4Q17 Review
BBTN booked the interest income of IDR5.4 trillion growing by 11.7% y-y, but the net interest income only grew by 8.9% y-y into IDR2.9 trillion. The net profit was only IDR1.0 trillion growing slightly by 2.5% y-y and affected by the hike of 26.3% y-y in the provision cost.

High Dependence on Subsidized KPR
In 2017, BBTN booked the credit distribution of IDR199.0 trillion growing 21% y-y. The average growth of around 20% was consistently maintained since 2015. However, the double-digit growth higher than the banking industry’s growth was heavily affected by the surge of 32.5% in 2017’s subsidized mortgage loan (KPR). The subsidized KPR portion of IDR75.3 trillion or 37.5% of the total credit constituted as the main contributor to the credit.

We are aware of the high dependency on the subsidized KPR impacting on flat profit growth. In 2015, the government launched the subsidized KPR program boosting the growth of 65.9% and 41.5% in 2015 and 2016’s net profit.

However we project that in 2018, the profit will only grow slightly compared to the growth of 15.6% in 2017’s profit. The government intervention in the subsidized KPR rate and the high funding portion of time deposit is setback in achieving the spectacular growth.


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