BBTN - Solid 3Q23 earnings growth; In-line 9M23

KBVS update
Thursday, 30 Nov 2023

BBTN - Solid 3Q23 earnings growth; In-line 9M23
(Maintain BUY; TP: IDR1,770)

-    BBTN’s 9M23 earnings grew flat at 1.7% yoy to IDR2.3 tn, amid mounting cost of funds which translated to 43.9% yoy rise on interest expenses. Yet, on quarterly basis, the bank booked a solid result, whereas PATMI surged 24.5% qoq. In all, 9M23 results arrives in-line with our projection yet below street forecast at a run rate of 72%/70%.

-    Loan and financing growth stood at 10% yoy to IDR318.3 tn, arriving above industry loan growth and within management range expectation of 10-11% yoy. Key performance metrics struggling on yoy, yet recorded much better result on quarterly basis. NIM inched up by 14bps qoq to 3.76% while NPL slightly better from 3.66% to 3.53% and closed to ‘23F BBTN’s guidance of <3.5%.

-    We expect an immediate impact on lower NPL following the execution of BBTN’s bulk asset sales in 4Q23 amounting IDR900 bn with all of the NPL has been fully provisioned and green-light from various stakeholders have been pocketed. BBTN will also become as one of the beneficiaries of latest government VAT incentives for houses tag price between IDR2-5 bn.

-    BBTN plans to acquire one of major sharia bank in Indonesia and has reportedly received the green light from Ministry of SOE and hence we expect this corporate action will be turned into reality soon. The bank recorded a continuing improvement on its sharia business unit, with earnings frog leaped by 70.4% yoy or nearly doubled vs 1Q23 growth of 39% yoy and total asset growth of 17.3% yoy to IDR48.4 tn.

-    Maintain BUY with GGM TP IDR1,770. Our target price is based on Gordon Growth Model with fair 2023F P/B of 0.6x. The bank is trading at 0.3x ’24F P/B, or slightly above its -2SD of hist mean of 0.3x.

Pease click link below for full report: 
https://bit.ly/BBTN_CompanyUpdate_301123_KBVS

Regards,
Akhmad Nurcahyadi - KBVS Research team