BTPS Initiation Coverage Mirae Sekuritas - 230822 - 085823

[Indonesia] Banks
BTPN Syariah Buy

(BTPS IJ) (Initiation)
As cheap as chips; Initiate with Buy TP: IDR3,650

Upside: 29.9%
Mirae Asset Sekuritas Indonesia

Hariyanto Wijaya, CFA, CFP, CPA, CFTe, CMT hariyanto.wijaya@miraeasset.co.id Rut Yesika Simak rut.simak@miraeasset.co.id
Company at a glance Serving ultra-micro lending segment with superior NIM, ROE, and loan growth prospects
 BTPS is one of the very few banks in Indonesia that serves the ultra-micro lending market. Compared to the
commercial and sharia banking industry, the company enjoys a higher loan growth rate given its niche
market for ultra-micro/unbanked females with enormous potential customers of around 45mn people. As
of June 2022, the company’s active customers are around 4.15mn people.
 The key strengths of BTPS include generating superior net interest margins (NIM) and return on equity
(ROE). As a note, prior to COVID-19 pandemic, BTPS booked >30% NIM and >24% ROE. The pandemic then
negatively affected the company’s performance due to social restrictions in 2020 and 2021.
Investment thesis Earnings growth to recover to 43%YoY in FY23F; ROE to recover to 25% in FY23F
 Improving people’s mobility and economic activities to the pre-pandemic level should make BTPS’ loan
growth keep recovering, which we estimate to reach 18% YoY in FY23F. Meanwhile, earnings growth is
projected to recover to 43% YoY in FY23F (vs. average earnings growth projection of the big 4 banks at 16%
YoY in FY23F) to IDR2.4tr, driven by the recovery in its loan growth and normalizing provisions.
 In line with our projection of significant earnings growth recovery, we also expect BTPS’ ROE to recover to
25% in FY23, which is higher than the big 4 banks of <20%.
The impact of sizable Ultra-micro lending business tends resilient during fuel price hikes
fuel price hikes  Learning from experience, micro and ultra-micro segments are quite resilient during fuel price hikes. This
can be seen from the financial performance of BTPS’ closest peer, PNM, which continued to show strong
revenue and earnings growth in FY13 and FY14, amidst the fuel price hikes. As a note, fuel prices of gasoline
and diesel rose significantly by 44.4% & 30.8% and 22.6% & 36.4%, respectively. Regardless, PNM was still able
to book strong earnings growth of 11.8% YoY and 28.7% YoY, respectively.
Undemanding Initiate with Buy recommendation and TP of IDR3,650
valuation  We initiate coverage on BTPS with a Buy recommendation and 12-month target price of IDR3,650. Our TP is
derived using Gordon Growth Model (GGM) which implies FY23 P/B of 2.9x (-1.3 SD of its 3-year mean P/B).
 We think that BTPS’ current valuation is still undemanding and should deserve higher valuation than the big
4 banks’ valuation considering: 1) we estimate BTPS should book strong FY23F earnings growth of 43% YoY
to IDR2.4tr, driven by strong FY23 loan growth; 2) its ROE should recover to 25% in FY23F, which is much
higher than the big 4 banks’; and 3) cleaner balance sheet in FY23F as the restructure loan should be already
at a low level in FY23F.
Key data
(D-1yr=100) JCI BTPS Share Price (9/23/22, IDR) 2,810 Market Cap (IDRbn) 21,647
130
Consensus NP (22F, IDRbn) 1,875 Shares Outstanding (mn) 7,704
120
110 NP Mirae Asset vs. consensus (22F, %) -9.3 Free Float (%) 30.0
100 EPS Growth (22F, %) 16.3 Beta (Adjusted, 24M) 1.0
90
80 P/E (22F, x) 12.7 52-Week Low (IDR) 2,530
70 Industry P/E (22F, x) 15.8 52-Week High (IDR) 4,100
9/21 11/21 1/22 3/22 5/22 7/22 9/22
Benchmark P/E (22F, x) 15.8
Share performance Earnings and valuation metrics

(%) 1M 6M 12M (FY Dec. 31) 2019 2020 2021 2022F 2023F
Absolute -6.3 -19.7 -17.1 Total OP (IDRbn) 3,952 3,562 4,302 4,926 5,986
Relative -6.1 -22.2 -34.0 PPOP (IDRbn) 2,190 1,970 2,608 3,063 3,974
Net profit (IDRbn) 1,400 855 1,465 1,701 2,447
EPS (IDR) 182 111 190 221 318
BPS (IDR) 700 763 921 1,065 1,271
P/B (x) 4.0 3.7 3.1 2.6 2.2
P/E (x) 15.5 25.3 14.8 12.7 8.8
ROE (%) 26.0 14.5 20.6 20.7 25.0
ROA (%) 9.1 5.2 7.9 8.1 10.1
Note: Net profit refers to net profit attributable to controlling interests
Source: Company data, Mirae Asset Sekuritas Indonesia Research
Analysts who prepared this report are registered as research analysts in Indonesia but not in any other jurisdiction, including the US. PLEASE
SEE ANALYST CERTIFICATIONS AND IMPORTANT DISCLOSURES AND DISCLAIMERS IN APPENDIX 1 AT THE END OF REPORT.
September 26, 2022 BTPN Syariah
C O N T E N T S
Investment thesis 3
Company at a glance 4
One of the very few banks with ultra-micro lending market 4
Building sharia digital ecosystem 5
1H22 earnings result 11

1H22 earnings growth driven by strong interest income growth 11
Improving efficiencies 15
Outlook 16
Improving people’s mobility should boost its loan and earnings growth 16
Consumers remain optimistic 18
Ultra-micro lending business tends resilient during fuel price hikes 19
Strong recovery post COVID-19 outbreak 20
Investment recommendation 22
Initiate with Buy and TP of IDR3,650 22
Management profile 23
Organization structure 23
Board of Commissioners (BOC) 24
Board of Directors (BOD) 25
Mirae Asset Sekuritas Indonesia Research 2

Investment thesis
One of the very few banks serving ultra-micro lending

Despite many banks serving the non-ultra-micro market, there are only very few banks
focusing on the ultra-micro segment. Therefore, the level of competition in ultra-micro is
relatively low compared to the non-ultra-micro segment. Additionally, the potential ultra-
micro market is enormous considering around 80mn people in Indonesia are reported
unbanked, bringing total potential customer of around 45mn to BTPS (vs. current active
customers of 4.15mn customers).
Loan growth to recover to high mid-teens % in FY23F

As long as there are no social restrictions and natural disasters, BTPS enjoys higher loan
growth than the commercial and sharia banking given the huge potential ultra-micro
customers. Prior to the pandemic era, BTPS booked loan growth of more than 20% p.a.
However, social restrictions disrupted the business of BTPS’ customers in 2020 and 2021. The
recent recovery in people’s mobility to pre-COVID-19 level should make BTPS’ loan growth to
keep recovering, which we estimate to 18% YoY in FY23F.
Earnings growth to recover to 43% YoY in FY23F

Prior to the pandemic era, BTPS experienced substantial earnings growth with 2015-2019
CAGR of 69% on the back of strong loan growth. In 2020 and 2021, the earnings of BTPS were
impacted severely by COVID-19 as many of the businesses of its customers were disrupted by
strict social restrictions. In FY23F, we estimate its earnings growth to recover to 43% YoY to
IDR2.4tr, driven by the recovery in its loan growth and normalizing provisions.
ROE to recover to 25% in FY23F

BTPS enjoys superior ROE than commercial and sharia banking on the back of its niche
segment, thus generating superior NIM and earnings growth. Meanwhile, prior to the
pandemic era, BTPS generated ROE of >24% in FY16 – FY19. We expect its earnings growth to
recover significantly in FY23F with ROE resuming to 25%, which is higher than the big 4 banks
of <20%.
Resilient during significant fuel price hikes

Learning from experience, micro and ultra-micro segments are quite resilient during fuel
price hikes. This can be seen from the financial performance of BTPS’ closest peer, PNM,
which continued to show strong revenue and earnings growth in FY13 and FY14 amidst the
fuel price hikes. As a note, fuel prices of gasoline and diesel rose significantly by 44.4% &
30.8% and 22.6% & 36.4%, respectively. Regardless, PNM was still able to book strong earnings
growth of 11.8% YoY and 28.7% YoY, respectively.
Initiate with Buy recommendation and TP of IDR3,650

We initiate coverage on BTPS with a Buy recommendation and 12-month target price of
IDR3,650 providing a potential upside of 29.9% to our target price. Our TP is derived using
Gordon Growth Model (GGM) which implies FY23F P/B of 2.9x (-1.3 SD from 3-year mean
forward P/B). As a note, we use long-term growth assumption of 10% and a cost of equity of
14%. Currently, BTPS is trading at 2.2x P/B based on our FY23F book value estimate (-2.0 SD
from 3-year mean forward P/B).
With BTPS’ higher earnings growth, superior NIM and superior ROE than the big 4 banks, we
think BTPS deserves for higher price multiple than the big 4 banks’. Near-term catalysts are
continuing strong loan growth, strong earnings growth, and recovering ROE.
Key investment risks include: 1) another social restriction in Indonesia; 2) unexpected and
massive natural disasters in areas where its customers are located; 3) a higher cost-to-income
ratio; and 4) weaker-than-expected loan growth.

Company at a glance
One of the very few banks with ultra-micro lending market

Unlike commercial banking which has abundant financial institutions, there are only very few
financial institutions serving the ultra-micro segment, thus bringing low level of competition
in the segment.
Strong loan growth due to enormous potential ultra-micro lending market

Bank BPTN Syariah (BTPS) enjoys higher loan growth than the commercial and sharia banking
industry. The company’s 2016-2021 CAGR loan growth was 13% (vs. commercial banking
industry of 6% vs. sharia banking industry of 11%). Such a high number was mainly due to
BTPS’ niche market for ultra-micro/unbanked females which still has huge potential
customers. According to Ministry of Finance, as of end 2021, around 80mn people in Indonesia
are reported unbanked, bringing a total potential customer of around 45mn to BTPS. With
the company’s active customers of around 4.15mn people as of June 2022, there are definitely
enormous potential customers to be onboarded by the company. The main drivers of BTPS’
loan growth are the number of new customers and upscaling customers.
BTPS’ loan growth slowed down significantly to 6% and 10% in 2020 and 2021, respectively,
given the social restrictions during the COVID-19 outbreak which disrupted the activities of
BTPS in surveying and onboarding new customers. As people’s mobility continues recovering
to the pre-COVID-19 level, the onboarding process of new customers should continue to
recover and favor recovering loan growth in 2022 and onwards.
Figure 1. Enormous potential customers Figure 2. BTPS’ high loan growth
(%, YoY) BTPS Commercial banking Sharia banking

50
40
30
20
10
(10)
2015 2016 2017 2018 2019 2020 2021
Source: Company data, Mirae Asset Sekuritas Indonesia Research Source: Company data, OJK, Mirae Asset Sekuritas Indonesia Research
Superior NIM and ROE

As long as the company could manage risks properly, there are advantages of serving ultra-
micro lending market, including generating superior net interest margins (NIM) and return
on equity (ROE), which become the key strengths that BTPS has obtained. Prior to COVID-19
pandemic, BTPS booked above 30% NIM, which decreased to 23% and 26% in FY20 and FY21,
respectively, due to social restrictions. With the recovery in people’s mobility and economic
activities that translate into normalized business activities of BTPS’ customers, BTPS’ NIM
should gradually recover to 30% level.
Similarly, BTPS booked higher ROE of above 24% prior to the pandemic which decreased to
14% and 21% in FY20 and FY21, respectively. With the recovery in its earnings growth, we
expect BTPS’ ROE to recover to 25% level in FY23F. Furthermore, BTPS’ higher ROE and
stronger earnings growth should make the company gain higher price multiple than the big
4 banks, in our view.

Figure 3. NIM: BTPS vs. commercial banking vs. sharia banking Figure 4. ROE: BTPS vs. big 4 banks
(%) BTPS Commercial banking Sharia banking

BBCA BBRI BBNI BMRI BTPS
40 (%)
35
30
28
21
20
14
10
7
0 0
2014 2015 2016 2017 2018 2019 2020 2021 2017 2018 2019 2020 2021
Source: Company data, OJK, Mirae Asset Sekuritas Indonesia Research Source: Company data, Mirae Asset Sekuritas Indonesia Research
Building sharia digital ecosystem
Serving productive underprivileged females in remote areas

BTPS was established as a sharia unit in 2011 and spun-off as a sharia bank in 2014. As of June
2022, BTPS spreads across 23 provinces with around 12k employees, 95% of them are female
employees and 45% are high school graduates. The high proportion of employees from high
school graduates benefits BTPS to maintain its competitive advantage in cost to income ratio,
in our view.
BTPS gives lending to ultra-micro by serving productive underprivileged females in remote

areas, i.e., tier-3 and tier-4 areas as lenders, especially in Java and Sumatra (see Figure 5-7).
Throughout the company's journey, BTPS aims to create a sharia digital ecosystem for the
unbanked and unprivileged females, hoping that this will open a broader financial access to
sustainably serve the inclusive society.
Figure 5. Margin income by geography Figure 6. Lending by geography Figure 7. Deposits by geography
(%) Java Sumatra (%) Java Sumatra (%) Java Sumatra
Kalimantan & Sulawesi Bali & Nusa Tenggara Kalimantan & Sulawesi Bali & Nusa Tenggara Kalimantan & Sulawesi Bali & Nusa Tenggara
4.9 3.8 4.8 3.8 4.7 3.5
25.3 23.9 25.4
66.0 67.6 66.3
Source: Company data, Mirae Asset Sekuritas Indonesia Source: Company data, Mirae Asset Sekuritas Indonesia Source: Company data, Mirae Asset Sekuritas Indonesia
Research Research Research

Figure 8. BTPS’ branch locations
Source: Company data
Besides choosing a unique market segment, BTPS also has a unique way of getting its
customers. Before providing loans, BTPS’ community officers (CO) form a group lending
model where the bank established Sentra (community center). Each Sentra consists of 2-4
groups of 5 individuals. Community formation is also a way for BTPS to maintain its asset
quality as there would be moral pressure by the members of community on individuals to pay
their loan installments properly.
On top of that, BTPS can manage and retain its individual lenders collectively through the
community. As of 1H22, the number of communities grew by 6.0% YoY to 249k (vs. 235k in
1H21 and 241k in FY21). Moreover, the number of active customers also increased by 3.8%
YoY to 4.2mn customers in 1H22 (vs. 4.0mn in 1H21 and FY21).
Figure 9. BTPS’ active customers and communities
Active Customers (L) Communities (R)

(mn) (k)
4.2 249 260
241 4.2
235
4.0 240
4.0 4.0
3.8 220
3.6 200
3.4 180
2019 2020 2021 1H21 1H22

Target markets for its funding and lending

BTPS only serves productive underprivileged females in remote areas as its customers are
classified as productive poor/unbankable. The lent money should be used for productive
purposes only, such as opening a small home industry. Notably, the average loan sizes are
less than IDR10mn.
Its third-party deposits generally come from the middle & high income, very rich employee,
and large & medium companies. Currently, BTPS gets its third-party deposits either from
employees, self-employed people, or companies in big cities where BTPS’ physical branches
are located.
Figure 10. BTPS’ target markets for its funding and lending
Higher CASA ratio in coming years

The re-launching of its internet and mobile banking in June 2022 should enable BTPS to get
third-party deposits from the broader markets. On top of that, the apps should also enable
the company to make its current account saving account (CASA) grow more rapidly. Currently,
BTPS’ CASA ratio is still hovering at 20% level, much lower than the level of sharia and
commercial banking. As BTPS’ CASA ratio should increase in coming periods, its blended cost
of funds (CoF) could be maintained at the current level amidst rising interest rate
environment.
Figure 11. CASA ratio: BTPS vs. commercial banking vs. sharia Figure 12. CoF: BTPS vs. BI-7DRR vs. commercial banking vs.
banking sharia banking
BI7DRR (R) BTPS (L)
(%) BTPS Commercial banking Sharia banking
(%) Commercial banking (L) Sharia banking (L) (%)
70 12 10
60 10
8
50
8
40 6
6
30
4
4
20
2
10 2
0 0 0
2014 2015 2016 2017 2018 2019 2020 2021 2014 2015 2016 2017 2018 2019 2020 2021
Source: Company data, Mirae Asset Sekuritas Indonesia Research Source: Company data, Mirae Asset Sekuritas Indonesia Research

Paket Masa Depan as one of the main financing products of BTPS

One of BTPS' main financing products is Paket Masa Depan (PMD). This product focuses on
character development and good habits of BTPS’ customers as entrepreneur, such as the
courage to start a business, discipline, hard work, and solidarity. With PMD, the customers
are to pay a biweekly installation with an average financing tenor of 1 year. After the loan
repayment, customers may move on to higher cycle (upscaling). The higher the cycle, the
better chance for its customers to borrow higher loan principles. In total, there are 4 cycles in
BTPS' ultra-micro financing journey (see Table 1).
Table 1. Cycle of BTPS’ ultra-micro financing journey

Cycle Average loan (IDRmn)
Cycle 1 2.0 – 3.0
Cycle 2 4.5 – 5.5
Cycle 3 5.5 – 6.5
Cycle 4 and above Avg. 7.0 to 10.0
Figure 13. The proportion of BTPS’ lenders by the cycle
Cycle 1 Cycle 2 Cycle 3 Cycle 4 and above

(%)
100
24 27 29 29 29 29
80
17
17 17 15 16 15
60
24
25 24 24 24 24
40
20 35 31 30 32 31 32
0
2018 2019 2020 2021 1H21 1H22
Increasing financial inclusion by building a sharia digital ecosystem

BTPS builds a sharia digital ecosystem and continuously initiates broaden access to financial,
supplies, knowledge, and market for the unbanked/underprivileged customers (see Figure
14). Currently, the company is doing digital initiatives by building four platforms: Tepat Daya
platform, Warung Tepat (Agent Apps), Tepat mobile banking, and Tepat internet banking.
These platforms are created to 1) adapt to the changing needs of customers; 2) ensure an
increase in the welfare of its customers; and 3) create opportunities to serve more customers
in a sustainable manner.

Figure 14. Building sharia digital ecosystem by utilizing technology
Tepat Daya is an integrated platform of digital learning & empowerment program for
increasing BTPS’ customer capacity as entrepreneurs by providing access to knowledge. Its
customers can learn entrepreneurship material independently and/or be assisted with
contributor who joined the empowerment program (see Figure 15).
Meanwhile, to facilitate communication with existing agents, BTPS has built Mitra Tepat
platform, which is an extension from the bank to provide banking services. Mitra Tepat is
supported by Warung Tepat application where clients can utilize to submit and withdraw
cash, open an account, do various transactions, such as buying phone credit as well as pay
bills, including e-commerce services for daily needs.
Figure 15. Tepat Daya platform Figure 16. Warung Tepat (Agent Apps)
Source: Company data Source: Company data
Moreover, BTPS has also just given e-channel services to its third-party depositors through
the re-launching of Tepat mobile banking and internet banking to optimize the transaction
convenience.
Tepat mobile banking will be provided for individual third-party depositors, while Tepat
internet banking will be provided for individual and corporate third-party depositors. In 2H22,
BTPS will complete the feature enhancements of Tepat mobile banking with QRIS, E-KYC,
withdrawal via third-party, and more biller partners.

Through this platform, we see that BTPS could increase its third-party deposit growth and
lending growth, considering that per 1H22 its Financing/Loan to Deposit Ratio (FDR/LDR) has
reached 96.2%. In addition, its CASA ratio could also increase, translating into manageable
CoF amidst rising interest rate environment during tightening monetary policy.
Figure 17. Tepat mobile banking Figure 18. Tepat internet banking
Source: Company data Source: Company data
In addition, the company is expanding the market access and reaching supply access by
creating BTPN Syariah Venture Capital (VC), where it can easily collaborate with strategic
partners with the same vision to further expand the digital ecosystem for an inclusive society
in the future.

1H22 earnings result

1H22 earnings growth driven by strong interest income growth
BTPS booked 2Q22 earnings of IDR445bn, escalating by 12.8% YoY and 9.7% QoQ.
Cumulatively in 1H22, BTPS’ earnings grew by 11.2% YoY to IDR856bn. The decent earnings
growth was driven by moderate loan growth and a decline in interest expenses from the
recovery in economic activities and efficiency measures taken by the management.
We see a gradual increase in BTPS’s net interest income since FY18. In 1H22, net interest
(margin) income grew by 16.1% YoY to IDR2,405bn, which should be stronger in 2H22 as
economic activities have recovered to pre-COVID-19 level. On top of that, BTPS also booked
higher non-interest income of IDR22bn (+102.3% YoY) in 1H22.
BTPS’ 1H22 earnings run-rate is still in line with consensus’ FY22F expectation, reaching 45.7%
(vs. 47.6% in 5-year average run-rate), respectively.
Table 2. Key financial highlights (IDRbn)

2018 2019 2020 2021 YoY (%) 2Q21 1Q22 2Q22 YoY (%) QoQ (%) 1H21 1H22 YoY (%)
Interest income 3,447 4,457 4,037 4,674 15.8 1,172 1,256 1,311 11.8 4.4 2,286 2,567 12.3
Interest expense -368 -524 -498 -395 -20.7 -105 -85 -82 -22.0 -4.3 -215 -162 -24.7
Net interest income 3,080 3,934 3,540 4,279 20.9 2,071 1,176 2,405 16.1 104.6 2,071 2,405 16.1
Non-interest income 13 18 22 22 2.0 5 13 8 61.2 -38.7 11 22 102.3
Operating income 3,093 3,952 3,562 4,302 20.8 2,076 1,189 2,413 16.2 102.9 2,082 2,426 16.5
Operating expenses -1,514 -1,761 -1,592 -1,693 6.4 -420 -476 -468 11.4 -1.7 -840 -943 12.2
PPOP 1,578 2,190 1,970 2,608 32.4 1,656 713 1,945 17.4 172.7 1,241 1,483 19.5
Provision expenses -276 -309 -850 -728 -14.3 -141 -187 -199 41.2 6.7 -249 -386 54.8
Operating profit 1,303 1,881 1,120 1,880 67.9 1,515 527 1,746 15.2 231.5 992 1,097 10.6
Pretax profit 1,299 1,878 1,124 1,877 67.0 507 521 571 12.6 9.5 987 1,097 11.1
Net profit 965 1,400 855 1,465 71.4 395 406 445 12.8 9.7 770 856 11.2
Total asset 12,039 15,383 16,435 18,544 12.8 17,407 19,180 20,031 15.1 4.4 17,407 20,031 15.1
Gross loan 7,277 9,000 9,523 10,443 9.7 10,048 10,647 11,146 10.9 4.7 10,048 11,146 10.9
Demand deposit 100 25 51 41 -19.8 27 26 27 0.5 1.3 27 27 0.5
Saving deposit 1,633 1,976 1,973 2,764 40.1 2,240 2,831 2,704 20.7 -4.5 2,240 2,704 20.7
Time deposit 5,878 7,446 7,756 8,168 5.3 8,346 8,185 8,980 7.6 9.7 8,346 8,980 7.6
Total deposit 7,612 9,447 9,780 10,973 12.2 10,613 11,043 11,710 10.3 6.0 10,613 11,710 10.3
CASA ratio (%) 22.8 21.2 20.7 25.6 21.4 25.9 23.3 21.4 23.3
LDR (%) 95.6 95.3 97.4 95.2 94.7 96.4 95.2 94.7 95.2
NPL (%) 1.4 1.4 1.9 2.4 2.4 2.4 2.5 2.4 2.5
NPL Coverage (%) 214.1 237.9 466.5 282.8 2.7 2.6 2.4 2.7 2.4
CoF (%) 5.2 6.1 5.2 3.8 1.0 0.8 0.7 2.0 1.4
CIR (%) 49.0 44.6 44.7 39.4 20.2 40.0 19.4 40.4 38.9
NIM (%) 30.6 30.0 23.3 25.6 12.5 6.5 12.8 12.5 12.8
Table 3. Results run rate (IDRbn)

Results run rate 1H22 BTPS (a) Consensus (b) (a)/(b) (%) 5-year average run rate (%)*
Comment
Interest income/(loss) 2,567 5,034 51.0 52.7 In-line
Net profit/(loss) 856 1,875 45.7 47.6 In-line
Note: Above: >5%. In-line: within ±5%. Below: <-5%, *exclude 1H20’s pretax and net profit

Figure 19. Net interest income trajectory Figure 20. Non-interest income trajectory
Net interest income (L) Growth (R) Non-interest income (L) Growth (R)
(IDRbn) (%, YoY) (IDRbn) (%, YoY)
4,500 30 25 120
+102.3% YoY
3,600 20 20
80
2,700 +16.1% YoY 10 15

40
1,800 0 10
0
900 -10 5
0 -20 0 -40
2018 2019 2020 2021 1H21 1H22 2018 2019 2020 2021 1H21 1H22
Provision expenses proportionally recognized throughout 2022
BTPS recorded higher financing loss provision expenses in 2Q22 to 199bn (+41.2% YoY, +6.7%
QoQ). Cumulatively in 1H22, the provision expenses increased by 54.8% YoY (vs. -36.2% YoY
in 1H21) due to the timing differences in provision expenses recognition. Despite recording
provision expenses in bulk at the end of 2021, BTPS’ provision expenses are recorded
proportional every month throughout 2022.
Due to changes in the provision timing recognition, FY22F net profit will be higher than the
previous period, in our view. This will also be reflected in FY22F profitability ratios, such as
ROA & ROE.
Figure 21. PPOP & net interest trajectory Figure 22. Provision expenses trajectory
PPOP (L) Net profit (L) Provision expenses (L) Growth (R)
(IDRbn) (%, YoY)
PPOP margin (R) Net profit margin (R)
(IDRbn) (%) 900 200
3,000 80
750
150
2,400
60 600
100
1,800
450 +54.8% YoY
40
50
1,200 300
20 0
600 150
0 0 0 -50
2018 2019 2020 2021 1H21 1H22 2018 2019 2020 2021 1H21 1H22
ROA & ROE keep recovering post pandemic outbreak
BTPS booked ROA of 11.4% (vs. 11.6% in 1H21 vs. 10.7% in FY21) and ROE of 23.5% in 1H22
(26.1% in 1H21 vs. 23.7% in FY21), respectively. The ROA and ROE performances keep
recovering post COVID-19 pandemic. We expect the growth to keep improving in FY23F and
onwards with ROE achieving above 24%.
As a note, BTPS’ ROA & ROE was higher than the 4 big banks with 1.9% and 13.1% in FY21 and
2.8% and 19.6% in 1H22, respectively.

Figure 23. ROA & ROE
ROA (L) ROE (R)

(%) (%)
12 28
9 21
6 14
3 7
0 0
2018 2019 2020 2021 1H21 1H22
Loan growth keeps recovering and posts higher performance than industry
Along with the economic recovery, we see that loan growth in the banking industry (including
BTPS) is increasing. BTPS booked loan growth of 10.9% YoY in 1H22, higher than the loan
growth of the banking industry of 10.3% YoY in 1H22.
We see that loan growth accelerates into double digit due to economic recovery and
increasing public's optimism towards economic activities. In addition, we also see that the
market expansion and the borrowing process are getting easier to support gradual growth
of loan.
Figure 24. Loan trajectory Figure 25. Quarterly loan trajectory
Loan (L) Growth (R) Loan (L) Growth (R)

(IDRbn) (%, YoY) (IDRbn) (%, YoY)
12,000 30 12,000 20
+10.9% YoY
9,000 9,000 10
20
6,000 6,000 0
10
3,000 3,000 -10
0 0 0 -20
2018 2019 2020 2021 1H21 1H22 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22
Cautiously optimistic for asset quality
In 1H22, BTPS recorded a decline of non-performing loan (NPL) coverage to 236% (vs. 272%
in 1H21 vs. 283% in FY21), which impacted the increase of NPL ratio to 2.5% (vs. 2.4% in 1H21
& FY21). Nevertheless, the SML (Special-Mention Loan) ratio declined to 1.7% (vs. 2.1% in 1H21
and 1.3% in FY21).
On the other hand, deposit and CASA ratio improved in 1H22. As of June 2022, BTPS recorded
the deposit growth by 10.3% YoY to IDR11,709bn. The highest growth was in saving deposits,
surging by 20.7% YoY in 1H22 to IDR2,703bn.

Meanwhile, CASA ratio grew higher to 30.4% in 1H22 (vs. 27.2% in 1H21), driven by third party
depositors surrounding its physical branches. We think the growth in CASA ratio will continue
in the future, boosted by the launching of Tepat mobile banking and internet banking to BTPS’
third-party depositors.
Figure 26. NPL & SML Figure 27. Deposit & CASA ratio
NPL Coverage (L) NPL ratio (R) SML ratio (R) Demand deposit Saving deposit (L)
(%) Time deposit (L) CASA ratio (R)
(%)
(IDRbn) (%)
500 3.0 12,000 30
2.5
400 2.4
9,000
20
300 1.8
1.7
6,000
200 1.2
10
100 0.6 3,000
0 0.0
0 0
2018 2019 2020 2021 1H21 1H22
2018 2019 2020 2021 1H21 1H22
Additionally, we see a lot of improvement in the restructured loan progress since 2Q20. In
June 2022, total loan under restructuring declined to IDR1.1tr vs. IDR1.7tr in December 2021
(c.10% of total loan in June 2022 and 16% in December 2021). The management guides the
restructured loan should decrease to around 2% of total loan in the end of FY22F.
Figure 28. Loan restructured progress
Loan restructured (L) % to total loan (R)

(IDRbn) (%)
7,000 80
5,600
60
4,200
40
2,800
20
1,400
0 0
2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22

Improving efficiencies
BTPS generates superior profit margins by improving its efficiency every year, which can be
seen in the decline in cost to income ratio (CIR). On top of that, its loan to employee ratio
keeps increasing.
The latest initiative to increase its efficiency is by converting the community leaders to use
Mitra Tepat app which will allow customers to make the biweekly financing repayment, not
only through BTPS’ community officers but also their community leaders via the app. This
should improve the productivity of BTPS’ community officers, in our view. Therefore, BTPS
will be able to reach more potential customers, without significant addition of its community
officers.
Figure 29. Cost to Income (CIR) Figure 30. BTPS’ loan/employee
(%)
Number of employee (L) Loan/employee (R)
60 (IDRbn/
(people)
people)
49.0 13,200 1.0
45 40.4 38.9 12,800
0.8
12,400
30 0.6
12,000
0.4
15 11,600
0.2
11,200
0
10,800 0.0
2018 2019 2020 2021 1H21 1H22 2015 2016 2017 2018 2019 2020 2021 1H21 1H22

Outlook
Improving people’s mobility should boost its loan and earnings growth
During COVID-19 pandemic in 2020 and 2021, the business of BTPS’ customers was disrupted
due to strict social restrictions, making around IDR8.8tr of its total accumulated loans
restructured.
Based on Google COVID-19 Mobility Report, people’s mobility in most provinces in Indonesia
has recovered to the pre-COVID-19 level, in line with the decline in COVID-19 cases. People’s
mobility in retail & recreation, grocery & pharmacy, and workplaces continue to increase in
Java and Sumatra (see Figures 35-38), where fundings are concentrated.
We believe the increase in people’s mobility is also supported by the relatively high
vaccination rates for the first-dose vaccines, second-dose vaccines, and booster vaccines
which reached 97.3%, 81.7%, and 27.3%, respectively (see Figure 41). Thus, we expect mobility
to keep increasing so that economic activity will also continue to recover in both urban and
rural areas. Furthermore, this could also support BTPS’ lending growth, in our view.
Now, most BTPS customers are able to operate their businesses normally. This has improved
the company’s restructured loans as seen in the decrease in flagged restructured loans to
IDR1.1tr (active delay payment of its total loan has decreased to 5.8%) as of June 2022. Due to
the impact of the COVID-19-triggered restructured loan, BTPS’ asset yield slumped to 26% in
2020 (vs. 34% prior to the pandemic in 2019).
Currently, asset yield keeps recovering as restructured loans keep declining. We estimate its
asset yield to recover to 31% in FY23F. Similarly, on the back of the recovery in people’s
mobility and economic activities, we estimate BTPS’ loan growth to also recover to 18% in
FY23F, in along with its earnings growth at 43% YoY in FY23.
Figure 31. BTPS’ loan growth Figure 32. BTPS’ earnings growth
(%, YoY) (%, YoY)

30 90
COVID-19 COVID-19
70
20
50
30
10
10
-10
0
-30
-10 -50
2017 2018 2019 2020 2021 2022F 2023F 2017 2018 2019 2020 2021 2022F 2023F
Source: Company data, Mirae Asset Sekuritas Indonesia Research estimate Source: Company data, Mirae Asset Sekuritas Indonesia Research estimate

Figure 33. BTPS’ ROA trajectory Figure 34. BTPS’ ROE trajectory
(%) (%)
12 30
COVID-19 COVID-19
25
9
20
6 15
10
3
5
0 0
2017 2018 2019 2020 2021 2022F 2023F 2017 2018 2019 2020 2021 2022F 2023F
Source: Company data, Mirae Asset Sekuritas Indonesia Research estimate Source: Company data, Mirae Asset Sekuritas Indonesia Research estimate
Figure 35. Mobility on retail & recreation (Java) Figure 36. Mobility on retail & recreation (Sumatra)
Jakarta Banten Yogyakarta Aceh Riau Lampung

West Java Central Java East Java North Sumatra West Sumatra South Sumatra
(%)
150 (%)
150
100
100
50 50
0 0
-50 -50
-100 -100
8/20 2/21 8/21 2/22 8/22 8/20 2/21 8/21 2/22 8/22
Note: % change to baseline (median Jan 3-Feb 6, 2020) Note: % change to baseline (median Jan 3-Feb 6, 2020)
Source: Google mobility reports, Mirae Asset Sekuritas Indonesia Research Source: Google mobility reports, Mirae Asset Sekuritas Indonesia Research
Figure 37. Mobility on grocery & pharmacy (Java) Figure 38. Mobility on grocery & pharmacy (Sumatra)
Aceh Riau Lampung

Jakarta Banten Yogyakarta
North Sumatra West Sumatra South Sumatra
(%) Central Java East Java West Java (%)
200 200
150 150
100
100
50
50
0
0
-50
-100 -50
8/20 2/21 8/21 2/22 8/22 8/20 2/21 8/21 2/22 8/22

Figure 39. Mobility on workplaces (Java) Figure 40. Mobility on workplaces (Sumatra)
Jakarta Banten Central Java Aceh Lampung Riau
East Java Yogyakarta West Java South Sumatra North Sumatra West Sumatra
60 90
60
30
30
0
0
-30
-30
-60 -60
8/20 2/21 8/21 2/22 8/22 8/20 2/21 8/21 2/22 8/22
Figure 41. COVID-19 vaccination rate
Vaccination rate - 1st dose Vaccination rate - 2nd dose Vaccination rate - 3rd booster
(%)
100.0
97.3
80.0 81.7
60.0
40.0
27.3
20.0
0.0
10/21 12/21 2/22 4/22 6/22 8/22
Source: Mirae Asset Sekuritas Indonesia Research
Consumers remain optimistic

In line with higher economic activities due to the recovery in people’s mobility, consumer
confidence indexes also have recovered to pre-COVID-19 level. According to consumer survey
by Bank Indonesia (BI) in August 2022, the consumers remain optimistic. This is reflected in
the Consumer Confidence Index (CCI), Current Economic Condition Index (CECI), and
Consumer Expectation Index (CEI) of 124.7, 111.7, and 137.7, respectively. The three indexes
remained in the optimistic zone (index > 100), higher than the index in the previous month.
Consumers’ optimism should make the demand for ultra-micro loan keep growing.

Figure 42. CCI, CECI, and CEI
CCI CECI CEI

(pts)
160
137.7
124.7
120
111.7
80
40
0
8/15 8/16 8/17 8/18 8/19 8/20 8/21 8/22
Source: BI, Mirae Asset Sekuritas Indonesia Research
Ultra-micro lending business tends resilient during fuel price hikes

As of September 3, 2022, the government decided to increase fuel prices of gasoline and
diesel by 30.7% and 32.0%, respectively. This policy was taken to diminish the gap between
the economical price and the actual selling price.
Fuel price hikes could hit the purchasing power of mid-to-low-income segments. However,
learning from experience, micro segment is quite resilient during fuel price hikes. This can be
seen from the financial performance of BTPS’ closest peer, PNM, which continued to show
strong revenue and earnings growth in FY13 and FY14 amidst the fuel price hikes (see Table
4). As a note, fuel prices of gasoline and diesel rose significantly by 44.4% & 30.8% and 22.6%
& 36.4%, respectively. Regardless, PNM was still able to book strong earnings growth of 11.8%
YoY and 28.7% YoY, respectively.
Although Indonesia booked lower economic growth than the government’s GDP target of
only 5.58% in FY13, the micro, small and medium (SME) segments still showed healthy
financial performance growth and demonstrated their resilience during the significant fuel
price hike.
All in all, we think SME including the ultra-micro segment would be resilient in facing current
fuel price hikes. In addition, the management of BTPS also stays confident that the segment
would find creative ways in handling current fuel price hikes.
Table 4. MSME’s performance (PNM) vs. fuel price hikes

Period Gasoline Diesel PNM's revenue (YoY) PNM's net profit (YoY) Note
22-Jun-13 ▲44.4% ▲22.2% +13.0% +11.8% FY13
18-Nov-14 ▲30.8% ▲36.4% +13.4% +28.7% FY14
01-Jan-15 ▼11.8% ▼3.4% +7.2% +7.0% FY15
19-Jan-15 ▼9.2% ▼15.0% +7.2% +7.0% FY15
01-Mar-15 ▲1.5% - +7.2% +7.0% FY15
28-Mar-15 ▲7.4% ▲7.8% +7.2% +7.0% FY15
05-Jan-16 ▼7.2% ▼18.1% +9.2% +17.4% FY16
01-Apr-16 ▼7.2% ▼8.8% +9.2% +17.4% FY16
Note: ▲Fuel price hike; ▼Fuel price down
Source: PNM, Mirae Asset Sekuritas Indonesia Research

Strong recovery post COVID-19 outbreak

Since the COVID-19 outbreak, BTPS' performance has continued to improve, even higher than
the commercial or sharia banking. We attribute the faster recovery of BPTS to its unique
business model.
Faster recovery in loan growth

We think, due to its unique business model that serves underprivileged females in remote
areas, BTPS could recover its loan growth faster than commercial and sharia banking. As a
note, most BTPS' customers and potential customers earn money from their daily business
activities. Hence, they still need to do such activities regularly, bringing faster loan growth
recovery. Since June 2021, BTPS has become the leading bank for loan growth on a YoY basis
compared to the commercial and sharia banking.
Figure 43. Loan growth trajectory Figure 44. Deposit growth trajectory
(%, YoY) BTPS Commercial banking Sharia banking BTPS Commercial banking Sharia banking
50 (%, YoY)
45
40
36
30
27
20
18
10
- 9
(10) -
2015 2016 2017 2018 2019 2020 2021 2015 2016 2017 2018 2019 2020 2021
Source: Company data, OJK, Mirae Asset Sekuritas Indonesia Research Source: Company data, OJK, Mirae Asset Sekuritas Indonesia Research
Outperform financial parameters in commercial and sharia banking

All the profitability ratios that we highlight, such as Return on Assets (ROA), Non-Performing
Financing/Loan (NPF/NPL), and Operating Costs and Operating Income (BOPO) show that
BTPS also outperforms commercial and sharia banking.
All in all, we believe BTPS should continue to outperform those banking in coming years,
partly supported by the development progress of its sharia digital ecosystem and ongoing
digitalization initiatives along with substantial potential customers.
Figure 45. ROA trajectory Figure 46. NPF trajectory
(%) BTPS Commercial banking Sharia banking BTPS Commercial banking Sharia banking
(%)
12 4
9 3 3.0
8.6
2.6
2.4
6 2
3 1
2.2
2.0
0 0
3/20 9/20 3/21 9/21 3/22 3/20 9/20 3/21 9/21 3/22
Source: Company data, OJK, Mirae Asset Sekuritas Indonesia Research Source: Company data, OJK, Mirae Asset Sekuritas Indonesia Research

Figure 47. BOPO trajectory
BTPS Commercial banking Sharia banking

(%)
100
86.8
80 79.9
60 58.5
40
20
0
3/20 9/20 3/21 9/21 3/22
Source: Company data, OJK, Mirae Asset Sekuritas Indonesia Research

Investment recommendation
Initiate with Buy and TP of IDR3,650

We initiate coverage on BTPS with a Buy recommendation and 12-month target price of
IDR3,650 providing potential upside of 29.9% to our target price. Our TP is derived using
Gordon Growth Model (GGM) and implying FY23F P/B of 2.9x. We use long-term growth
assumption of 10% and cost of equity of 14%.
Currently, BTPS is trading at 2.2x P/B based on our FY23F book value estimate (-2.0 SD from
3-year mean forward P/B). With its higher earnings growth, superior NIM and superior ROE
than the big 4 banks, BTPS should deserve for higher price multiple than the big 4 banks’, in
our view.
We also think that BTPS’ current valuation is still undemanding and should deserve higher
valuation than the big 4 banks’, considering: 1) we estimate BTPS should book strong FY23F
earnings growth of 43% to IDR2.4tr, driven by strong FY23F loan growth; 2) its return on equity
(ROE) should recover to 25% in FY23F, which is much higher than the big 4 banks’ ROE; and
3) cleaner balance sheet in FY23F as the restructure loan should be already at a low level in
FY23F. Furthermore, near-term catalysts are continuing strong loan growth, strong earnings
growth, and recovering ROE.
Key investment risks include: 1) another social restrictions in Indonesia; 2) unexpected and
massive natural disasters in areas where its customers are located; 3) higher cost-to-income
ratio; and 4) weaker-than-expected loan growth.
Figure 48. Forward P/B Band (1) Figure 49. Forward P/B Band (2)
(x) P/B -1 SD +1 SD -2 SD +2 SD Mean

(IDRbn)
8
6,000
5.0x
6 4,500
4.0x
4 3,000 3.0x
2.0x
2 1,500
0
0 9/19 9/20 9/21 9/22
9/19 9/20 9/21 9/22
Source: Mirae Asset Sekuritas Indonesia Research Source: Mirae Asset Sekuritas Indonesia Research
Table 5. Bank comparison

Mkt cap EPS growth (%) ROE (%) P/B (x) P/E (x) Div. yield (%)
Ticker Company name (IDRbn) 2022F 2023F 2022F 2023F 2022F 2023F 2022F 2023F 2022F 2023F
BBCA Bank Central Asia PT 1,038,592 17.6 13.4 17.3 17.8 4.6 4.2 28.1 24.8 1.8 2.1
BBRI Bank Rakyat Indonesia Persero Tbk PT 682,016 31.0 16.2 15.4 16.7 2.2 2.0 14.4 12.4 4.7 5.6
BMRI Bank Mandiri Persero Tbk PT 428,167 34.6 13.0 17.2 17.9 1.9 1.7 11.3 10.0 4.6 5.5
BBNI Bank Negara Indonesia Persero PT 168,304 53.3 21.4 12.9 14.3 1.2 1.1 10.1 8.3 2.4 3.2
BRIS Bank Syariah Indonesia PT 64,984 34.0 27.6 14.8 16.4 2.3 2.0 16.0 12.5 1.7 2.3
BANK Bank Aladin Syariah PT 23,055 5.7 -54.3 N/A N/A 6.6 6.7 N/A N/A N/A N/A
Average 29.4 6.2 15.5 16.6 3.1 3.0 16.0 13.6 3.0 3.7
BTPS Bank BTPN Syariah PT 21,801 16.1 43.9 20.7 25.0 2.6 2.2 12.7 8.8 2.1 2.8
Note: Valuations are based on consensus (except BTPS)
Source: Mirae Asset Sekuritas Indonesia Research estimate

Management profile
Organization structure
PT. Bank BTPN Syariah Tbk (BTPS IJ) is engaged in banking based on sharia principles. BTPS
is a subsidiary of PT. Bank BTPN Tbk (BTPN IJ).
As of 2014, BTPS was spun-off as a sharia bank. As of June 2022, the bank spreads across 23
provinces with around 12k employees, 95% of them are female employees and 45% are high
school graduates.
Currently, the shareholders structure of BTPS consists of PT Bank BTPN Tbk (70.00%), Public
(29.98%), and Treasury Stock (0.02%).
Table 6. Shareholders structure (As of August 31th, 2022)

Entity Number of shares Percentage ownership
PT Bank BTPN Tbk 5,392,590,000 70.00
Public 2,309,842,000 29.98
Treasury Stock 1,268,000 0.02
Total 7,703,700,000 100.00
Figure 50. Organization structure

Board of Commissioners (BOC)

Kemal Azis Stamboel – President Commissioner (72 years old)
Educational background
1985: Master of Science in Business Management – Hult International
Business School
1974: Bachelor of Psychology – Padjadjaran University
Professional background
2014 – Present: Commissioner and Independent Commissioner – PT
Bank BTPN Syariah Tbk
2004 – 2018: Independent Commissioner and Chairman of the Audit
Committee – PT Holcim Indonesia Tbk
2013 – 2018: Advisor to the Board of Directors – PT Indosat Tbk
2013 – 2017: Secretary General – the Association of International
Banks of Indonesia (PERBINA)
Committee – PT Titan Petro Chemical
Committee – PT Krakatau Steel
2005 – 2008: Supervisory Member of the Aceh and Nias Rehabilitation
and Reconstruction Agency
2002 – 2004: Country Leader & Partner – IBM
1982 – 2002: PwC Indonesia
Dewie Pelitawati – Commissioner (61 years old)
2005: Master of Laws – Padjadjaran University
1984: Bachelor of Laws– Padjadjaran University
2014 – Present: Member of Board of Commissioner/Independent –
PT Bank BTPN Syariah Tbk
2013 – 2018: Senior GM Corporate Legal, Governance and Compliance
and advisor to CEO – PT XL Axiata Tbk
2010 – 2013: Partner – Bahar and Partner Attorney at Law
2009 – 2010: Chief of Legal and Compliance – PT Indosat
2002 – 2003: Commissioner – PT Indosat Mega Media Mobile & PT
Satelindo
2001: Secretary to Junior Minister of the Indonesian Ministry of
National Economic Restructuring-RI
1999 – 2000: Head of Chairman Office – Indonesia Bank Restructuring
Agency
1985 – 1999: PT Indosat
Yenny Lim – Commissioner (55 years old)
1990: Bachelor of Science – Oregon State University
2014 – Present: Member of Board of Commissioner/Independent –
PT Bank BTPN Syariah Tbk
2015 – 2019: Chief of Finance & Planning – PT Bank Sumitomo Mitsui
Indonesia
2007 – 2015: Financial Planning & Project Division Head – PT Bank
Danamon Indonesia
2003 – 2007: Credit Management Head – PT Bank DBS Indonesia
1998 – 2003: Financial Planning & Analysis and Compliance
Coordinator – American Express Bank, Ltd
1991 – 1998: Credit Manager – PT Bank Dagang Nasional Indonesia

Board of Directors (BOD)

Hadi Wibowo – President Director (54 years old)
1991: Bachelor of Civil Engineering – Bandung Institute of
Technology (ITB)
2020 – Present: President Director – PT Bank BTPN Syariah Tbk
Previously:
• Director of Operations and Director of Small-Scale
Business – PT Bank BTPN Tbk
• Head of Branchless Banking – PT Bank BTPN Tbk
• PT Bank Danamon Tbk
• AC Nielsen
M. Gatot Adhi Prasetyo – Director (59 years old)
1987: Bachelor of Geodetic Engineering – Bandung Institute of

Technology (ITB)
2020 – Present: Funding & Fee Based Business Director – PT Bank

BTPN Syariah Tbk
Previously:
• Banking industry: Bank Pasific, Bank Universal, Bank
Permata, Bank Sahabat Purba Danarta as well as BTPN
Syariah (as Operational, Credit, Loan, System and
Procedure Development, Human Resources, and
Management)
• Media industry: Pay-Per-View Television – PT Direct

Vision/Astro TV)
• Insurance industry: Asuransi Astra Buana
• Technical Consulting Service industry: PT Infratama
Yakti, PT Ripta Paripurna, and PT Mirazh.
Arief Ismail – Director (55 years old)
1990: Bachelor of Industrial Engineering – Bandung Institute of

Technology (ITB)
2017 – Present: Director of Compliance – PT Bank BTPN Syariah Tbk

2011 – 2017: Head of Retail Banking & Wealth Management Risk
(RBWM Risk) – HSBC Indonesia
2010 – 2011: Head of Retail Credit Risk – PT ANZ Panin Bank

Indonesia
2005 – 2010: Head of Consumer Risk and Country Head of Risk and
Head of Consumer Risk – ABN Amro

2001 – 2005: Card Center’s Credit Cycle Manager and Unsecured
Risk Management Head – PT Bank Danamon Indonesia
1999 – 2001: Marketing Director – PT Rahajasa Media Internet
1995 – 1999: Director of Risk and Director of New Business – GE

Capital
1990 – 1995: Citibank Global Consumer

Dwiyono B Winantio – Director (58 years old)
Bachelor of Economics – IMMI Management Institute
2017 – Present: Director of Financing Business – PT Bank BTPN

Syariah Tbk
2020 – 2021: Chief of Financing Business – PT Bank BTPN Syariah

Tbk
2017 – 2020: Region 2 (East) Distribution Head
2014 – 2017: Head of Business Development, Planning, and Support
Sales – PT Bank BTPN Syariah Tbk

1985 – 2011: PT CIMB Niaga Tbk
1985: Personnel division – Citibank
Fachmy Ahmad – Director (39 years old)
Bachelor of Economics (Accounting) – Padjadjaran University
2020 – Present: Director of Finance & Operations – PT Bank BTPN

Syariah Tbk
2017 – 2020: Finance & Investor Relation Head – PT Bank BTPN

Syariah Tbk
2013 – 2017: Senior Manager – PwC Indonesia
2012 – 2013: Head of Finance Project and Performance – Standard

Chartered Indonesia
2004 – 2011: From Associate, Senior Associate, assigned to Sydney
branch, to Manager and Assistant Manager – PwC Indonesia

BTPN Syariah (BTPS IJ)
Income statement (summarized) Key performance indicators

(IDRbn) 12/20 12/21 12/22F 12/23F 12/20 12/21 12/22F 12/23F
Interest income 4,037 4,674 5,391 6,742 Growth (%, YoY)
Interest expenses -498 -395 -489 -784 Net interest income -10.0 20.9 14.6 21.6
Net interest income 3,540 4,279 4,902 5,958 Non-interest income 23.4 2.0 8.0 15.0
Trading income - - - - Interest expense -5.0 -20.7 23.8 60.3
Fee and commission 3 1 1 1 Other operating expense -9.6 6.4 10.0 8.0
Other operating income 18 22 23 27 PPOP -10.1 32.4 17.5 29.7
Non-interest income 22 22 24 28 Provision expenses 174.8 -14.3 8.8 -10.6
Operating income 3,562 4,302 4,926 5,986 Operating profit -40.5 67.9 20.8 43.8
Personnel expenses -1,050 -1,147 -1,262 -1,363 Net profit -38.9 71.4 16.1 43.9
G&A expenses -500 -511 -563 -608 Loan -0.4 12.3 17.2 18.0
Other operating expenses -42 -35 -38 -41 Deposit 3.5 12.2 12.1 12.4
Total operating expenses -1,592 -1,693 -1,863 -2,012 CASA 1.2 38.6 29.7 34.8
PPOP 1,970 2,608 3,063 3,974 Total asset 6.8 12.8 13.4 15.0
Provisions -850 -728 -793 -709 Shareholder's equity 9.0 20.7 15.6 19.4
Operating profit 1,120 1,880 2,271 3,266
Pretax profit 1,124 1,877 2,268 3,263 Profitability (%)
Income tax -270 -412 -567 -816 Net interest margin 23.3 25.6 26.0 27.6
Net profit before minorities 855 1,465 1,701 2,447 Asset yield 26.6 28.0 28.5 31.3
Minorities - - -0 -0 Average cost of funds 5.2 3.8 4.2 6.0
Net profit 855 1,465 1,701 2,447 Spread 21.4 24.2 24.3 25.3
ROA 5.2 7.9 8.1 10.1
(IDRbn) 12/20 12/21 12/22F 12/23F ROE 14.5 20.6 20.7 25.0
Cash and cash equivalents 1,110 862 965 1,277
Current account with BI 3,026 1,075 1,161 1,254 Efficiency (%)
Placement at other banks 28 6 7 7 Cost/income ratio 44.7 39.4 37.8 33.6
Securities assets 2,827 6,023 6,505 7,039 Oper. exp/oper. income 82.5 65.5 63.8 58.5
Gross Loans 9,523 10,443 12,010 14,172 CASA ratio 20.7 25.6 29.6 35.5
Provision -849 -699 -594 -701 Loan to deposit ratio 97.4 95.2 92.8 97.5
Net loans 8,673 9,744 11,416 13,470
Total interest earning assets 15,664 17,711 20,054 23,048 Capital (%)
Net fixed assets 332 377 433 498 CAR 49.4 58.3 55.6 52.6
Intangible assets 102 129 162 200 Tier-1 ratio 48.8 57.7 54.9 52.0
Other assets 337 327 376 436
Total non-interest earning assets 771 833 971 1,134 Asset quality (%)
Total assets 16,435 18,544 21,025 24,182 Cost of credit (net) 8.9 7.0 6.6 5.0
Demand deposits 51 41 45 52 NPL/gross loan 1.9 2.4 2.4 2.4
Savings 1,973 2,764 3,594 4,851 NPL coverage 466 283 283 283
Time deposits 7,756 8,168 8,658 8,918 SML/gross loan 0.9 1.3 1.3 1.3
Total customers deposits 9,780 10,973 12,297 13,821
Other int. bearing liabilities 200 - - - Per share data
Total int. bearing liabilities 9,980 10,973 12,297 13,821 EPS (IDR) 111 190 221 318
Other non-int. bearing liabilities 576 475 523 565 EPS growth (%) -38.9 71.4 16.1 43.9
Total liabilities 10,556 11,449 12,820 14,386 BPS (IDR) 763 921 1,065 1,271
Share capital 770 770 770 770 BPS growth (%) 9.0 20.7 15.6 19.4
Additional paid-in capital 846 846 846 846 DPS (IDR) 43 31 59 77
Other equity 26 26 26 26
Retained earnings 4,245 5,461 6,566 8,157
Treasury stocks -10 -9 -7 -7 Valuation
Total shareholders' equity 5,879 7,095 8,202 9,793 P/B (x) 3.7 3.1 2.6 2.2
Minority interest - 0 3 3 P/E (x) 25.3 14.8 12.7 8.8
Total liab. + shareholders' equity 16,435 18,544 21,025 24,182 Dividend yield (%) 1.5 1.1 2.1 2.8
Source: Company data, Mirae Asset Sekuritas Indonesia Research estimates

Appendix 1
Important Disclosures & Disclaimers

2-Year Rating and Target Price History
Company (Code) Date Rating Target Price (IDR) BTPS Analyst's TP
BTPN Syariah (TPS IJ) 9/26/2022 Buy 3,650 5,700
3,700
1,700
Sep-20 Sep-21 Sep-22
Stock Ratings Industry Ratings

Buy : Relative performance of 20% or greater Overweight : Fundamentals are favorable or improving
Trading Buy : Relative performance of 10% or greater, but with volatility Neutral : Fundamentals are steady without any material changes
Hold : Relative performance of -10% and 10% Underweight : Fundamentals are unfavorable or worsening
Sell : Relative performance of -10%
Ratings and Target Price History (Share price (─), Target price (▬), Not covered (■), Buy (▲), Trading Buy (■), Hold (●), Sell (◆))
* Our investment rating is a guide to the relative return of the stock versus the market over the next 12 months.
* Although it is not part of the official ratings at PT Mirae Asset Sekuritas Indonesia, we may call a trading opportunity in case there is a technical or short-term
material development.
* The target price was determined by the research analyst through valuation methods discussed in this report, in part based on the analyst’s estimate of future
earnings.
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BTPS Initiation Coverage Mirae Sekuritas - 230822 - 085823

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[Indonesia] Banks

BTPN Syariah Buy

As cheap as chips; Initiate with Buy TP: IDR3,650

Mirae Asset Sekuritas Indonesia

Share performance Earnings and valuation metrics

1H22 earnings result 11

Mirae Asset Sekuritas Indonesia Research 2

One of the very few banks serving ultra-micro lending

Loan growth to recover to high mid-teens % in FY23F

Earnings growth to recover to 43% YoY in FY23F

ROE to recover to 25% in FY23F

Resilient during significant fuel price hikes

Initiate with Buy recommendation and TP of IDR3,650

Mirae Asset Sekuritas Indonesia Research 3

One of the very few banks with ultra-micro lending market

Strong loan growth due to enormous potential ultra-micro lending market

Figure 1. Enormous potential customers Figure 2. BTPS’ high loan growth

(%, YoY) BTPS Commercial banking Sharia banking

Superior NIM and ROE

Mirae Asset Sekuritas Indonesia Research 4

(%) BTPS Commercial banking Sharia banking

Building sharia digital ecosystem

Serving productive underprivileged females in remote areas

BTPS gives lending to ultra-micro by serving productive underprivileged females in remote

4.9 3.8 4.8 3.8 4.7 3.5

25.3 23.9 25.4

66.0 67.6 66.3

Mirae Asset Sekuritas Indonesia Research 5

Figure 8. BTPS’ branch locations

Source: Company data

Figure 9. BTPS’ active customers and communities

Active Customers (L) Communities (R)

Source: Company data

Mirae Asset Sekuritas Indonesia Research 6

Target markets for its funding and lending

Source: Company data, Mirae Asset Sekuritas Indonesia Research

Higher CASA ratio in coming years

Mirae Asset Sekuritas Indonesia Research 7

Paket Masa Depan as one of the main financing products of BTPS

Table 1. Cycle of BTPS’ ultra-micro financing journey

Figure 13. The proportion of BTPS’ lenders by the cycle

Cycle 1 Cycle 2 Cycle 3 Cycle 4 and above

Source: Company data

Increasing financial inclusion by building a sharia digital ecosystem

Mirae Asset Sekuritas Indonesia Research 8

Figure 14. Building sharia digital ecosystem by utilizing technology

Source: Company data

Source: Company data Source: Company data

Mirae Asset Sekuritas Indonesia Research 9

Source: Company data Source: Company data

Mirae Asset Sekuritas Indonesia Research 10

1H22 earnings result

Table 2. Key financial highlights (IDRbn)

Table 3. Results run rate (IDRbn)

Mirae Asset Sekuritas Indonesia Research 11

2,700 +16.1% YoY 10 15

Provision expenses proportionally recognized throughout 2022

ROA & ROE keep recovering post pandemic outbreak

Mirae Asset Sekuritas Indonesia Research 12

Figure 23. ROA & ROE

ROA (L) ROE (R)

Source: Company data, Mirae Asset Sekuritas Indonesia Research

Figure 24. Loan trajectory Figure 25. Quarterly loan trajectory