BBTN - Upbeat FY23 earnings

KBVS update
Monday, 12 February 2024

BBTN - Upbeat FY23 earnings
(Maintain BUY; TP: IDR1,770)

•    FY23 earnings growth was reported at a strong figure of 15.0% yoy to IDR3.5tn, beating the street forecast and our ‘23F earnings for BBTN (108.2%/106.5%), as well as 500 basis points higher than BBTN’s net profit upper range guidance in ‘23F of 8–10% yoy.

•    Total loan and financing growth at 11.9% yoy was above industry growth of 10.4% yoy, 90 bps surpassing BBTN loan growth range guidance of 10–11% yoy and in line with our ‘23F for BBTN at IDR328,041 (101.7%). Total TPF grew by 8.7% yoy, or more than doubled vs. industry growth at 3.8% yoy.

•    In line with our expectations (see our previous report in Nov23), the bank has closed the bulk of asset sales divestments amounting to IDR 861 billion and thus has had a positive impact on BBTN. The bank is expecting another round of asset sales with a potential total amount of IDR1 trillion and is expected to be completed by the end of 1H24. We expect the UUS (BBTN’s sharia business unit) spin-off will turn into reality soon, * as the synergy will have a *positive impact on BBTN and will create a fairer landscape of competition in the Syariah banking industry.

•    Maintain BUY, DDM TP of IDR1,770. Our target price is based on GGM with a fair * ‘24F P/B of 0.6x. * The bank is currently traded at 0.4x’24F P/B, or slightly above its -2SD of the histogram mean of 0.3x.

Regards,
Akhmad Nurcahyadi - KBVS Research team