluding ~Rp113tr KPP additions. Credit cost is projected to moderate to 1.0–1.1% in FY26F from 1.6–1.7% in FY25F. However, asset quality risks remain, particularly in non-subsidized mortgages and rapid corporate expansion. We revised our FY25/26 net profit assumptions by -7.1%/3.3% reflecting our higher NIM assumptions (+27bps/+24bps) and higher CoC (+36bps/+12bps).
Upgrade rating to Buy with an unchanged TP of Rp1,400
We upgraded our rating to Buy as the share price has declined 7.3% since our last downgrade. We maintain our TP at Rp1,400 based on GGM valuation, with 14.4% CoE (5-year mean) from 15.5% prev. and 9.3% FY25F ROE from 10.0% prev., implying an FV PBV of 0.6x. Key risks to our call are deterioration asset quality in wholesale segment and stagnated CoF.
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