BBTN - Reports profit down to IDR3 tn

BBTN - Reports profit down to IDR3 tn Bank Tabungan Negara (BBTN) recorded a net profit of IDR3.00 tn in 2024, a decrease of 14.1% yoy from IDR3.5 tn the previous year. BTN's interest income throughout 2024 grew by 4.5% yoy to IDR29.55 tn. However, interest expenses surged 21.9% yoy to IDR17.84 tn. Thus, net interest income also fell by 14.1% yoy to IDR11.73 tn. Meanwhile, non-interest income successfully surged 17.6% yoy to IDR4.61 tn. However, operational expenses also surged by 12.1% yoy to IDR10.44 tn. Throughout 2024, BTN successfully recorded credit and financing disbursements amounting to IDR357.97 tn, growing by 7.3% yoy compared to the same period in 2023, which was IDR333.69 tn. BTN's President Director Nixon L.P. Napitupulu said that BTN is optimistic that total assets can exceed IDR500 tn by the end of 2025, supported by positive growth prospects. The acquisition of BTN's assets by the end of 2024 is expected to reach IDR469.61 tn, an increase of 7% compared to 2023, which amounted to IDR438.75 tn. (Source : Cnbc Indonesia). Comment : BBTN's FY24 earnings missed both our and street expectations (85% and 88%, respectively), primarily due to slower-than-guided loan growth, resulting in subdued 4.6% revenue growth. Rising funding costs (softer qoq) pressured PATMI despite a sharp 45.5% yoy provision decline. Worth to note, PATMI grew strong by 59.3% qoq on soaring recovery. Loan growth (7.3% yoy) missed management's (10-11%) and our (9.5%) forecasts. TPF surged 9.1% yoy, exceeding peers, fueled by low-cost CASA growth (9.8% yoy, 9.2% qoq). CoC improved significantly (1.2% to 0.6%), but NPLs rose 20bps to 3.2% (improve qoq). NIM contracted to 2.9% from 3.8% (flat qoq vs 2.9%), mirroring industry trends. Despite this, LDR improved to 93.8% from 95.4%, bolstering resilience amid liquidity challenges. The bank targets 7-8% yoy loan growth and 8-9% yoy deposit growth. CoC is projected at 1.0-1.1%, with NPLs targeted below 3.0%. Maintain BUY GGM-based TP IDR1,530 (0.4x '25F P/B), while the current market price implies a deeply undervalued 0.3x '25F P/B, at its -2SD, even more depressed than during the COVID-19 pandemic.