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3Q25 Net profit -25.6% QoQ, +2.9% YoY; NIM down to 3.9% (2Q25: 4.4%). In 3Q25, BBTN posted consolidated net profit of IDR 597 bn (-25.6% QoQ, +2.9% YoY), bringing 9M25 earnings to IDR 2.3tn (+10.6% YoY), in-line with our forecast (74.1% of FY25F target) but below consensus (69.0%). The bank’s performance was largely driven by strong 43.5% YoY increase in net interest income (NII) to IDR 12.7 tn, supported by 7% YoY loan growth—driven by 8.0% YoY rise in subsidized mortgages (IDR 186.6 tn) and robust 10.7% YoY expansion in non-housing loans, with corporate loans up 27.5% YoY. Liquidity improved significantly, as reflected in the drop in LDR to 88.6% (the lowest in three years) on the back of IDR 25 tn Ministry of Finance fund injection (6.2% of DPK) in mid-September. The slip in NIM to 3.9% is primarily due to normalization following one-off technical boost from accounting adjustment in 2Q25. While gross NPL held steady at 3.4%, LAR improved from 20.2% in 2Q25 to 18.6%, signaling early recovery in assets quality and aligning with lower cost of credit at 1.6% (2Q25: 2.0%).
Housing KUR should help unlock growth. BBTN remains the key SOE bank driving government-backed mortgage and housing finance programs. Momentum in Housing KUR (KPP) scheme accelerated in October with BTN securing IDR 7.5 tn quota for both supply and demand sides (full disbursement is expected by year-end) and management mapping IDR 9.5 tn in allocation for 2025. Subsidized mortgage income remains well supported by resilient BTN House Price Index (HPI), led by type-45 houses at +4.6% YoY. On the digital front, the balé by BTN app, launched in February 2025, has reached 3.2 mn users (+68.2% YoY) with 1.1 bn transactions worth IDR 72 tn, while user deposits rose +22.1% YoY to IDR 21.4 tn, reinforcing BTN’s low-cost retail funding base.
2025: Stable guidance; positive outlook for 2026. Management maintained its FY25 loan growth guidance at 8–10%, supported by continued momentum in KPP and FLPP programs, while deposit growth is expected to slightly outpace loans at 9–10% YoY. The 4Q disbursement pipeline (IDR 20–22 tn) should lift full-year loan growth above 8%. Despite persistent competition and relatively high CoC of 1.6% YTD (FY25 guidance: ~1.5%), NPL management remains a key focus with gross NPL steady at 3.4% in Sep-25 and a target of <3.1% by year-end. Looking ahead to 2026, management guides for stronger loan growth of 10–11% supported by CoC normalization to 1.0–1.1% as assets quality improves. NIM is expected to expand, driven by higher proportion of KUR housing loans, robust KPP quota pipeline, and digital banking initiatives, reinforcing the bank’s medium-term growth trajectory.
Retain BUY on NIM improvement due to lower rates; IDR 1,600 TP (33.9% upside). We maintain our BUY rating on BBTN with 12-month TP of IDR 1,600, implying 2026F PBV of 0.45x. Our positive view is backed by expectations of continued NIM improvement in 4Q25, supported by lower CoF following Bank Indonesia’s 100 bps rate cut and easing SRBI yields. Loan growth is also poised to accelerate, driven by the rollout of Housing KUR program and sustained FLPP quota (2026: 350k units), which could offer attractive mortgage yields of up to 6%. While structural challenges in asset quality and funding mix remain, we believe the worst has passed, with the current policy environment offering more upside than risk. Key catalysts include faster FLPP disbursement, successful KUR execution, and continued CASA recovery, which together support BBTN’s return to stronger profitability trajectory
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