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Net profit down -2.3% QoQ, up +5.1% YoY; LAR up to 20.3% (4Q24: 19.7%). In 1Q25, BBTN reported consolidated net profit of IDR 904 bn (-2.3% QoQ, +5.1% YoY), in line with our forecast (24.5% of FY25 target) and above consensus (29.5%), driven mainly by 13.8% YoY increase in operating income and stronger NIM. Net interest income (NII) rose to IDR 3.8 tn (+17.1% YoY), supported by improved quarterly NIM of 3.6% (+70bps QoQ) thanks to the decline in cost of funds. Total loans and financing grew 5.5% YoY to IDR 363 tn, underpinned by 7.8% YoY growth in mortgages, while high-yield segments (KUR, KAR, KRING) recorded 9.5% YoY expansion with blended loan yield of 9.6%. Cost of credit (CoC) rose to 1.1% (1Q24: 0.8%), still within guidance. NPL ratio remained stable at 3.3%, while loan-at-risk (LAR) ratio increased to 20.3% from 19.7% in 4Q24.
Unlocking growth through housing programs and asset monetization. Looking ahead, BBTN will maintain its focus on higher-yield, housing-related segments while strengthening its position in mortgage market by targeting its captive mortgage base through extensive soft loan (KRING) programs. The bank also aims to optimize payroll-based lending by partnering with several new institutions. In 2025F, the government’s 3 million-home initiative could lead to higher FLPP allocation for BBTN, potentially at more favorable rates. In addition, the third phase of bulk asset sales (~IDR 1.0 tn), expected to take place in 2H25, may offer further support non-interest income growth.
2025F guidance: loan growth at 7-8% (2024: 9.1%), higher CoC to 1.0-1.1%. Down from 9.1% in 2024, BBTN maintains its 2025F loan growth target at 7–8% with subsidized mortgages expected to be the key driver, supported by substantial rise in 2025 FLPP budget to IDR 31 tn (+72.2% YoY) to finance over 440k housing units for low-income households. The bank projects 2025F NIM to improve to 3.3%–3.5% (FY24: 2.9%), but still the lowest amongst banks in our coverage, with CASA ratio of > 55%. To achieve these targets, the management plans to expand the bank’s retail and transaction banking segments as well as to enhance cross-selling by boosting product penetration. Meanwhile, Cost of Credit (CoC) is projected to rise to 1.0%–1.1% in 2025F (vs. 0.6% in 2024), while NPL ratio is expected to fall < 3%, improving NPL coverage to over 150%.
Market underperformance to persist; retain SELL and IDR 800 TP (0.24x PBV). While home ownership backlog in Indonesia is expected to remain above 15 million in 2025, offering substantial long-term growth potential for BBTN, the high-interest rate environment poses challenges. Also, the bank may have to bear higher cost of funds (CoF) than its peers, mainly due to elevated LDR ratio (1Q25: 94.4%), as well as potential asset quality deterioration amid sustained pressure on consumer purchasing power. Thus, we expect BBTN to continue its market underperformance. That said, we reiterate our SELL rating on BBTN with 12-month target price of IDR 800, implying 2025F PBV of 0.24x. Key upside risks for the bank include stronger-than-expected loan growth, improved NIM, and lower-than-expected credit costs.
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