Bank Tabungan Negara (BBTN.IJ Rp940; BUY TP Rp 1,100) FY24 Results: missing estimates on lower NIM and persistent higher operating costs

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Bank Tabungan Negara (BBTN IJ)

FY24 Results: missing estimates on lower NIM and persistent higher operating costs

BBTN reported net profit of Rp3.0tr (-14% yoy) in FY24, missing our and consensus’ estimate on lower NIM and higher CIR.
BBTN’s 4Q24 net profit of Rp92bn (+59% yoy, -22% qoq) was boosted by a strong recovery income, but opex remained elevated.
We lowered our FY25-26F est. by 12-8% on higher CoC projection. Maintain Buy rating for BBTN with a lower TP of Rp1,100.

Missed FY24 NP estimate due to lower NIM and higher opex

BBTN reported a net profit of Rp3.0tr (-14% yoy) in FY24, missing our estimate (93% of FY24F) and consensus (95%). The FY24 performance was pressured by a lower NIM at 2.7% (-79bps yoy) and higher opex (+12% yoy), driving the CIR up to 64% (FY23: 52%) despite higher non-interest income. Recovery income was a bright spot, growing 40% yoy to Rp4.6tr (+18% yoy). CoC remained low at 0.6% (FY23: 1.2%), but NPL coverage weakened to 115%, with rising NPLs from mortgages, as the NPL ratio increased to 3.2% (FY23: 3.0%).

4Q24 net profit boosted by strong recover income

BBTN posted a 4Q24 net profit of Rp925bn (+59% qoq, -22% yoy), driven by strong recovery income, which surged 10x qoq to Rp795bn (+80% yoy), while opex remained high (+12% qoq, +4% yoy). Loan growth was modest at +1% qoq (+7% yoy) to Rp357tr, while deposit growth of +3% qoq (+9% yoy) lowered the LDR to 94% (3Q24: 96%). Funding costs rose in Dec24, with CoD increasing to 4.1% (Nov24: 3.9%) due to higher TD costs. A bulk asset sale of Rp1.3tr in Tranche 2 reduced the NPL ratio by 28bps, though without it, the NPL ratio would have been 3.4%.

FY25 guidance: moderate loan growth with improvement in NIM

BBTN is targeting loan growth of 7-8% (FY24: 7.3%) and expects NIM to improve to 3.2-3.4% (FY24: 2.7%). BBTN expects CoC to rise to 1.0-1.1% (FY24: 0.6%), expects NPL to fall below 3.0% (FY24: 3.2%), and CIR to improve to 52-54% (FY24: 57%). The bank plans another bulk asset sale of Rp1.1tr in FY25 and expects the Sharia bank spin-off to be fully operational by Oct25. Management also awaits clarity on the updated FLPP scheme. We lowered our FY25-26F est. by 12-8% to reflect higher CoC projections.

Maintain Buy with a lower TP of Rp1,100

We reiterate our Buy rating while lowering the TP to Rp1,100, reflecting our revised forecasts, including a change in CoC projection. This valuation, based on GGM, uses a 15.6% CoE (from 15.5% avg. prev.) and an 8.7% FY25F ROE (from 9.7% prev.), implying an FV PBV of 0.5x. Key risks to our call include BBTN’s ability to increase its FLPP lending rate, mitigate CoF pressures to support NIM, and maintain loan quality amid higher loan growth.

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