Ahead of Rights Issue of IDR 4.13 Trillion, BTN Earns IDR 2.49 Trillion Net Profit as of October

BTN President Director Haru Kusmahargyo: Doc. Antara/BTN

JAKARTA - PT Bank Tabungan Negara (Persero) Tbk (BBTN) recorded a positive performance ahead of additional capital with preemptive rights (PMHMETD) or rights issues. This specialist mortgage loan (KPR) bank earned a net profit of IDR 2.49 trillion at the end of October 2022, up 44.43 percent compared to October 2021 which was recorded at IDR 1.72 trillion

From the BTN Monthly Financial Report quoted by Antara on Tuesday, November 29, this achievement was supported by the company's revenue growth. BBTN's net interest income (NII) shot up 29.81 percent on an annual basis (year on year/YoY) to IDR 12.66 trillion.

The company's interest expense fell by 22.14 percent (YoY) to IDR 8.39 trillion, compared to the previous year of IDR 10.78 trillion. In fact, in the same period, BTN third-party funds (DPK) increased 1.92 percent (YoY) to IDR 314.65 trillion. This reflects an improvement in the structure of DPK so that the cost of funds can be reduced.

Meanwhile, interest income rose by 2.54 percent (YoY) to IDR 21.05 trillion. The increase in interest income was supported by an increase in sharia credit and financing by 8.04 percent (YoY) to IDR 293.66 trillion.

Overall, the bank led by Main Director Haru Koesmahargyo recorded total assets of IDR 391.58 trillion as of October 2022, an increase of 1.35 percent (YoY) compared to the same period the previous year.

BTN is currently processing a rights issue with a schedule for completion in December 2022. The target fund for the rights issue is IDR 4.13 trillion, including IDR 2.48 trillion for state equity participation (PMN).

MNC Sekuritas Tirta Gilang analyst Widi Citradi thinks that BBTN's rights issue is attractive because it is supported by the company's improving fundamentals. A clear improvement is seen in the cost of funds improvement.

"BBTN has had a solid performance as one of the provisions for the success of the rights issue", said Tirta in MNC Sekuritas' research released today.

The combination of strengthening the structure of low-cost funds or CASA carried out by BBTN and asset allocation with attractive returns and prudent risk management will be a driving force for increasing BBTN's net interest margin (NIM).

In addition to solid performance and a business strategy that focuses on good risk-adjusted returns, Tirta also assesses that what is no less important than BBTN's corporate actions is that the rights issue fund will strengthen BBTN's capital.

After the rights issue is carried out, BBTN's tier-1 capital can reach more than 15 percent and BBTN's CAR can reach 20.6 percent. This will bring BBTN in terms of capital to be on par with Bank Group banks based on Core Capital (KBMI) IV.

"Don't forget that this injection of fresh funds can make BBTN healthier from a liquidity standpoint. With an increase in GWM and a reference interest rate, banks will tend to compete for funding by raising deposit rates. However, if the rights issue is successful, BBTN doesn't need to until we have to be aggressive in raising interest rates and the funds can be used for expansion in BBTN's core business, namely mortgages, so BBTN's NIM can increase", said Tirta.