BTPN's first quarter of 2013 results is in line with expectations

BTPN 1Q13 results - in line with expectations (Rp5,100; Buy; TP Rp5,600)

Results in line. The Rp573bn net profit, +30% YoY, is in line with expectations, accounting to 22% of our full year expectation (similar to 1Q12) and 24% of the consensus.

NIM declined to 11.4% in 1Q13. Despite the lower NIM the strong loan growth of 28% helped support  the 26% YoY growth in net interest income. Lower NIM was recorded given the decline in average interest yield of 17.5% in 1Q13 compared to 18.9% in 1Q12 while the decline in average cost of funds was slower at 6.8% vs. 7.8%. With deposit growth of 25% YoY gross LDR reached the new record of 88%. Of the total loans we believe loans to pensioners (consumer loans) still account for around 72% while micro loans at 23%. On the deposit side, there is not much change in the composition with CASA deposits make up 16% and time deposits 84%.

Low NPL maintained at 0.7%. This level is the same as in March 2012 but it increased from 0.6% recorded in December 2012. With the estimated write-off of Rp95bn in 1Q13 coverage ratio is now at 155% compared to 170% in December 2012 and 144% in March 2012.

High capital. CAR is one of the highest in the industry at 22.8% with Tier I CAR of 21.9%.

Buy with TP Rp5,600. The bank, which has been recording 23-35% ROE in the past nine years is trading at 2.9x P/B 2013F. Maintain Buy with TP of Rp5,600 based on 3.2x P/B 2013F.