PT Bank Tabungan Pensiunan Nasional Tbk Moving Into A New Normal - AAA Securities

2010 was indeed another spectacular bottom line growth but that also come with higher NPL as well which seems that will make the bank to be more prudent in its lending activity toward 2011 and forward, resulting in new normal growth in terms of loan and bottom line expansion. Valuation wise, the stock is trading below its +1 std, while long-term ROE remain premium. BUY.

± 2010 : 36% ROAE, 14% NIM and 128% Coverage Ratio
In 2010, BTPN booked strong performance, interest income accelerated faster at 55% yoy than interest expense that grew only 26% yoy, resulting in 80% yoy jump in net interest income and a 179 bps higher NIM at 14% as well. Deteriorating assets quality has been responded by 1,071% yoy increase in provisioning expense, signaling BTPN’s high risk management policy. Coverage ratio stood above 100%, at 128%. Even with higher provisioning expense, net profit still grew 99% yoy to Rp837 billion, inline with our and consensus estimates at 108%. ROAE stood the highest among peers, at 36%.

± Despite High NPL on Micro, Due to Size, Total NPL Only 1.1%
Apart from excellent EPS growth that jumped 99% yoy in 2010, BTPN also came with deteriorating asset quality. NPL rose from 0.5% to 1.1% on which by absolute number surged Rp186 billion to Rp266 billion. Of that amount, 89% came from micro loan and on stand alone basis, NPL in micro loan soared to 5% from previously only 1%. While maybe the figure sounds alarming, we see that as, something natural, due to pension loan is still 78% of total BTPN loan with NPL still stays low at 0.3%, hence as long as pension loan still has the biggest portion, we foresee total NPL going forward on average would be at around 1.5%, still manageable.

± “Taseto” Helped CASA Ratio Slightly Higher
However to cool down the NPL ratio, it seems that the bank will book lower loan growth in 2011 compare to 48% yoy loan growth in 2010. We expect the bank booked only 31% yoy growth, still above industry that is expected to grow at a rate 21% yoy. Third fund deposits in 2010, up 38% yoy, bringing LDR at 91%, highest level since FY08 at 91.6%. But CASA is improved from 10% to 12% due to the bank’s innovative product, “Taseto” (tabungan setara deposito / savings accounts that offers the same rate as time deposits) successfully enticed 73% yoy growth on savers.

± Valuation, Trading Below its +1std. BUY.
Post rights, the bank is in well capitalized. CAR ratio stood at 23.4%. And since the bank’s business focus (pension and micro) have low risk weighted assets below 70%, long term CAR would be sitting at 18%. In addition to that, rights also bring our long-term ROE assumption down from 29% to 25%. On that basis we come with TP Rp15,700 which is derived from Gordon growth methodology. Our TP implies 3.4x PBV, same level PBV with its +1 std dev. Current share price is trading at only 2.5x PBV. BUY