Jakarta, 29 July 2022 -- PT Bank Negara Indonesia (Persero) Tbk. or BNI (stock code: BBNI) posted a solid trend of performance and expansion in the second quarter of this year in line with a healthy growth focus on Top Tier customers.
This achievement is also accompanied by efforts to strengthen the green portfolio and the implementation of the principles of sustainability or ESG (Environment, Social, and Governance) in every aspect of the company's business. BNI's net profit in the first semester of 2022 was recorded at Rp. 8.8 trillion, or grew 75.1% on an annual basis or year-on-year.
The choice of BNI's business focus to become a pioneer of financial institutions that strengthen Green Financing has paid off well. Morgan Stanley Capital International (MSCI) has announced the results of its latest ESG Leaders index review. From the results of the review, MSCI increased BNI's ranking in the MSCI Indonesia ESG Leader Index to become the Top Three in Indonesia. BNI is also still the holder of an A Rating from MSCI, the best rating in the industry today. Digitalization is one of the main drivers of high transactions, both by business and individual customers, which is also one of the passions of implementing green banking-based businesses.
BNI President Director, Royke Tumilaar said that BNI recorded a very good economic recovery in the middle of this year. Business activity and public consumption are getting stronger, thus encouraging BNI's performance as an intermediary function.
As a first mover in green banking, BNI has proven that the implementation of green financing in Indonesia is able to have a positive correlation with profitability. Digital transformation that encourages transaction banking continues to encourage the implementation of BNI's green banking to be more comprehensive.
“We are very grateful for the achievement of performance until the middle of this year. The performance of the intermediation function is getting stronger in line with the trend of economic recovery. The implementation of green banking can still be carried out, and even becomes a positive potential for profitability performance," he said.
Royke explained, the growth of organic performance based on digital services at BNI has resulted in strong and highest operational income before reserves (PPOP) in BNI's history of performance. This is the result of healthy credit expansion and is supported by low-cost TPF or CASA.
Stable net interest margin in the range of 4.7%, and supported by the high achievement of non-interest income which in the first semester of 2022 could reach Rp 7.6 trillion, up 11.0% YoY. Net profit was also achieved due to the strengthening of the intermediation function. Loans in the first half of this year were recorded at Rp 620.42 trillion, increasing more positively with a growth of 8.9% YoY.
One of the programs that should be taken into account as a driver of credit realization, especially in the small and medium segment is the BNI Xpora Program. During the first semester of 2022 alone, BNI Xpora has managed to disburse loans worth Rp 7.2 trillion. Even until June 2022, credit distribution to export-oriented MSME debtors has reached Rp 22.1 trillion with the number of debtors reaching 39,000 debtors.
Public fund raising performance also remained strong with the value of third party funds (DPK) reaching Rp 691.84 trillion, up 7.0% YoY. These deposits are dominated by low-cost funds (CASA), which account for 69.2% of the total collected deposits. The biggest contributors to CASA are savings customers who actively transact through the BNI Mobile Banking application and current accounts from customers who use cash management services on BNI Direct.
“As of June 2022, BNI Mobile Banking users contributed 59.2% of savings. Meanwhile, 92% of current accounts were contributed by cash management service users," he said.
Green Financing Continues Growing
Royke said that until the end of June 2022, BNI's financing in the green segment had reached Rp 176.6 trillion or 28.6% of total loans. The entire financing is intended for industries that produce products or services that have a positive impact on the environment.
BNI's green financing has so far been mainly provided for the needs of economic development through the empowerment of MSMEs worth Rp 117.9 trillion. Meanwhile, the rest is used for the needs of developing green environmental ecosystems of Rp. 16.1 trillion, new and renewable energy (EBT) of Rp. 12.0 trillion, and pollution management of Rp. 7.2 trillion, and water and waste management of Rp. 23.4 trillion.
"BNI also provides ease of ownership of electric vehicles through BNI consumer financing and financing through its subsidiary BNI Multifinance, with more attractive interest rates compared to financing for conventional cars. We are also working with PLN in the construction of a Public Electric Vehicle Charging Station (SPKLU) with a partnership scheme in the BNI office environment," he said.
He also emphasized that financing for New and Renewable Energy or NRE continues to increase quite strongly. Until the middle of this year, financing to NRE is intended for the needs of Hydropower, Solar Power, and Biogas.
“In an effort to support a green portfolio, BNI became a pioneer by issuing green bonds denominated in rupiah worth Rp 5.0 trillion. This issuance will later be used to encourage the performance of green banking, especially financing in 11 categories of green areas according to POJK 60/POJK.04/2017," he said.
Digital Service Performance
BNI Deputy President Director Adi Sulistyowati said that digital transformation had made a strong contribution both in terms of operations and BNI's profitability. As one of the pioneers of digital banking, the company is proactive in increasing service capacity and capability in encouraging and developing digital solutions for customers.
BNI noted that the number of users of BNI Mobile Banking application reached 12.14 million customers as of June 2022, an increase of 34.7% YoY. The number of transactions increased significantly by 34.8% to reach 271 million with a transaction value of Rp. 368 trillion or grew by 36.8% YoY.
“Of course, this excellent achievement will continue to be maintained and improved. BNI continues to strengthen its existence to become the main banking service channel for Indonesian banking customers," said Adi Sulistyowati, who is familiarly called Su.
Susi continued, the company has established partnerships with more than 4,000 Application Programming Interface (API) partners, with a total of 443 services. The banking function to provide access to financial services to the public, especially in remote areas, is also continuously improved by making branchless banking services or BNI Agen46 the spearhead.
The number of Agen46 which is an extension of this bank has reached more than 161,000 agents to help, some of the people who have not been served by formal financial institutions. In fact, the transaction volume value from Agen46 has reached Rp 37.32 trillion.
Electronic money services through the Tapcash product also support the trend of non-cash transactions in the community. A total of 8.89 million Tapcash cards in circulation are able to support transportation, F&B, and minimarket transactions with a transaction volume of Rp 698 billion.
In addition, Business Banking's digital performance was also recorded to be getting stronger in the first half of this year. BNIDirect's digital business solutions posted stronger performance. With a total of 79,800 users, BNIDirect has recorded a transaction volume of more than Rp 2,500 trillion.
“All BNIDirect transaction authorizations are secured with a Dynamic PIN generated by a physical or mobile token. BNIDirect's role as Corporate Digital Services has been very helpful for business customers and continues to receive appreciation," he said.
Intermediation Function Performance
BNI Finance Director, Novita Widya Anggraini said that BNI was able to encourage stronger intermediation function performance in the second quarter of 2022. Loan in the corporate segment is still the motor of BNI's loan acceleration. During the second quarter of 2022, BNI disbursed loans of Rp 74.3 trillion, higher than in the second quarter of 2021 which reached Rp 59.3 trillion. Loan disbursement in the second quarter of 2022 is mainly channeled to top tier corporate debtors.
This acceleration of loan disbursement led to financing to the Private Corporate segment which grew 14.7% YoY to Rp 205.3 trillion; the large commercial segment which grew 31.2% YoY to Rp 48.5 trillion; the small segment also grew 10.2% YoY with a loan value of Rp 100.2 trillion. Overall loans in the Business Banking sector grew 7.7% YoY to Rp 512.3 trillion.
“The economic sectors targeted in the business banking segment are manufacturing, trade, agriculture, transportation and warehousing, and telecommunications. BNI also enters the green economy sector such as new and renewable energy," she said.
In terms of consumer credit, Novita said, BNI is able to score a positive performance in the payroll credit business with 19.6% YoY growth to Rp 39.1 trillion and housing loans which grew 7.6% YoY to Rp 51.2 trillion.
"With BNI's consumer banking brand getting stronger, BNI is able to increase its competitiveness, while launching various innovations to increase the attractiveness of consumer products in competing with peers," he said.
BNI hopes that the economic performance trend in the second half of 2022 will again make BNI's intermediation function and performance even stronger. With the stronger growth potential of green banking debtors, BNI remains optimistic that credit growth by the end of the year will be between 7% and 10% this year.
"With the continuing trend of economic recovery, and the transformation that we are carrying out has begun to show results, we also hope that this year's profit can break the record for the highest profit in BNI's history," she said.
Novita believes that there is still room for BNI's expansion as indicated by the loan to deposit ratio (LDR) which is at 90.1 percent. On the capital side, the capital adequacy ratio (CAR) is in a strong position of 18.42%.
The good performance improvement is accompanied by strengthening the quality of the company's assets supported by various factors, improvement in Loan at Risk (LaR) to 19.6% (including restructuring loans due to Covid-19), and non-performing loans (NPL) which declined to 3.2% levels. Cost of Fund is more efficient at the level of 1.4%, and Net Interest Margin is stable at 4.7%.
This positive performance is inseparable from the Government's support which has made the business climate very conducive even in the midst of the threat of a global crisis. Loan restructuring due to the pandemic continues to show increasingly significant improvements.
"Covid-19 restructuring credit is recorded at Rp 62.9 trillion, down from the position in the same period last year of Rp 81.8 trillion. In fact, 64% of BNI debtors affected by the pandemic have started making payments above the base lending rate, so we are optimistic that the trend of improving credit quality will continue in all segments," he added.
Novita further said that BBNI's stock price closed at Rp 7,850 on 30 June 2022, an increase of 69.5% compared to the previous year. With a market capitalization of Rp 146.4 trillion, BBNI remains the main choice for investors. Apart from achieving positive and solid performance in the first half of 2022, several points can be a supporting note for BNI investors, namely: First, the Company is a leading financial business entity in carrying out digital transformation to prepare business foundations for the future.
Second, the Company also carries out a comprehensive corporate transformation into a bank that focuses on profitability. Third, BNI has an attractive valuation, because it does not reflect the actual fundamental conditions. In terms of transformation, the company continues to strengthen aspects of strengthening capital, digitization, and improving asset quality.
“In the long term, this transformation effort is directed at bringing BNI to be a bank with high profitability in the industry. BNI also remains worthy of continuing to be an investment collection because in terms of valuation, BNI's Price to Book Value (PBV) ratio is still in the range of 1.2x, not reflecting actual fundamental conditions," she said. (*)