Bank Tabungan Negara - 1Q13 results below expectations (Rp1,690; Buy; TP Rp2,100)The Rp334bn net profit, +7% YoY, account for 20% of consensus and 19% of our full year earnings. This is mainly due to rising provisioning charges and operating expenses.
NIM declined to 5.0% in 1Q13 from 5.1% in 1Q12 but showed improvement from the 4.9% recorded in 4Q12. The support came from 29% Y-Y loan growth. Housing loans increased 27% Y-Y while no-housing loans were up 42% Y-Y. Of the housing loans, the non-subsidized loans increased 51% Y-Y and the subsidized loans a mere 3% Y-Y. Of the non-housing loans, consumer lending reported a 56% Y-Y increase while commercial loans +39% Y-Y.
NPL was still high at 4.77% in March 2013 with housing loans NPL at 4.6% (3.1% in Mar 12 and 3.9% in Dec 12) and non-housing NPL at 5.8% (4.1% in Mar 12 and 5.1% and 3.9% in Dec 12). To Indonesia Market Summaries, the management indicated that February 2013 saw the peak of the NPL and this has started to improve in Mar with the expectation to continue improving going forward through a more efforts in visiting the customers for loan payment. The problem is concentrated in the interest only balloon payment (IOBP) subsidized housing loans, current outstanding Rp6tr (23% of total subsidized housing loans, 7% of total loans), which were given in 2008-10 for which the customers only had to pay the interest in the first few years and thereafter had to pay both principal and interest based on market rate (11-12%pa). The NPL in this type of loans reached 8% as compared to the other subsidized housing loans at less than 2%.
As a result of rising NPL, the bank had to increase their provisioning charges leading to the weak net earnings.
We anticipate further improvement in asset quality given the efforts by the bank and based on the Rp1.8tr net profit the stock is trading at 1.5x P/BV 2013F. Maintain our Buy with TP of Rp2,100 based on 1.9x P/BV 2013F