JAKARTA (TheInsiderStories) – State lender, PT Bank Tabungan Negara Tbk (IDX: BBTN) plans increase capital by releases a new shares with total amount Rp5 trillion (US$347.22 million), said the vice president director yesterday. As the major shareholders, the government must injected capital Rp3 trillion at the bank.
The new-appointed deputy CEO of the issuer, Nixon LP Napitupulu told the media virtually after the extra ordinary shareholders meeting, hoped the planned will get approval by the government in the first semester of 2021. The additional capital is needed by the company to increase the value of core capital because the financial firm has the smallest capital compared to other state-owned banks.
At the shareholders meeting, the government has appointed Haru Koesmahargyo as the new CEO of Bank Tabungan Negara to replace Pahala Mansyuri who became deputy vice state own enterprises minister. The shareholders also agreed not to share a dividend at the meeting.
The housing lender, targeting the 2021′ net profit to reached Rp2.8 trillion from last year Rp1.61 trillion, or up around 50 percent in annual basis. The bank also sees the realization of home ownership loans more than 200,000 houses in the same year inline with the expectations on the economic improvement.
Napitupulu said the biggest source of profit is from cost of funds saving and a massive cleanup of the company’ balance sheet. Until September of last year, the issuer had restructured more than 20 percent of its gross loans. Bank Tabungan Negara also plans to reduce the bond issuances amid the strong liquidity.
According to him, this momentum is an opportunity for the company to re-pricing the prices of the notes and relies on the third party funds. His party will also encourage the ratio of low-cost funds to encourage transaction fees working with several merchants or institutions with high transaction volumes.
In this year, the lender also looking an insurance and venture capital companiess to support its business expansion. Last year, joint with PT Taspen Life, the issuer had acquired PT Jiwasraya Putra shares from the problematic insurance firm, PT Asuransi Jiwasraya. Napitupulu conveyed, the lender wants to develop life insurance or bancassurance.
Beside life insurance, he conveyed, Bank Tabungan Negara also looking an asset management company that intended to generate a second home sales business and aimed to accommodate quite large non-performing loans. His office, he said, has a fairly large NPL and need an asset management company that focus on buying and selling the secondary home assets.
Recently, Moody’s has affirmed the government-owned bank’ rating to Ba1 and Ba3 (hyb) long-term foreign-currency subordinated debt rating, to negative from stable. The support assumption is underpinned by the government’ majority stake in the bank, the policy role in the national housing program, and its systemic importance to the financial system as one of the largest banks in Indonesia by deposits.
The change in outlook to negative reflects risks to the bank’ asset quality, as the economic contraction caused by the coronavirus pandemic has exacerbated pre-existing weaknesses in its loan portfolio. The repayment capacity of a large number of Bank Tabungan Negara” borrowers has been affected by the COVID-19 shock to the economy, as indicated by the substantial amount of restructured loans after the financial regulator relaxed the regulation on loan restructuring in March 2020.
Until September, the state lender had restructured more than 20 percent of its gross loans since the measure was introduced. Moody’s expects the bulk of the asset quality deterioration to be led by the bank’ non-subsidized mortgages and construction loans, which accounted for 31.5 percent and 10.8 percent of the gross loans as of Sept. 30, 2020.
Asset risk associated with subsidized mortgages, which constituted 45.6 percent of the its gross loans as of the same date, will however be mitigated by guarantees. Further, the loan restructuring program and an interest subsidy scheme introduced by the government will provide relief to Bank Tabungan Negara‘ low-income mortgage borrowers.
However, Moody’s anticipates some of the restructured loans to become nonperforming. The extent of any slippage will depend on the speed of Indonesia’ economic recovery. The lender ability to absorb losses, in terms of pre-provision income and capital, is modest when compared to its rated peers in Indonesia. The bank’ pre-provision income as a percentage of average assets was 1.2 percent
in the first nine months, while its tangible common equity over risk-weighted assets was 9.3 percent as of the same date. While, Bank Tabungan Negara‘ liquidity has improved amid easing liquidity conditions. Its liquidity coverage ratio was 178.4 percent in nine months of 2020, up from 131.1 percent a year ago.
The issuer will continue to benefit from government-related deposits and borrowings, and is likely to receive more concessional funding from the government to expand its subsidized mortgages.
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