BBTN – UUS spin off is targeted to be completed next year, capital of IDR6 tn is prepared

BBTN – UUS spin off is targeted to be completed next year, capital of IDR6 tn is prepared Bank Tabungan Negara (BBTN) syariah's business unit (UUS) targeted to take place next year. The bank is preparing trillions in capital to support the corporate action. BBTN President Director Nixon L.P. Napitupulu detailed that the UUS BTN Syariah spin-off would be executed in the first semester of 2025. The separation will be included in second place on BTN's 2025 corporate action list and is planned to be tentatively completed in the first half of 2025. The bank had prepared a capital of IDR1.5–6 tn. This was disbursed so that post the spin off, BTN Syariah remained in the Commercial Bank Business Activities (BUKU) II category. BBTN Syariah's net profit shot up 56.1% on an annual basis (yoy) to IDR164 bn in the first quarter of 2024. Financing also grew 20.0% yoy to IDR39 bn for the first three months of 2024. These two achievements were also accompanied by an improvement in the quality of financing to 2.8% in the same period. Nixon believes that BTN Syariah can produce good performance because there is still a lack of large Islamic banking players in Indonesia. (Source : detikfinance.com) Comment : After the cancellation of the acquisition of Bank Muamalat, we expect the corporate action will not be postponed again. We believe that post-spin-off, the UUS will continue to record a solid earnings performance due to the promising demand of syariah banking sector. We also expect that the untapped massive potential market growth will benefit BTN syariah in the following year. The industry is likely to experience more fairly competition as currently it is only commanded by one huge Syariah bank, in our view. Maintain our BUY call for BBTN with GGM TP of IDR1,770/share, pegged at ‘24F P/B of 0.6x.