An Opportunity In The Mortgage Industry

Banking is an extremely profitable business, largely because all other businesses need banking services. However, in most countries, a few players usually dominate the industry.

The same goes in Indonesia where more than 70% of banking assets are controlled by four lenders: Bank Central Asia (BBCA), Bank Mandiri (BMRI), Bank Rakyat Indonesia (BBRI), and Bank Negara Indonesia (BBNI). These four tend to make huge profits every year, while the rest often have to be satisfied with annual returns on equity of less than 12%.

Bank Tabungan Negara (BBTN) is one of the banks that regularly turn in that mediocre performance, with an ROE only in the range of 10-12% per year until 2015. So even though the book value of BBTN continued to grow in the long run, the growth rate was lower than those of the big four banks above, and likewise the stock price performance was not too hot.