Credit Suisse:: Bank Tabungan Negara (BBTN, N, PT Rp1,450)

Credit Suisse:: Bank Tabungan Negara (BBTN, N, PT Rp1,450): To Launch Rights Issue in 2Q12 BBTN is targeting to launch a rights issue in 2Q12 to raise Rp2-3 tn to strengthen its CAR to 20% – vs 16% at the end of September 2011. In the rights issue, BBTN is looking to sell 12-14% additional stake and targeting a free float of 40%. Sales commentary: Despite the potential positive impacts of the rights issue to help BBTN’s overcome its funding constraint and high LDR, we remain concerned on potential NIM compression for the bank. Mortgage lending remains as BBTN’s forte and the Housing Ministry’s plan to lower subsidized mortgage rate to 5% would be a negative catalyst for the stock. We would be watching BBTN rights issue plan closely.