BTPS released its 1H25 results, which were largely in line with our expectations. Headline net profit (NP) was IDR333bn (+7% q-q, +16% y-y) in 2Q25, bringing 1H25 NP to IDR644bn (+17% y-y) – accounting for 50% of our FY25F earnings forecasts. We believe that the bank's net financing margin of 33.2% in 2Q25 may indicate financing mispricing. On the other hand, we have seen improvement in the on-time payment rate, which is showing an upward trajectory. Indeed, the on-time payment rate as of 2Q25 reached 90.8% (vs 78.7% in 2Q24 and 79.6% in 2Q23).

Based on our latest discussion with management, there are possibilities that the bank will conduct either share buybacks or distribution of an interim dividend. Looking at the financials and subdued loan demand, we believe that the bank is capable to perform such a corporate action without hurting the company’s financials. However, these corporate actions are subject to approval from the parent company. We think that with the share price having moved up materially (+62% YTD, vs JCI +6%), it is likely the bank may not be able to execute its buyback program effectively. This could mean it could pay larger payout ratio to shareholders. We maintain our Neutral rating on the stock with a TP of IDR1,100.

2Q25 results summary

Margin income was IDR1.3tn (+1% q-q, -4% y-y), bringing 1H25 margin income to IDR2.6tn (-5% y-y). Margin expenses (equivalent to cost of funds in conventional banks) reached IDR122bn (flat q-q; -6% y-y), bringing 1H25 margin expenses to IDR245bn (-4% y-y). These brought net margin income to IDR1.2tn (+1% q-q; -4% y-y), with 1H25 net margin income totaling IDR2.4tn (-5% y-y) – accounting for 49% of our FY25F projection. PPOP stood at IDR637bn (+1% q-q, -12% y-y), bringing 1H25 PPOP to IDR1.3tn (-14% y-y) – accounting for 50% of our FY25F projection. On the other hand, provisions (CoC) declined to IDR200bn (-8% q-q, -41% y-y), bringing 1H25 CoC to IDR418bn (-42% y-y). This translated into CoC of 7.8% in 2Q25 (down from 12.7% in 2Q24). This has resulted in lower write-off rates, which reached 8.3% in 2Q25 (down from 18.8% in 2Q24 and 11.7% in 4Q24). These have resulted into better NPL and LAR on a q-q basis at 3.1% and 5.3%, respectively. We believe that asset quality has not improved and remains an issue for the bank. Meanwhile, net profit reached IDR333bn (+7% q-q, +16% y-y), bringing 1H25 profit to IDR644tn (+17% y-y).

On the balance sheet, total financing (or loans) dropped by 3% y-y, with YTD growth at -3%, bringing total loans to IDR10.1tn. Deposits also decreased by 3% y-y, with YTD growth at -3%, bringing total deposits to IDR11.5tn. This translates into a financing ratio (LDR) of 88.5% (+50bp q-q; -30bp y-y). Overall, the balance sheet remained stable, with CAR at 54.5%. With on-time loan repayments still at ~90%, we think it is unlikely loans will grow. This means the bank has plenty of room for higher payout ratios in coming years, in our view.

Valuation and risks

We derive our TP of IDR1,100 based on a DuPont methodology, with a risk-free rate of 6.5%, an equity risk premium of 7.8%, a CAR-adjusted ROAE of 19.0% and a beta of 2.3x. Our TP implies 0.7x 2025F PBV and 6.6x 2025F P/E (currently 9.1x 2025F P/E). Upside/downside risks include management changes, lower/higher operational/fraud risks due to the cash-based nature of the business, better/adverse macroeconomic development, better/worse regulatory risks (especially the risk of lending rate caps), and better/worse asset quality risks.

Fig. 3: BTPS on-time payment trends

Fig. 4: BTPS – 12MMA cost of credit (CoC) vs 12MMA write-offs (WO)%

INVESTMENT RATINGS
A rating of ‘Buy’, indicates that the analyst expects the stock to outperform the Benchmark over the next 12 months. A rating of ‘Neutral’, indicates that the analyst expects the stock to perform in line with the Benchmark over the next 12 months. A rating of ‘Reduce’, indicates that the analyst expects the stock to underperform the Benchmark over the next 12 months. A rating of ‘Suspended’, indicates that the rating, target price, and estimates have been suspended temporarily to comply with applicable regulations and/or firm policies. Securities and/or companies that are labelled as ‘Not Rated’ or ‘No Rating’ are not in regular research coverage. Benchmark is Indonesia Composite Index (‘IDX Composite’). A ‘Target Price’, if discussed, indicates the analyst’s forecast for the share price with a 12-month time horizon, reflecting in part of the analyst’s estimates for the company’s earnings, and may be impeded by general market and macroeconomic trends, and by other risks related to the company or the market in general. 

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Erwin Wijaya (erwin.wijaya@verdhana.id)