BBTN : New Revenue Engine to Generate Profit

01 Apr 2024 Valdy

BBTN recorded a net profit of IDR 3.5 trillion, growing 15% yoy in FY23. Interest Income rose 9.2% yoy, although this was followed by an increase in Interest Expense of 36.4% yoy in FY23.

Loans & financing have been on an uptrend for the last five years. BBTN’s loans & financing grew 11.09% yoy to IDR 334 trillion in FY23.

BBTN became the first state-owned bank to sell significant assets using an asset exchange scheme. The transaction amounting to IDR 861 billion was completed in FY23, with a portion of 7.9% of the 2023 NPL.

CASA grew 20.4% yoy in FY23. BBTN recorded total Third Party Funds of IDR 349.9 trillion (+8.7% yoy) in FY23.

BBTN will continue to develop high-yield loans in FY24, where in FY23, Home Equity Loan (KAR), People’s Business Loan (KUR), and Soft Loan (KRING) succeeded in leading growth with a loan yield of 8.12%

Using the Discounted Cash Flow method with a Required Return of 9.98% and Terminal Growth of 8.43%, we estimate BBTN’s fair value at 1,807 (6.29x expected P/E). Considering BBTN’s reasonable price and its relative valuation, which is below 0.74x its 5-year average P/B, we give BBTN a buy rating with a potential upside of 16.23%.

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