JAKARTA (TheInsiderStories) – State lender focused on housing loans, PT Bank Tabungan Negara Tbk (IDX: BBTN) eyes insurance and venture capital firms to support its business expansion, said acting CEO at the hearing with parliament on Tuesday (02/02). Last year, joint with PT Taspen Life, the issuer had acquired PT Jiwasraya Putra shares.
Both bought the shares from the problematic company, PT Asuransi Jiwasraya, the state insurance firm inability to pay policyholder claims caused a negative equity position. The CEO Nixon Napitupulu in a hearing with parliament, reported the bank wants to develop businesses related to 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 (NPLs). The lender, he said, has a fairly large NPL and need an asset management company that focus on buying and selling the secondary home assets.
He also reported, during 2020, the net profit of the state bank skyrocketed by 671.6 percent from Rp209 billion in 2019 to Rp1.61 trillion (US$115 million). The resulted achieved after the company carried out a massive cleanup of its’ balance sheet in 2019.
Last year, Moody’s Investor Service has affirmed Bank Tabungan Negara‘ ba1 Baseline Credit Assessment and Ba3 (hyb) long-term foreign-currency subordinated debt rating. At the same time, the agency has revised the bank’ rating outlook, as applicable, 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 repayment capacity of a large number of the 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 of last year, Bank Tabungan Negara 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 the company‘ low-income mortgage borrowers.
However, Moody’s anticipates some of the restructured loans to become NPL. The extent of any slippage will depend on the speed of Indonesia’ economic recovery. Bank Tabungan Negara 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 perent in the first nine months, while its tangible common equity over risk-weighted assets was 9.3 percent as of the same date.
Moody’s said, 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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