Bank Tabungan Negara’s asset sale push a positive for the bank: analyst

The bank plans to offload $262m of bad loans in 2024.

The Bank Tabungan Negara (BBTN) is expected to log 15.4% net profit growth in 2024, whilst asset quality will improve thanks to its plan to offload $262.37m (IDR4.1t) in bad loans.

The Indonesian bank recently sold over $55m (IDR861b) in assets last December 2023. This and future asset sales, which are expected to account for 36% of its non-performing loans (NPL) in September, will help lower NPL and increase provision coverage.

Meanwhile, with central banks slashing rates, BBTN says that its net interest margin (NIM) can expand over 4% in 2024. Loans are expected to grow 10 to 11% in 2024, driven by adjustments on subsidised housing prices and value added tax (VAT) incentives by the government for the property sector.

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Should BBTN get a 3.7% NIM expansion, 9.6% in loan growth, and 1.3% credit cost, it should log a net profit growth of 15.3%, says UOB Kay Hian analyst Posmarito Pakpahan.

Furthermore, the bank’s spin-off syriah business unit will be completed in 2024, with plans to acquire a yariah bank and divest its syariah unit to the acquired bank. Management expects its new syariah bank to expand its market presence and efficiency. 

Currently, BBTN’s syariah unit’s loans and deposits contributed 11% and 11% respectively to consolidated loans and deposits, whilst net profit accounted for 17% of consolidated net profit.