Company Update

21 Februari 2023

BBTN IJ - MNC Sekuritas Equity Report February 21, 2023

Need to Focus on Improving Asset Quality

Key Takeaways :
• BBTN posted net income of IDR3.05tn in FY22 forming 101.6/105.1% of ours and consensus estimate despite earnings contraction in 4Q22 largely driven by provisioning charges.

• BBTN has successfully executed its right issue obtaining IDR4.13tn of fund from shareholder resulting in higher CAR and better liquidity.

• Outlook remain positive yet the bank need to focus on asset quality improvement given BBTN LaR was still the highest among KBMI IV & SOE peers at 23.2% by the end of Dec-22.

• BBTN has set some initiatives to improve its asset quality that we think could avert the worst scenario by : 1) bulk asset sales and 2) focusing on lower risk segment with attractive yield such as KUR. Note that BBTN has secured IDR3tn KUR quota from government.

Reiterate BUY with TP of IDR1,900/share. We arrived at lower TP (previously IDR2,300/share) to reflect the EPS dilution impact due to right issue. Our new TP implies 0.9x FY23F/FY24F P/B.

• Key upsides to our call : 1) higher than expected NIM & 2) lower than expected CIR. Key downside remain on slow progress in asset quality improvement.

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