PT Bank Tabungan Pensiunan Nasional Tbk Robust Performance - AAA

BTPN booked strong 1H11 results across all products. It is worth mentioning that 40% of its existing pensioners have renewed the loans leading to effortless loan growth and higher efficiency. Micro loan outlook is still robust and is a good differentiation strategy.

± ROE Remain Premium
BTPN continued to book stellar performance in 1H11 with net profit jumped to 69% yoy. With 101% yoy growth on its equity, its ROE is 25.8%, which is still premium among Indonesian banks, though plunged from 33% in 1H10 on the effect of rights issue. Net profit of Rp585 bn was in line, fueling 53% of our forecast. Provisioning expense increased 63% yoy in accordance with 10 bps increase in NPL from 0.9% to 1.0%. Loan loss coverage is ample at 112%.

± LDR Could Still Be Maintained at Current Level
Loan grew 33% yoy led by 41% yoy expansion in micro loan while pension loan is up 32% yoy. Although LDR is high at 91%, we feel that it could be maintained at current level as influx of deposits will be driven by: 1) Robust Taseto “Tabungan Setara Deposito” product (savings account with rate equal to time deposits. Hence, CASA has increased to 15% from 10% in FY09). 2) Adding 5 funding offices every year. In 1H11, third fund deposits grew 32% yoy.

± Catalysts
First, is the capability of BTPN in acquiring 500k pensioners out of 2 mn pensioners in Indonesia. Further good news is 40% of 500k has renewed their loans, implying easy loan growth and increasing efficiency going forward. Secondly, despite decreasing yield on micro loan, we believe BTPN will still be able to increase its loan volume as it differentiates from other competitors by offering faster loan process and approval (1 day, even only 2 hours) and by offering solution to its micro business customers by giving free counseling.

± Valuation, BUY with New TP of Rp4,200
We roll forward our valuation to FY12F thus we increase our TP from Rp3,300 (FY11F) to Rp4,200 (FY12F). Our TP implies 3.7x PBV FY12F. Historically PBV on average was traded at range 3.3x-3.8x. BUY.