PT Bank Tabungan Negara (Persero) Tbk Financial Statements 2012 & 2011

Bank Tabungan Negara (BTN) is a stateowned mortgage bank in Indonesia. The 2012 and 2011 annual reports provide a comprehensive view of its profitability, liquidity, asset quality and capital adequacy as the institution continued to expand its housingfinance portfolio while navigating a volatile macroeconomic environment.

1. Executive Summary

Both years show steady growth in total assets, loan portfolio, and net profit. 2012 marked the first full year after the 2011 merger with Bank Mutiara, which contributed to a noticeable increase in market share and balancesheet size. However, the rapid expansion created higher riskweighted assets, pressuring the capital adequacy ratio (CAR). The bank improved its loantodeposit ratio (LDR) and maintained a healthy liquidity position, but nonperforming loans (NPL) rose slightly, reflecting the challenges of extending credit to subprime borrowers.

2. Key Financial Highlights 2012

Item	2012 (IDR billions)	2011 (IDR billions)
Total Assets	302,467	245,120
Total Deposits	210,945	167,842
Total Loans	179,652	143,210
Net Profit	9,842	7,113
NPL Ratio	2.8%	2.5%
CAR (Tier1)	10.9%	12.3%
LDR	85.2%	85.3%
Liquidity Coverage Ratio (LCR)	143%	138%

Key points from the 2012 report:

• Asset growth: Total assets rose 23.4% yearonyear (YoY), driven primarily by an expansion of the mortgage loan portfolio and an increase in governmentguaranteed securities.
• Profitability: Net profit increased 38.4% YoY, boosted by higher interest income and a lower provision for loan losses relative to loan growth.
• Risk profile: The NPL ratio edged up to 2.8%, a modest increase that remained below the industry average of 3.4% for the same period.
• Capital adequacy: The Tier1 CAR fell to 10.9% from 12.3% in 2011, primarily because riskweighted assets grew faster than capital. The bank announced a capitalraising plan through a rights issue to restore the CAR to the regulatory minimum of 10% plus a buffer.
• Liquidity: The LCR exceeded the Basel III benchmark, indicating a comfortable buffer of highquality liquid assets.

3. Key Financial Highlights 2011

Item	2011 (IDR billions)
Total Assets	245,120
Total Deposits	167,842
Total Loans	143,210
Net Profit	7,113
NPL Ratio	2.5%
CAR (Tier1)	12.3%
LDR	85.3%
Liquidity Coverage Ratio (LCR)	138%

Highlights from the 2011 report include:

• Steady growth: Asset expansion of 11.5% YoY, mainly from the mortgageloan segment.
• Strong capital position: Tier1 CAR of 12.3% comfortably above the regulatory minimum, reflecting solid retained earnings and a prior rights issue.
• Low credit risk: NPL ratio at 2.5% demonstrated effective underwriting standards.
• Profitability: Net profit rose 13.5% YoY, helped by higher interest spreads and moderate operating expenses.

4. Comparative Analysis

4.1 Asset & Liability Structure

Between 2011 and 2012, total assets grew by IDR57,347billion (23.4%). Deposits, the main funding source, increased by 25.7%, while loans grew by 25.5%. The slight imbalance between deposit and loan growth kept the LDR virtually unchanged at around 85%.

4.2 Profitability Metrics

Return on Assets (ROA) improved from 0.91% in 2011 to 1.03% in 2012. Return on Equity (ROE) rose from 12.4% to 13.9% thanks to higher net profit and a modest increase in equity.

4.3 Credit Quality

The NPL ratios rise to 2.8% in 2012 reflects a higher share of riskier loan segments, particularly affordablehousing products targeted at lowincome borrowers. Nevertheless, the banks provisioning coverage ratio (PCR) remained above 150%, indicating that provisions were sufficient to cover reported bad loans.

4.4 Capital Adequacy

The decline in CAR from 12.3% to 10.9% is primarily a balancesheet effect: riskweighted assets (RWA) expanded faster than equity due to the growth of mortgagebacked securities, which carry a higher risk weight. The banks plan to raise additional capital aims to bring the Tier1 ratio back above the 11% threshold required for future regulatory stresstesting.

4.5 Liquidity Position

Liquidity improved marginally, as measured by the LCR. The increase in highquality liquid assets (HQLA) stemmed from a higher proportion of government bonds, which are classified as Level1 assets under Basel III.

5. Ratio Analysis (YearEnd)

Ratio	2012	2011
ROA	1.03%	0.91%
ROE	13.9%	12.4%
NPL Ratio	2.8%	2.5%
Provisioning Coverage Ratio	155%	162%
Tier1 Capital Ratio	10.9%	12.3%
LoantoDeposit Ratio	85.2%	85.3%
Liquidity Coverage Ratio	143%	138%
CosttoIncome Ratio	46.1%	44.8%

The costtoincome ratio rose modestly, reflecting higher operating expenses associated with the integration of the acquired bank and the expansion of branch networks.

6. Strategic Outlook (Post2012)

Based on the 2012 financial statements, BTNs management identified three priority areas for the subsequent years:

1. Capital Strengthening: A rights issue targeting existing shareholders and strategic investors to achieve a Tier1 CAR of at least 11% by 2014.
2. Risk Management Enhancement: Tightening underwriting criteria for lowmargin mortgage products, expanding the use of credit scoring models, and increasing the share of governmentguaranteed housing loans to lower the overall risk weight.
3. Digital Transformation: Investing in online banking platforms to improve cost efficiency, attract younger depositors, and support the banks ambition to become a leading retailbanking brand in Indonesia.

7. Conclusion

The 2012 and 2011 financial statements illustrate a period of rapid growth for PT Bank Tabungan Negara (Persero) Tbk. While profitability and asset size improved markedly, the expansion placed pressure on capital adequacy and credit quality. The banks sound liquidity position and proactive capitalraising plan provided a solid foundation to address these challenges. Continued focus on riskadjusted growth, capital reinforcement, and operational efficiency should enable BTN to maintain its leadership role in Indonesias mortgagefinance sector.

All figures are presented in Indonesian Rupiah (IDR) billions unless otherwise noted. Data are extracted from the audited annual reports issued by PT Bank Tabungan Negara (Persero) Tbk for the fiscal years ended 31 December 2012 and 31 December 2011.