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P H
Apr 18,2017 13:13:51

Yesterday afternoon BTN ($BBTN) held its 1Q17 result. Our GGM-derived TP are 1.27xP/BV multiple for 2017F.

Key highlights:


1Q17 performance:

  • Net interest income represents 21.3% of our forecast as BTN still use cashbasis (instead of accrual-basis method for interest income) thus has not received the payment from Government on interest rate subsidy for subsidised mortgage of IDR80bn.
     
  • Reported net interest margin (NIM) compressed to 4.3% due to lower asset yield of 9.3% (1Q16: 10.4%) despite 80bps reduction in blended CoF from 1Q16’s figure of 6%.
     
  • Cost to income ratio (CIR) uptick to 61.9% from 59.3% due to lower YoY operating income growth.
     
  • Gross non-performing loans (NPL) ratio stood at 3.3% (Mar-16: 3.6%).
     
  • Credit cost remain manageable at 33bps with 11.7% special Mention loan (Mar-16: 13.8%).
     
  • Net profit of IDR594bn accounted for 18.9% of our forecast, inline with lastyear’s cyclicality of 1Q contribution at 18.8% of full year’s net profit.
     

What to expect:

  • BTN’s management emphasised that interest income payment from government would all be received by end of year given that such amount already allocated in government’s state budget.
     
  • Subsidised mortgage scheme would remain unchanged with 90-10 funding split between government and bank. This year government allocate total c.IDR15trn for subsidised mortgage consists of funding scheme (90-10), interest rate subsidy (12month SBI), and subsidy on down payment for eligible potential borrowers.
     
  • We expect moderate loan growth figure at 17.1%. We still expect strong growth coming from subsidised mortgage segment as BTN continue its commitment to support government’s one million houses program.
     
  • Asset quality would improve in our view to 2.5% by end of year with 48bps credit cost (2016: 2.8% gross NPL and 47bps credit cost).
     
  • Asset yield would fall to 9.5% in FY17 (FY16: 9.7%) due to higher portion of subsidised mortgage in loan portfolio. We assume 21% YoY growth in subsidised mortgage resulting to 35.7% contribution to total loan book (end- 16: 34.6% of loan book).
     
  • NIM would be flat at 4.6% for FY17 (FY16: 4.6%) in our forecast as we expect lower both on asset yield and blended CoF of 5% (FY16: 5.2%).
     
  • Funding should remain manageable aside from customer deposits. For wholesale funding, BTN would continue to issue bonds and NCD as a strategy to diversify the maturity profile of its funding structure given that most of its loans book dominated by long-term tenure (more than five years maturity profile). (Eka Savitri)
     
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P H
Feb 22,2017 11:11:40

Bank Tabungan Negara - A Good Year Indeed

Yesterday evening BTN had analyst meeting presentation on its FY16 performance. BTN currently trades at 0.97x 2017 P/BV multiple (-0.7SD of its historical mean). Maintain BTN ($BBTN) as one of our top pick in the sector.

Key highlights:

FY16 performance:

  • Net interest income represents 103%/105% of our/consensus forecasts.
     
  • Net interest margin (NIM) slightly expanded to 5% due to lower blended CoF by 6bps to 5.7% in FY16 (FY15: 5.8%).
     
  • Cost to income ratio (CIR) slightly elevated to 57.4% from 56.7% due to 22% YoY opex growth.
     
  • Credit cost improved significantly to 46.7bps indicating lower pressure in asset quality.
     
  • Restructured loan of IDR4.9trn accounted for 2.9% of total loans, still relatively manageable compared to other banks.
     
  • Lower corporate tax rate due to BTN already reach 40% free float (previously only c.39%).
     
  • Net profit of IDR2.6trn accounted for 109%/113% of our/consensus forecast.
     

4Q16 performance:

  • NIM expanded to 5.3% compared to previous quarter due to high growth in current account as BTN received substantial amount (c.IDR7.7trn in 4Q16) from government institutions’ fund as well as IDR546bn payment of 2015 FLPP’s claim from government.
     
  • Credit cost remain managable at 57.3bps as BTN’s loan mostly secured by the property themselves.
     
  • With stable credit cost and lower corporate tax rate, net profit grew by 71.2% QoQ.
     

What we miss:

  • Lower credit cost at 46.7bps as we expect higher gross NPLs ratio at 3.1% (vs 2.8%) and 63bps credit cost.
     

What to expect:

  • Loan growth would reach 19% this year as we expect that BTN would continue to channel subsidised mortgage through interest rate subsidy first while FLPP scheme is still under discussion with Government. Yet we expect the FLPP scheme would not changed significantly given that Government would still need to reduce the housing backlog in Indonesia.
     
  • We conservatively expect lower loan yield of 9.9% in FY17 (FY16:11%) on the back of higher subsidised mortgage portion into BTN’s loan book. (Eka Savitri)
     
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P H
Dec 14,2016 15:16:55

Masalah di Sektor Properti Bukan Hanya Soal Bunga Bank
https://finance.detik.com/properti/d-3370790/masalah-di-sektor-properti-bukan-hanya-soal-bunga-bank

Jakarta - Sektor properti masih berada dalam situasi perlambatan, mengikuti perekonomian secara nasional. Berbagai kebijakan sudah diluncurkan, baik dari pemerintah, Bank Indonesia (BI) dan otoritas terkait lainnya, namun belum membuahkan hasil.

Direktur Utama PT Bank Tabungan Negara ($BBTN) Maryono menilai, solusi dari permasalahan ini bukan hanya dari sisi bunga bank untuk mendorong peningkatan permintaan masyarakat. Akan tetapi juga soal lahan, perizinan dan lainnya.

"Permasalahan dari perumahan ini kita nggak bisa bergantung pada satu instansi atau kewenangan, karena perumahan bergantung ke banyak instansi. Kalau sering disebutkan perbankan untuk pembiayaan," terang Maryono dalam acara diskusi Property Outlook di Hotel Pullman, Jakarta, Rabu (14/12/2016).

"Kita juga ada persoalan izin di pemerintah daerah, kemudian penyediaan tanah yang masih menjadi masalah, kebutuhan akan landbank, ini sangat menjadi dominan dibandingkan masalah lain," paparnya.

Sektor properti berkaitan erat dengan kebutuhan rumah layak huni dari masyarakat masih sangat tinggi di Indonesia. Baik pemerintah, maupun instansi lainnya harus menjalankan program secara bersamaan agar mampu mencakup kebutuhan tersebut.

"Pak Jokowi betul-betul memberikan jalan keluar untuk memperbaiki kebutuhan rumah ini, lewat kebijakan nasional," ujar Maryono.

Total backlog sekarang adalah 13,5 juta. Setengah dari jumlah tersebut adalah untuk masyarakat kelas menengah ke bawah. Untuk itu program satu juta rumah dari pemerintah harus didukung agar menutupi kebutuhan masyarakat.

"Dari 5-7 juta yang perlu rumah untuk segmen menengah ke bawah. Ini lah kebutuhan. Minimal kita harus kurangi backlog," tandasnya. (mkl/dna)

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P H
Nov 08,2016 18:32:53

Banking: 9M16 Results - On the Road to Recovery?

- Banks' average profit growth improved to 4% y-y in 9M16 from +1% y-y in 6M16, but loan and deposit growth remained weak at +9% y-y and +6% y-y respectively. NIM improved to 6.7% while NPL reached 3.0% with signs of peak. Trading at 1.6x P/BV 2017, we keep our Neutral sector call with $BBRI, $BBTN and $BNGA as top picks.

- Average net profit growth of 4% y-y in 9M16. The 12 banks under our result universe show improving profit growth from the previous quarter given the high losses incurred by $BNLI in 1Q and 2Q16. The results were in line with expectations, accounting 73% of the consensus’ full year targets. $BMRI, $BBTN, and $BJBR posted below expectations, while $PNBN, $BJTM and $BNGA above. $BNLI continued to record losses in 9M16 on its rising NPL level. At the PPOP level, average growth was a decent 18% y-y as banks had a better management on operating costs.

- Loan growth slowed down to 9% y-y. The industry indicates +6.4% y-y loan growth in September while some of the banks in our universe managed to record much higher loan growth; BBNI (+21% y-y) is on corporate/infrastructure loans, BBRI (+16% y-y) on corporate and micro loans, while $BBTN (+17% y-y) on housing loans. Over the past one year, more loans have been channeled into corporate (especially state companies) and micro segments, at the expense of SME commercial and consumer loan segments. Of the 12 banks, three ($BDMN, $BNGA and $BNLI) still posted negative y-y growth.

- Deposit growth also weakened to 6% y-y. Total deposit still grew at +8% y-y in June, while the 5% economic growth is not enough to generate better deposit growth. Five banks ($BDMN, $BJBR, $BJTM, $BNGA and $BNLI) still recorded negative y-y deposit growth with two of them ($BDMN and $BNLI) continued to see negative ytd growth. CASA deposits continued to gain more than time deposits, which see declining rates.

- NIM still improved to 6.7% in 9M16. In contrast to our earlier expectation, banks recorded better margin in 3Q16 as they had not lower the lending rates as much as deposits rates. While this is true in the declining rate environment, banks are also pending further reduction in view of rising need for provisioning. Average NIM reached 6.9% in 3Q16 from 6.7% in 2Q16, but this level is expected to decline in the coming quarter on pressure to reach single digit lending rates.

- NPL reaching the new peak of 3.0%. Additional problem loans are growing at a slower pace, with some banks claiming to have seen peak NPL in August. Banks like $BMRI and $BBCA still expect peak NPL in 4Q16 and continued charging high provisioning.

- Classified loans at 11.3%. Average classified loans (NPL, SML, and performing restructured loans) were at 11.2% in June and 10.9% in March 2016. This shows less pressure on asset quality while coverage/classified loans ratio improved to average 32% from 28% a year ago.

- Operating costs were well managed. The average cost/income ratio went down to 45% in 3Q16 from 48% in 2016 and 47% in 3Q15. Of the banks, $PNBN, $BNGA, and $BDMN showed the best cost/income ratio improvement.

- Maintain Neutral. We will wait for stronger support for improving NPL and hence keep our Neutral call for the stock, which trades at 1.6x P/BV 2017. Our top picks are $BBRI, $BBTN and $BNGA.

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P H
Jul 27,2016 08:50:23
EARNINGS CALENDAR (Half Year 2016 - Estimated)

JULY 2016

Jul 25, 2016 :
$BBTN (Bank Tabungan Negara (Persero) Tbk PT)

Jul 26, 2016
$BDMN (Bank Danamon Indonesia Tbk PT)
$BMRI (Persero) Tbk PT Earnings Release - 4:00PM GMT+7

Jul 27, 2016
$AALI (Astra Agro Lestari Tbk PT)
$HMSP (Hanjaya Mandala Sampoerna Tbk PT)
$LPPF (Matahari Department Store Tbk PT)
$MPPA (Matahari Putra Prima Tbk PT)
$PTBA (Bukit Asam (Persero) Tbk PT)

Jul 28, 2016
$ASII (Astra International Tbk PT)
$BEST (Bekasi Fajar Industrial Estate Tbk PT)
$BJBR (PT Bank Pembangunan Daerah Jawa Barat dan Banten Tbk)
$DOID (Bloomberg)
$NCO (Vale Indonesia Tbk PT)
$JPFA (Bloomberg)
$PSAB (Bloomberg)
$SSMS (Bloomberg)
$SMGR (Semen Indonesia (Persero) Tbk PT)
$UNTR (United Tractors Tbk PT)
$UNVR (Unilever Indonesia Tbk PT)

Jul 29, 2016
$ASRI (Alam Sutera Realty Tbk PT)
$ADHI (Bloomberg)
$BSDE (Bumi Serpong Damai Tbk PT)
$BNGA (Bloomberg)
$BNLI (Bloomberg)
$BNII (Bloomberg)
$BKSL (Bloomberg)
$BHIT (Bloomberg)
$BISI (Bloomberg)
$CPIN (Bloomberg)
$CTRA (Ciputra Development Tbk PT)
$CTRP (Bloomberg)
$ELSA (Bloomberg)
$GIAA (Bloomberg)
$GJTL (Bloomberg)
$GGRM (Gudang Garam Tbk PT)
$NKP (Bloomberg)
$INTP (Indocement Tunggal Prakarsa Tbk PT)
$INDF (Indofood Sukses Makmur Tbk PT)
$ICBP (Indofood CBP Sukses Makmur Tbk PT)
$INDY (Bloomberg)
$KARW (Bloomberg)
$KAEF (Bloomberg)
$KIJA (Bloomberg)
$KLBF (Kalbe Farma Tbk PT)
$KRAS (Bloomberg)
$LPKR (Lippo Karawaci Tbk PT)
$LSIP (Perusahaan Perkebunan London Sumatra Indonesia Tbk PT)
$MAPI (Bloomberg)
$PWON (Bloomberg)
$PNBN, $PNLF, $PNIN (Bloomberg)
$PTPP (Bloomberg)
$RALS (Bloomberg)
$SMRA (Bloomberg)
$TBLA (Bloomberg)
$TLKM (Telekomunikasi Indonesia (Persero) Tbk PT)
$TOTL (Bloomberg)
$WSKT (Bloomberg)

AUGUST 2016
Aug 1, 2016
$HRUM (Harum Energy Tbk PT)
$SSIA (Surya Semesta Internusa Tbk PT)

Aug 10, 2016
$ITMG (Indo Tambangraya Megah Tbk PT)

Aug 12, 2016
$EXCL (XL Axiata Tbk PT)

Aug 29, 2016
$ADRO (Adaro Energy Tbk PT)
$ANTM (Aneka Tambang (Persero) Tbk PT)
$BBRI (Bank Rakyat Indonesia (Persero) Tbk PT)
$ISAT (Indosat Tbk PT)
$PGAS (Perusahaan Gas Negara (Persero) Tbk PT)

SEPTEMBER

Sep 13, 2016
$SMCB (Holcim Indonesia)

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P H
Jun 15,2016 10:18:16
Oil at US$50/bbl – Sweet Spot for Indonesia; Tax Amnesty – On Schedule for June 2016 Implementation

- Higher oil price will reduce fiscal deficit — The Indonesian government now expects incremental revenue from the recent bounce in oil price to ~US$50/bbl. Despite Indonesia is a net importer of oil & gas, fiscal deficit could decline by Rp0.1- 0.9trn based on government’s calculation for every US$1/bbl of oil price increase. The government is currently using an oil price of US$35/bbl in their 2016 proposed budget and thus with higher oil prices, they should receive additional revenue from the oil & gas sector.

- Gasoline being sold at c.US$50/bbl equivalent after taking into account the distribution margins of Pertamina — The current price of gasoline at Rp6,550/litre translates to c.US$48-50/bbl of oil prices. Thus the government is already at a comfortable level in terms of the selling prices of gasoline, and should see no pressure to increase the prices unless the oil prices were to increase to a higher level, say US$55-60/bbl. At Rp6,550/litre, Pertamina is making a distribution margin of Rp1,010/litre, as per government calculations (see Fig 1 for government’s detailed calculation of fuel prices).

- Non-subsidized fuel (RON97) in Malaysia is cheaper vs that in Indonesia — RON95 gasoline price in Indonesia (Rp8,250/litre) is +22% higher than RON97 price in Malaysia (Rp6,715/litre). The RON97 in Malaysia is a non-subsidize fuel while the RON95 is still being subsidized and sold at Rp5,575/litre.

- Tax amnesty is still on schedule to be passed in June 2016 — We see such an outcome as not being priced in by the market (see our recent Indonesian strategy note - Still Positive: Spotlight on Five Key Issues for Market). The parliament head of commission XI, Ahmadi Noor Supi, mentioned that tax amnesty bill will not get delayed since it is a critical part of the government’s 2016 budget revision. As per the government, they have included proceeds amounting to ~Rp103trn (US$7-8bn) from the tax amnesty bill in the 2016 revised budget.

- Maintain our positive view on the market — At a 1-year forward PER of 15.1x, the JCI is not cheap but nor does it look overly expensive, and we maintain our 5,700 target (+16%) set last October. Sector-wise, we continue to like property, construction and infra. $ASII rejoins our top picks and we see more value in banks as gainers from the expected passage of a tax amnesty bill. Top picks: $BBNI, $BBTN, $LPPF, $TLKM, $ASII, $MIKA, $PTPP, $ADHI, $BSDE, $CTRA, $PWON and $JSMR.

- Key market catalysts and risks — 1) Tax amnesty; 2) Lower personal income tax which would lift purchasing power. Risks: 1) Fed rate hikes; 2) Delay in passage of tax amnesty; 3) Heavy-handed policy intervention

 
Bull
P H
Jun 15,2016 10:00:33
REMINDER REVALUASI ASET BBTN


- TUJUAN
Tujuan Revaluasi Aset Tetap yang dilaksanakan oleh Perseroan adalah untuk mendapatkan nilai wajar atas objek penilaian pada tanggal penilaian sehingga dapat diperoleh suatu hasil penilaian yang sesuai dengan kondisi aset yang sebenarnya atau sesuai dengan kondisi pasar wajar dan tidak merugikan, baik dari aspek finansial maupun non-finansial.

- RINCIAN REVALUASI ASET TETAP PERSEROAN (dalam juta Rupiah)
Keterangan : Tanah
Nilai Buku Sebelum Revaluasi : 537.558
Nilai Buku Setelah Revaluasi : 3.580.297
Selisih (Surplus) Setelah Revaluasi* : 2.966.991

*)Surplus Revaluasi Aset Tetap setelah dikurangi Pajak

Perseroan telah melakukan revaluasi Aset Tetap pertanggal 13 April 2016 dan telah mendapat keputusan dari Direktur Jendral Pajak No. KEP-435/WPJ.19/2016 tanggal 08 Juni 2016 yang diterima oleh Perseroan pada tanggal 10 Juni 2016.

SEE MORE
http://www.idx.co.id/Portals/0/StaticData/NewsAndAnnouncement/ANNOUNCEMENTSTOCK/From_EREP/201606/9aac50bd17_19443ee77b.pdf
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P H
May 25,2016 09:12:24
LTV properti dilonggarkan, Bank yang memiliki KPR besar:


Bank Indonesia mengkaji penghapusan larangan inden KPR rumah kedua. Selain itu, BI juga tengah mengkaji untuk melonggarkan ketentuan LTV bagi KPR. Pelonggaran ini akan berlaku bagi bank yang memiliki NPL dibawah 5%.


Berikut komposisi KPR terhadap total KPR:

BBTN   90%
BBCA   15%
BBNI   11%
BBRI   3%
BMRI   0,7%



Kebijakan pelonggaran LTV akan sangat dirasakan dampak positifnya bagi BBTN.
BBCA dan BBNI juga memiliki portfolio sekitar 11-15%, meski tidak besar, namun cukup mendorong pertumbuhan kreditnya.
Sementara BBRI dan BMRI tidak fokus pada bisnis KPR.

$BBTN $BBCA $BBNI $BBRI $BMRI

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P H
May 04,2016 09:26:31
BANK TABUNGAN NEGARA | BUY


STANDING TALL


- Elevated multiples are supported by growth momentum
- Asset quality and cost-income improvements intact  
- A BUY rating well deserves  

We initiate coverage Bank Tabungan Negara (BTN) with a BUY rating. The core strength of the bank is the ability to grow its EPS above system, which has been the key driver of the stock performance. We think that the elevated multiples are supported by the growth momentum and sustainable improvement on asset quality. The medium-term trend for cost-income improvement remains intact as well to support solid EPS growth. BTN is also well-placed to benefit from an economic recovery, given its fortress balance sheet. We introduce our TP of IDR2,370, which still offers 32% upside from the current price level. BTN currently trades a little below +1sd on 3-year mean P/B. Multiples should continue to push up towards +2sd on P/B. Robust earnings momentum and fortress balance sheet should drive this. We prefer to follow P/B multiples on the stock given its significant return profile. Our TP is implying 1.4x 2017E PB.


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P H
Apr 29,2016 09:42:41
Indonesia: 12th stimulus policy – Further Streamlining in Various Permits
 
The government released the details of its 12th stimulus policy, which mostly aim to further simplify various permits in doing business. While the latest policy appears to be an accentuation of previous stimulus to streamlines business process, in our view the government continues to show its focus to attract more investment into domestic economy, especially given sizeable contribution from Gross Fixed Capital Formation (GFCF) to overall Indonesia’s economy.
 
Efforts to lure more investment
President Joko Widodo through several cabinet meetings has emphasized his means to increase the rating of the country’s Ease of Doing Business (EODB) to the 40th rank. The World Bank surveyed that Indonesia stood at rank 109th from a total of 189 surveyed countries. Other ASEAN countries such as Singapore and Malaysia stand at the 1st and 18th rank of the list. Currently, there are 10 indicators that measure the EODB rank for a country. The indicators are business starting process, construction permit dealing process, tax payment, credit accessibility, contract enforcement, electricity supply, across border trading, insolvency settlement, and minority investors protection. To comply with the indicators, the Indonesian Economic Ministry along with the Investment Coordinating Board formed deregulations through the 12th Economic Stimulus.
 
Key points of the 12th stimulus policy
The 12th stimulus introduced a new deregulation scheme that will cut 94 procedures into only 49 procedures and 9 permits to only 6 permits. Furthermore, the stimulus package is followed by the release of 16 new regulations.
¨ For the business starting process, the initial regulation requires investors to go through 13 procedures that will take 47 days and IDR6.8m-7.8m to obtain Business Permit (SIUP), Company Registration (TDP), Deed of Establishment, location permit, and nuisance permit. With the deregulation, investors will only need 7-10 days procedure with IDR2.7m fee. Moreover, the government will only require 3 permits for micro, small and medium enterprises (MSME), which are SIUP, TDP, and deed of establishment.
¨ The government also released a new regulation through regulation no 7/2016 on changes in authorised capital for limited company. With the new regulation, MSME’s authorised capital will be determined by mutual agreement of the founders as outlined in the deed of establishment. However, the regulation will keep enacting the minimum requirement of IDR50m for limited company.
¨ As for building construction permit, the government will cut the process into 14 procedures within 52 days from initial of 17 procedures and 210 days of processing time. Moreover, the building construction permit fee will be reduced to IDR70m from the initial fee of IDR86m.
¨ Tax payment process will be cut into 10x payments with online system from an initial of 54x payments. While property registration will be cut into 3 procedures in 7 days with a fee of 8.3% from the value of property. The government previously imposed 5 procedures with 25 processing days and 10.8% fee for the property registration.
¨ The government also decreases the simple lawsuit settlement process to only 8 procedures in 28 days. Any disagreement on the verdict will be able to appeal with additional 3 procedures and maximum of 10 days of settlement.
 
Follow-up measure to reduce overall execution risk

Before the release of the 12th stimulus package, the government has released a total of 195 regulations from September 2015- April 2016. The government stated that as of 18 April, it has successfully completed 169 regulations or 87% from the total regulation released. There are 16 (8%) regulations that are still in the discussion process, while the remaining 10 regulations that will be taken out from the Economic Stimulus Package. The government stated that each packages received positive responses from investors and citizens. However, the government will increase its socialisation and evaluate the implementation through dissemination and business clinics. The business clinics aimed to further discuss the stimulus packages with stakeholders to ensure the on the ground efficiency of the packages. Moreover, the business clinic will also serve as the communication facility between investors and government to resolve any problems, including the export increment issues. The clinics and dissemination will be implemented in 3 regions, such as Palembang, Balikpapan, and Lombok.
 
The near term catalyst is the tax amnesty approval
We continue to believe that tax amnesty approval could serve as one of major catalyst in the near term. Post the Parliament’s recess session, the long-awaited tax amnesty bill is finally being discussed under the Commission XI, which has been holding hearing sessions with experts, business leaders and other stakeholders. Given its importance on the overall budget and the progress of infrastructure development, the Government is mulling over the fact that the bill could take effect in June. We believe the initial approval of the tax amnesty could be an important catalyst for the near term, as well as a major step taken in the right direction to finally foster the compliance of taxpayers – which could help solidify the Government’s overall budget composition going forward. As such, we expect further foreign fund inflows to support the market post the approval of the tax amnesty although we acknowledge that execution risks still remain at this juncture. Our top pick in the market are $BBCA, $BBTN, $ICBP, $INDF, $ADHI, $LPPF, $MIKA, $TLKM, $BSDE and $LSIP.


Bull
P H
Apr 26,2016 16:04:04
Bank Tabungan Negara: Starting the Year Well (BBTN; Rp1,730; Buy; TP:Rp2,100)

Bank Tabungan Negara reported 1Q16 net income of Rp491bn, +22% yoy, accounting for 22% of FY16 consensus and 21% of our full year expectations.

Loan growth +19% yoy, deposit growth +20% yoy. Loan growth was mainly driven by subsidized mortgages at +28% yoy (32% of total loans), non-subsidized mortgages at +16% yoy (38% of total loans), and construction loans at +25% yoy (14% of total loans). Over all, housing related loans grew by +21% yoy ( 90% of total loans) while consumer and commercial loans grew by +5% yoy ( 10% of total loans). Meanwhile, deposit growth was driven by current account deposits +33% yoy, savings deposit +17% yoy, and time deposit +16% yoy bringing 1Q16 CASA to 46% vs. 1Q15 CASA of 44% and 4Q15 CASA of 48%. Of the CA Rp18tr (56% of total current accounts) come from the FLPP, in which the government puts the funds and get 0.3% pa interest.  

NIM deteriorated to 4.35% in 1Q16 from 4.66% in 1Q15. Decline in NIM was due to decline in asset yield of -63bps yoy as BTN lowered lending rates in the month of February. Meanwhile, cost of funds declined by a smaller proportion, -15bps yoy, as time deposits have yet to mature. BTN indicates that cost of funds will decline, in line with lower lending rates, in 2Q16 as BTN plans to lower time deposit rates once deposits have matured.
 
NPL slightly deteriorated to 3.59% in Mar16 from 3.42% in Dec15 while restructured loans totaled to 3.6% in Mar16 vs 3.0% in Dec15. Deteriorating asset quality mainly came from other housing loans (NPL increased to 3.77% in 1Q16 from 3.44% in 4Q15), construction loans (NPL at 4.18% in 1Q16 from 3.81% in 4Q15), and non-subsidized mortgage (NPL increased to 2.85% in 1Q16 from 2.57% in 4Q15). BTN targets NPL to be <3% by the end of 2016. Total provisioning expense declined by -28% yoy while write-offs totaled to Rp69.6bn in 1Q16. Coverage ratio improved to 41% in 1Q16 vs. 30% in 1Q15, however deteriorated compared to 4Q15 at 43%.  

BTN targets single digit lending rate by end of the year. As of April, BTN has lowered lending rates by ~75 bps. BTN targets to lower non-subsidized mortgage rates and construction lending rates to a single digit by Oct16 and Dec16. In order to maintain net income, BTN will focus on increasing mortgage volumes from the middle income segment and will also focus on increasing fee based income through digital banking services.

Higher CAR from asset revaluation. Total CAR was 16.5% in Mar 16 while the bank has yet to record additional ~Rp1.6tn capital from asset revaluation which is likely to be recorded in 2Q16, which will increase their CAR to ~18%.  

The counter is trading at 1.2x P/BV 2016 and we keep our Buy call with TP of Rp2,100.

$BBTN
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P H
Apr 26,2016 16:02:48

Bank Tabungan Negara: Starting the Year Well (BBTN; Rp1,730; Buy; TP:Rp2,100) 

 

Bank Tabungan Negara reported 1Q16 net income of Rp491bn, +22% yoy, accounting for 22% of FY16 consensus and 21% of our full year expectations. 

 

Loan growth +19% yoy, deposit growth +20% yoy. Loan growth was mainly driven by subsidized mortgages at +28% yoy (32% of total loans), non-subsidized mortgages at +16% yoy (38% of total loans), and construction loans at +25% yoy (14% of total loans). Over all, housing related loans grew by +21% yoy ( 90% of total loans) while consumer and commercial loans grew by +5% yoy ( 10% of total loans). Meanwhile, deposit growth was driven by current account deposits +33% yoy, savings deposit +17% yoy, and time deposit +16% yoy bringing 1Q16 CASA to 46% vs. 1Q15 CASA of 44% and 4Q15 CASA of 48%. Of the CA Rp18tr (56% of total current accounts) come from the FLPP, in which the government puts the funds and get 0.3% pa interest.  

 

NIM deteriorated to 4.35% in 1Q16 from 4.66% in 1Q15. Decline in NIM was due to decline in asset yield of -63bps yoy as BTN lowered lending rates in the month of February. Meanwhile, cost of funds declined by a smaller proportion, -15bps yoy, as time deposits have yet to mature. BTN indicates that cost of funds will decline, in line with lower lending rates, in 2Q16 as BTN plans to lower time deposit rates once deposits have matured. 

 

NPL slightly deteriorated to 3.59% in Mar16 from 3.42% in Dec15 while restructured loans totaled to 3.6% in Mar16 vs 3.0% in Dec15. Deteriorating asset quality mainly came from other housing loans (NPL increased to 3.77% in 1Q16 from 3.44% in 4Q15), construction loans (NPL at 4.18% in 1Q16 from 3.81% in 4Q15), and non-subsidized mortgage (NPL increased to 2.85% in 1Q16 from 2.57% in 4Q15). BTN targets NPL to be <3% by the end of 2016. Total provisioning expense declined by -28% yoy while write-offs totaled to Rp69.6bn in 1Q16. Coverage ratio improved to 41% in 1Q16 vs. 30% in 1Q15, however deteriorated compared to 4Q15 at 43%.  

 

BTN targets single digit lending rate by end of the year. As of April, BTN has lowered lending rates by ~75 bps. BTN targets to lower non-subsidized mortgage rates and construction lending rates to a single digit by Oct16 and Dec16. In order to maintain net income, BTN will focus on increasing mortgage volumes from the middle income segment and will also focus on increasing fee based income through digital banking services.

 

Higher CAR from asset revaluation. Total CAR was 16.5% in Mar 16 while the bank has yet to record additional ~Rp1.6tn capital from asset revaluation which is likely to be recorded in 2Q16, which will increase their CAR to ~18%.  

 

The counter is trading at 1.2x P/BV 2016 and we keep our Buy call with TP of Rp2,100.

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P H
Apr 26,2016 13:52:39
Banking; Limited Impact from Change in BI Reference Rate

- BI will change the benchmark rate into 7-day reverse repo rate, effective 19 August 2016. While OJK has yet to decide their maximum rate, we believe there will not be any major change in rates and hence impact is neutral on banks. We maintain our Neutral rating on the sector on rising NPL and lower margin.

- New central bank benchmark rate. Bank Indonesia has just announced that they will change the reference rate from BI rate into 7-day reverse repo rate (RRR), effective 19 August 2016. This will bring down the benchmark rate closer to the overnight interbank rate of 4.8%, in line with the practice conducted by many other central banks. The 7-day RRR is currently at 5.50%, while the BI rate is at 6.75%, similar to the 12-month interbank rate.

- OJK needs to change their ceiling rates. All of the banks under BUKU 4 (main capital >Rp30tr) and BUKU 3 (main capital of Rp5-30tr) are required to set maximum rupiah time deposit rates of BI rate +75-100bps, or 7.50-7.75% pa. With the BI rate no longer available in the future, OJK needs to use the new benchmark, either the 7-day reverse repo or other rate. What we have to confirm is whether OJK will keep the same premium to set the maximum rates or change it (reduce or expand it). If they use the new reference rate and keep the same premium, banks will see their cost of funds decline substantially by 125bps. However, the central bank has been quoted saying that OJK will use the 12 month SBI (currently at 6.75%), similar to the current BI rate, as the base for the deposit rate cap, in which case there will be no change in rates.

- Implication to the banking industry. We believe the impact will be neutral to banks. While there is a chance that deposit rates will be lowered following the change of the reference rate, BI’s statement that OJK might still use the 12- month SBI rate should keep the rates in line with the movement of the benchmark rate. The LPS guaranteed deposit rate (for deposits <Rp2bn in a bank) for commercial banks is at 7.25%, while the maximum special rate set by OJK for large deposits is at 7.75%.

- Concerns over deposits shifting to bonds overstated. There has been a concern that some large deposits will be shifted into the bond market, in particular the government bonds, which provide 7.4% yield for 10-year tenor, as well as the corporate bonds with higher yield. However, the market size of the government bonds of Rp1,473tr is 82% of total rupiah time deposits and the size of the total bond market of Rp1,727tr is 96% to total rupiah time deposits. This makes little room for rupiah time deposits to switch into bonds given their similar size. What will happen in our opinion is the rising demand for bonds, increasing their value and lowering the yield towards the deposit rates. The government will still keep issuing new bonds, but this will not be enough to satisfy demand, hence depending on the OJK’s new rate cap on large deposits, we do not see significant shift in time deposits and concerns over liquidity problem is not warranted.

- Deposit structure – Based on LPS data, total banks’ third party funds were Rp4,402tr in Dec 15, of which 84% of them were rupiah deposits or Rp3,723tr. Of this amount, 49% (Rp1,812tr) were rupiah deposits with outstanding amount of >Rp2bn (11% or Rp411tr with deposits between Rp2-5bn and 38% or Rp1,402tr with deposits >Rp5bn). Hence the size of the large deposits of >Rp5bn is close to the government bond market as well.

- Expect rates to decline. We have factored in declining interest rates on both deposits and lending rates of around 75- 100bps pa in 2016-2017. Aside from the government’s pressure for banks to lower the rates, the lower inflation expectations should also support lower rates. Under the declining interest rate scenario, usually banks will see a temporary margin expansion as they lower the cost of funds a few months before lending rate adjustment. However, we expect a 20bps average margin reduction in the industry in 2016 and another 30bps in 2017, taking into account steeper reduction in lending rates, as anticipated by the authorities.

- Maintain Neutral on banking. At this juncture, we maintain our Neutral stance on the banking industry as we see risk of rising problem loans in the coming months plus lower margin. This should limit the industry's earnings growth, which we expect at 7% this year. We keep BBNI (TP Rp6,000) and BBTN (TP Rp2,100) as our sector top picks. The recent price weakness on BBRI (TP Rp12,000) makes its valuation attractive at this level however, we keep our Neutral call for now.

$BBCA $BBRI $BMRI $BBNI $BBTN
Bull
P H
Apr 20,2016 09:38:58
Banks - Bumpy But Still Promising
 
We re-initiate coverage on Indonesia banks with an OVERWEIGHT. Higher government spending should translate into a 5.1% GDP growth pick-up and stronger loan growth of 14.3%. We forecast for earnings to grow a stronger 8.7% as credit costs stabilise at 161bps. Our Top Picks are BBCA (strong asset quality and least vulnerable to regulatory risks) and BBTN, as it would benefit most from the Government’s subsidised mortgage scheme.

¨ Reasonable valuations on higher GDP growth. According to our economists, 2016 would be a better year, supported by higher government spending in 2M16 to IDR5.4trn (+306% YoY) and a GDP growth pick-up to 5.1%. Yet with such potential, Indonesian banks under our coverage are trading at current P/BV multiple of 2.2x 2016F P/BV vs a historical mean of 2.9x and -2SD of 2.1x. We believe the multiple de-rating reflects the slide in ROAE to 17.6% for 2016F from c.25% in 2010 as loan growth slowed and credit costs spiked.

¨ Two sides of the knife. The Financial Services Authority (OJK) has introduced changes/revised guidelines to spur banks to lend more, but its renewed lower lending rates push has unnerved investors. We believe an immediate lending rate cuts to single digits directive is unlikely, as this has a detrimental impact on earnings. We expect it to take indirect measures that provide banks room to lower lending rates. March’s 125bps cut in maximum time deposit rates was the first move in this direction. We believe state-owned enterprise (SOE) banks would be most impacted, as the OJK would expect them to take the lead.

¨ Lower margins outlook. Lower caps for time deposit (TD) rates would mitigate the policy rate cuts (75bps YTD and another 25bps expected by end-2016), resulting in a moderate 7-12bps decline in net interest margins (NIMs). We expect Bank Negara Indonesia (BBNI) and Bank Tabungan Pensiunan Nasional (BTPN) to be most affected, while Bank Rakyat Indonesia (BBRI) and Bank Tabungan Negara (BBTN) are expected to see some uptick in NIMs.

¨ Smoother assets quality ride. Stronger economic growth and lower interest rates, we believe, would ease pressure on asset quality in 2016. We expect non-performing loans (NPLs) to trend higher in 1H16 and peak in 2Q16. Among banks under our coverage, we believe Bank Mandiri (given its loan portfolio size) would need a longer time to improve asset quality. We expect sector gross NPL ratio to edge down to 2% by Dec 2016 (Dec 2015: 2.1%) with stable 161bps credit costs and improvements in loan loss coverage to 155.2% by end-2016.

¨ Wholesale funding as additional liquidity source. As the system loan-to-deposit ratio (LDR) touched 90.9% in January, banks are likely to tap the wholesale market for funding, given more affordable benchmark rates and longer maturity profiles. Negotiable certificates of deposits, bonds and medium-term notes are the preferred wholesale instruments of the three big SOE banks.

¨ Bank Central Asia (BBCA) and BBTN are our Top Picks. Given regulatory risks and asset quality concerns, BBCA is our Top Pick for big-cap banks. Its premium valuation (3.0x 2016F P/BV vs peers’ 1.8x average) is justified as its NIMs are least vulnerable to government intervention risks while assets quality is superior vis-à-vis peers. BBTN is our small-cap Top Pick as we anticipate ROAE expansion and asset quality improvements in the next two years.

$BBCA $BMRI $BBRI $BBNI $BBTN $BTPN $PNBN $BDMN $BNGA
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P H
Apr 05,2016 15:30:37
Banking: 2M16 Results Wrap – Continuing Provisioning

- Banks have not shown significant earnings improvement in 2M16, with average net profit growth of 6% y-y, accounting for 14% of consensus expectations. Meanwhile, average NIM remained stable at 6.6% with loan growth of 11% y-y (vs. industry loans of 8%) and provisioning increased 60% y-y. Maintain Neutral.

- 6% y-y average earnings growth - banks have not shown any significant earnings improvement in the first two months of the year with average net earnings growth of 6% y-y. The results were still within expectations, accounting for 14% of average consensus’ full year forecast. Despite 16% y-y growth in operating income (net interest income plus non-interest income), banks have been increasing provisioning charges, which rose 60% y-y, as an anticipation for higher problem loans ahead. This, in addition to growing operating expenses, limited earnings growth. Among the larger banks, BBCA posted the highest earnings growth of 18% y-y, while among the smaller banks, BBTN, BJBR, and BJTM excelled with 19% y-y growth rate. Meanwhile BTPN and BDMN suffered 20% and 17% y-y earnings decline respectively due to competition in the micro lending.

- Loan and deposit growth. Due to cyclicality, most banks recorded negative or slow loan m-m growth in February, with average growth rate of 11% y-y, higher than the indicated industry loan growth of 8% y-y. Some banks reported high loan growth, such as BBNI due to government projects and BBTN on subsidized housing loans. Deposit growth was also weak, averaging 7% y-y, similar to the industry level, with CASA deposit growth overtaking time deposit growth at 12% vs. 1% yy. This is partly due to increasing government funds transferred as well as the crowding out effect on the government’s bond issuance and the regulation that requires pension funds to place some portion of their funds in government papers.

- Stable net interest margin for now – average NIM remained high at 6.6% in 2M16, up from 6.2% in 2M15 thanks to steeper reduction in cost of funds than in asset yield (60bps vs. 10bps). Banks have been cutting their time deposit rates on the back of weaker loan demand and are still taking the advantage before they start lowering the lending rates.

- Rising provisioning charges – the industry data shows the NPL level increased to 2.7% in January from 2.5% in December 2015 and we believe banks are experiencing the same pattern in February. This prompted banks to increase their provisioning charges, which rose 60% y-y. NPL is still expected to rise in the coming months, in particular from the retail commercial segment, and in terms of industry NPL comes mainly from mining related businesses. BBCA recorded the highest increase in provisioning charges at 429% y-y amid from the low base. PNBN came second with +262% y-y, while BJBR and BJTM bucked the trend with -62% and -39% y-y, as they have seen asset improvement. Provisioning level is now at 3.3% of total loans.

- Industry outlook and recommendation - We are still expecting rising problem loans in the coming months as a delayed effect from weak economic growth last year. Hence banks are still forecast to beef up their provisioning. We still rate Neutral on the sector, which is trading at 1.9x P/BV for 2016, with top picks on BBNI (TP Rp6,000) and BBTN (TP Rp2,100).

$BBRI $BBCA $BMRI $BBNI $BBTN $BBNI $PNBN
Bull
P H
Apr 02,2016 11:47:04
Indonesia Banks: 4Q15 Results Round-Up

Earnings growth: our 10 banks +8.1% y-y; industry: -1.5% y-y
All 10 banks under our coverage have reported 4Q15 net earnings, booking 8.1% y-y growth, vis-à-vis the industry average of a 1.5% y-y decline. On a quarterly basis, the 10 banks reported 3.3% q-q growth while the industry average contracted by 3.3% q-q, mainly due to the limited advantages of a lower blended cost of funding. The industry NIM reached 5.4% (+10bps q-q) in 4Q15 compared to 30bps higher q-q for our 10 listed banks. Only 4 of the 10 banks displayed lower NIMs: $BBRI (-20bps q-q), $BBNI (-20bps), $BJTM (-60bps) and $BBKP (-30bps). The better-than-expected 4Q15 earnings were supported by lower provisioning (-9.4% q-q) on improved loan quality, as most banks restructured their debt, benefiting from the OJK relaxation policy in pursuing NPLs based on debtor abilities to serve their loans while ignoring financial stability and the industry outlook.

Loan growth: 10.4% y-y vs 11.4% y-y on lower GDP
Sector 4Q15 loan growth was 2.5% q-q, bringing full-year 2015 loan growth to 10.4%, vis-à-vis 11.4% y-y growth in 2014, in line with the deceleration in GDP growth to 4.8% in 2015 from 5.0% in 2014. Our 10 listed banks’ loan growth of 12.6% was above the industry average, except for $BDMN and $BJTM. $BBTN posted the highest growth, at nearly 20% y-y, benefiting from continued strong demand from the low-end market segment, including government subsidized mortgages. Corporate loans were the main contributor, while consumer loans (9.1% y-y) moved at a slower pace due to slow mortgage demand. This brought the proportion of consumer loans to total loans to 27.1% (-30bps y-y). However, deposits contracted 1.1% q-q, bringing full-year 2015 growth to only 7.3% y-y. As a result, LDR increased to 92.5% from 89.9% a year earlier.

Seeking normalization under new low-lending rate regime
In 2016, we assume loan growth of 12.7% y-y on increased investment in infra-related projects, with the government having recently encouraged banks to set lending rates at single-digit levels. This, however, may create challenges given Indonesia’s geography, high inflation, limited fee-based income and low employee productivity. On monetary policy, lower lending rates may only be achieved once the benchmark rate reaches 6.25% (currently: 6.75%, or -125bps y-y), setting the ceiling on SOE deposit rates and eliminating current deposit rate spreads from 200bps and 225bps for bank categories IV and III, respectively, to 75bps and 100bps. On macroprudential policy, OJK should lower both the minimum primary (currently: 6.50% from 8.00% previously) and secondary (currently: 4.00%) reserve requirements, increasing LFR and lowering RWA. We believe this move may lower bank NIMs by 40-50bps (vs our previous estimate of 30-40bps) for the 10 banks we cover, but the overall industry may be worst off (exhibit 31). Based on this, combined with continued high provisioning, we forecast overall 2016 net earnings growth of around 6.3% y-y, helped by improved operating efficiencies and increased fee-based income.
Bull
P H
Feb 22,2016 15:43:45
Indonesian Banks

Rate cut and its repercussions
• Rate cuts announced; accommodative monetary policy aimed at boosting loan growth
• Short-term positive but repercussions of further regulatory action may be negative to banks
• Keeping our cautious stance; $BBCA and $BDMN remain our picks

What’s New
Rate cut announced. BI announced a reference rate (BI rate) cut of 25bps to 7.0%. In addition, BI also lowered the Rupiah reserve requirement by 100bps to 6.5% (effective March 2016). In line with this, deposit and lending facility rates were cut by 25bps to 5% and 7.5% respectively.

Impact and view:
Short-term positive… While this is positive in the short term for the banks, as banks tend to be able to reprice deposits faster than loans, there would be some ups deposits faster than loans ide potential to NIM, particularly for banks with a deposit mix skewed towards a higher time deposit composition (eg. $BDMN, $BBTN, $BTPN). The lower rates would also be positive to multi-finance companies from a funding cost perspective.

…but we are still keeping our cautious stance on the Indonesian banks because:

1) Concerns on asset quality Concerns on asset quality Concerns on asset quality are not over yet although our base case assumes stability in 2H16

2) OJK and BI have formed an ad hoc team to push down lending rates to below 10% below 10% and the team is expected to meet this task by end 2016. Among the possible approaches to this is a new OJK regulation to cap NIM at 4% with the aim to improve efficiency and competitiveness.

Should the NIM cap regulation be implemented this will be negative to banks as this would limit to a large extent, topline growth. Even if loan growth were to be boosted to 14% as intended by BI/OJK, it would be insufficient to maintain growth momentum for the net interest income line.

There have been noises in the past to lower lending rates for loans and also to impose a cap on NIM but none of these have so far materialised.

There were however two instances which the goverment had intervened to force down loan yields:
1) the KUR loan yield cap to 19% (2016: 9% chargeable rate to borrowers + government interest subsidy of 10%) - this affected $BBRI
2) lower loan yield for subsidised mortgage to 5% (from 7.5% previously) despite being partially subsidised by the Subsidized Mortgage Liquidity Facility Scheme/Fasilitas Likuiditas Pembiayaan Perumahan (FLPP) scheme - this affected $BBTN

Stock picks:
As we retain our cautious stance on the sector, our top picks remain $BBCA and $BDMN. Our pick on $BBCA lies on its defensiveness and strong financial indicators especially with respect to asset quality. $BDMN remains our pick for a turnaround story. Key risk to $BDMN however would be its inability to retain its high NIM (>8%) should the NIM cap be strictly implemented. This would mean $BDMN would have to significantly ramp up its strategy to lower funding costs quicker than planned.

Should the NIM cap be implemented, it would be negative to the SOE banks SOE banks SOE banks namely, $BMRI, $BBNI and $BBRI, as we are of the view that the government may impose these punitive recommendations on them before rolling it out to the entire sector.
Bull
P H
Feb 22,2016 15:43:44
Indonesian Banks

Rate cut and its repercussions
• Rate cuts announced; accommodative monetary policy aimed at boosting loan growth
• Short-term positive but repercussions of further regulatory action may be negative to banks
• Keeping our cautious stance; $BBCA and $BDMN remain our picks

What’s New
Rate cut announced. BI announced a reference rate (BI rate) cut of 25bps to 7.0%. In addition, BI also lowered the Rupiah reserve requirement by 100bps to 6.5% (effective March 2016). In line with this, deposit and lending facility rates were cut by 25bps to 5% and 7.5% respectively.

Impact and view:
Short-term positive… While this is positive in the short term for the banks, as banks tend to be able to reprice deposits faster than loans, there would be some ups deposits faster than loans ide potential to NIM, particularly for banks with a deposit mix skewed towards a higher time deposit composition (eg. $BDMN, $BBTN, $BTPN). The lower rates would also be positive to multi-finance companies from a funding cost perspective.

…but we are still keeping our cautious stance on the Indonesian banks because:

1) Concerns on asset quality Concerns on asset quality Concerns on asset quality are not over yet although our base case assumes stability in 2H16

2) OJK and BI have formed an ad hoc team to push down lending rates to below 10% below 10% and the team is expected to meet this task by end 2016. Among the possible approaches to this is a new OJK regulation to cap NIM at 4% with the aim to improve efficiency and competitiveness.

Should the NIM cap regulation be implemented this will be negative to banks as this would limit to a large extent, topline growth. Even if loan growth were to be boosted to 14% as intended by BI/OJK, it would be insufficient to maintain growth momentum for the net interest income line.

There have been noises in the past to lower lending rates for loans and also to impose a cap on NIM but none of these have so far materialised.

There were however two instances which the goverment had intervened to force down loan yields:
1) the KUR loan yield cap to 19% (2016: 9% chargeable rate to borrowers + government interest subsidy of 10%) - this affected $BBRI
2) lower loan yield for subsidised mortgage to 5% (from 7.5% previously) despite being partially subsidised by the Subsidized Mortgage Liquidity Facility Scheme/Fasilitas Likuiditas Pembiayaan Perumahan (FLPP) scheme - this affected $BBTN

Stock picks:
As we retain our cautious stance on the sector, our top picks remain $BBCA and $BDMN. Our pick on $BBCA lies on its defensiveness and strong financial indicators especially with respect to asset quality. $BDMN remains our pick for a turnaround story. Key risk to $BDMN however would be its inability to retain its high NIM (>8%) should the NIM cap be strictly implemented. This would mean $BDMN would have to significantly ramp up its strategy to lower funding costs quicker than planned.

Should the NIM cap be implemented, it would be negative to the SOE banks SOE banks SOE banks namely, $BMRI, $BBNI and $BBRI, as we are of the view that the government may impose these punitive recommendations on them before rolling it out to the entire sector.
Bull
P H
Feb 15,2016 09:03:46
Visit to property expo

First property expo in 2016 was encouraging
Over the weekend, we visited a property expo in Jakarta, organized by
Bank Tabungan Negara (BBTN IJ). During the event, BTN offered a
promotional mortgage rate of 6.6% fixed for one year. We found that a
large number of visitors to the expo showed enthusiasm regarding the
event. Besides BTN, we note that other big banks are also starting to
lower their rates to single digits. We see this trend as positive for
property sector especially for BSDE and CTRA.

Interesting mortgage rate promotion by BTN
As the organizer of the expo, Bank Tabungan Negara ($BBTN) specializes
in the mortgage segment and is the anchor bank for the Government
subsidized mortgage program. As of FY15, BTN had a market share of
~30% in mortgage lending. To boost its mortgage portfolio by ~20% in
FY16, during the expo, BTN offered a promotional non-subsidized
mortgage rate of 6.6% fixed for one year. For subsidized mortgages, BTN
offered a flat 5.0% for 20 years and LTV of 99%.

Targeting the low-middle segment
There were 209 developers participating in the event offering about 660
projects mainly in the Greater Jakarta area and several other cities in
Indonesia. Listed developers that participated in the expo were $CTRA,
$ASRI, $PPRO and $MTLA. Based on our visit to most of the exhibition
booths, we note that most of the properties offered were mainly
targeting the low-middle market segment with price tags starting from
IDR100m/unit (USD7,500). Further, many private developers offered low
cost housing that can be eligible to be financed by subsidized mortgage.

Other banks also starting to offer lower rates
Besides BTN, we also note that other big banks, such as BCA, Bank
Mandiri, BNI, BRI and CIMB Niaga offered promotional mortgage rates
below 10% starting in Feb’15. We view this positively for the property
sector, especially for $BSDE and $CTRA as most of their buyers use
mortgages for their purchases.

Bull
P H
Feb 05,2016 09:01:21
BBTN: Kinerja Membaik Signifikan
BELI, Target Harga: Rp 1.800

BBTN membukukan laba bersih 2015 Rp 1,85 triliun, tumbuh 62% dibanding tahun sebelumnya. Laba tersebut melebihi estimasi konsensus Bloomberg yang sebesar Rp1,62tn, dan estimasi kami sebesar Rp1,55tn. Kredit tumbuh hingga 20%, dua kali lipat lebih tinggi dibanding industri yang sebesar 10% per November 2015. Rasio kredit macet atau NPL membaik secara signifikan menjadi 3,42% dari bulan September 2015 yang sebesar 4,50%.

Selama dua tahun terakhir, perhatian utama BBTN adalah tingkat NPL yang mencapai titik tertinggi sebesar 5% pada pertengahan 2014, namun kami menilai hal tersebut sudah tercermin di harga saham. Sekarang, kualitas aset membaik signifikan, sehingga kami meyakini hal ini akan menjadi katalis utama BBTN, seiring valuasi harus disesuaikan untuk merekfleksikan perbaikan kualitas aset.

Oleh karena itu, kami merekomendasikan BELI, meningkatkan target harga kami dari Rp1.500 menjadi Rp1.800 dengan menyesuaikan tingkat PBV 2016 wajar dari 1,1x menjadi 1,3x seiring peningkatan kualitas aset.

$BBTN
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P H
Jun 05,2015 00:51:43

New tax issue for banking sector?


A letter from the tax office stating that loan write-offs on customers without tax ID (NPWP) is non-tax-deductible raise a concern on how this might affect banks’ earnings. This and weak 2Q15 earnings expectation has put banks’ shares under selling pressure.

We cross check with several banks on the tax-related issue, and we conclude that the risk to earnings should be limited. This is because small debtors are exempted from this write-off policy, and based on tax office definition these are loans below IDR30m. Banks are already in compliance with BI regulation which requires tax ID for loans of IDR50m and above. So between tax office and BI’s policy, the potential non-tax-deductible issue might only arise for loans size between IDR30-50m. According to our channel check, loans in this category covers less than 10% of total portfolio. Also note that banks can still use government regulation PP No.130/2000 that define small debtors as those with loans below IDR350m.

Right now some banks are facing ongoing dispute with the tax office:
·BBTN: IDR36b tax dispute on written-off loans from 2010. BBTN just won the appeal last week.

·BBRI: IDR1.5t tax dispute on written-off loans from 2010. The amount has been fully paid and BBRI is currently waiting for the decision on their appeal.

·BMRI: IDR 1.3t tax dispute on written-off loans from 2010 and IDR1.1t tax dispute on tax discount based on shareholder composition. The amount has been fully paid.

·BBNI: IDR1.6t tax dispute on written-off loans from 2010 (half paid) and IDR620b tax dispute on tax discount based on shareholders composition (fully paid).

*Note that the 2010 case will not affect banks’ earnings.

Bull
Quotes delayed, except where indicated otherwise.
BBTN
2,600.00 70.00 (2.62%)
Bank Tabungan Negara (Persero)
Last Update 16:59:09