CIMB Quick Takes – Bank Tabungan Negara – New scheme on show

Maintain OUTPERFORM. The long-awaited new subsidy scheme was finally launched on 1 Oct 2010 after being postponed from its original launch date of 1 Jul 2010. The government has allocated Rp2.6tr for this programme for the remainder of 2010. This implies a potential additional subsidised-mortgage loan of Rp4.3tr for BTN or circa 11% pts of loan growth in 4Q10 from this subsidised mortgage alone, given that 60% of funding for subsidised loans will be provided by the government. Such a scheme certainly offers BTN great funding support amid the central bank’s recent liquidity tightening initiatives. With funding capacity exceeding our previous expectations, we upgrade our loan growth assumptions for FY11 from 27% to 29% and for FY12 from 25% to 27%, which lifts our FY11-12 EPS estimates by 2-4%. We also roll forward our target price to end-CY11, which raises it from Rp2,250 to Rp2,600 (GGM method, unchanged discount rate of 15.7%). Accelerated loan growth, especially from the subsidised scheme, should provide a near-term catalyst, in our view.