22/08/2024. PT Bank Negara Indonesia (Persero) Tbk or BNI recorded a stronger performance in the first semester of 2024, supported by accelerated business growth, both in terms of lending and customer transactions, as well as momentum to improve maintained asset quality. This was reflected in BNI's consolidated net profit until June 2024 which grew by 3.8% on an annual basis (Year on Year / YoY) to reach IDR 10.7 trillion, which was in line with market expectations.
This good profit achievement was bolstered by credit performance which improved in the second quarter, allowing BNI to record credit growth as of June 2024 of 11.7% YoY to IDR727 trillion, an increase compared to credit growth in the first quarter of 9.6% YoY. This credit growth was driven by conservative expansion in low-risk areas such as blue chip corporations both private and state-owned, consumer credit, and subsidiaries.
BNI President Director Royke Tumilaar explained that the acceleration of credit growth was also inseparable from the stability of the national economy amid very dynamic global conditions, as well as an improved operating environment for banks, especially since Bank Indonesia (BI) provided incentives in the form of easing the obligation to fulfill the minimum reserve requirement (GWM) in rupiah to banks that channel credit or financing to certain sectors, which took effect on June 1, 2024.
Through these incentives, BI has broadened the scope of macroprudential liquidity policy (KLM) priority sectors to include the automotive, trade, electricity, gas, and water sectors, as well as social services, the creative economy, and green financing, in addition to the existing downstream mineral and nonmineral sectors, housing, and tourism.
Using this incentive, banks can receive greater funds, which can then be used to increase lending to the public. Furthermore, for BNI, this incentive has a beneficial influence on Cost of Fund (CoF), which began to improve in the second quarter of 2024 due to its ability to strengthen deposit structure.
BNI's loan disbursement (bank only) during the first semester of 2024 reached IDR171 trillion, an increase of 48% compared to the first semester of 2023, which was channeled mainly to blue chip corporations, both private and state-owned. The three economic sectors with the largest loan disbursements were trade, energy, and manufacturing. However, in general BNI still sees good loan demand in all economic sectors.
“Our credit expansion was focused on top tier debtors in each industry and region followed by business optimization from the debtor ecosystem, thus driving credit growth in other segments, such as consumer which grew up to 15.1% YoY,” said Royke.
In addition to accelerating credit growth, one of BNI's focuses in the second quarter of 2024 is to release a personal transaction application built using the latest technology platform, called wondr by BNI. wondr by BNI was launched on July 5, 2024 to coincide with BNI's 78th anniversary, built with in-depth research, following standards of excellence in the industry not only in Indonesia, but also following global standards, so it was projected to be a game changer for BNI and the banking industry in Indonesia.
“We were grateful that wondr by BNI has received good acceptance by the public. As of August 18, 2024, wondr by BNI has been downloaded more than 2 million times. One of the encouraging indicators for us was the high level of active users transacting, whose proportion has increased by 200% compared to the previous BNI Mobile Banking, showing high customer interest in this digital application,” said Royke.
The company's transformation agenda also continued on an ongoing basis. BNI strove to build work patterns that were more agile, collaborative, and careful in managing risks, so that business growth in each business segment ran in a measured manner.
Strengthening the role of subsidiaries has been increasingly beneficial to the BNI Group's overall success. Pre-Provision Operating Profit (PPOP) from subsidiaries increased by 4.8% year on year in Semester 1 2024.
“We were optimistic that BNI could continue to encourage this good growth trend, in order to make an optimal contribution in maintaining the momentum of credit and economic growth,” Royke said.
First Semester Performance Highlights 2024
Finance Director Novita Widya Anggraini said BNI was able to record credit growth as of June 2024 of 11.7% YoY to IDR727 trillion, an improvement compared to credit growth in the first quarter of 9.6% YoY. This credit acceleration was carried out while still prioritizing the principle of prudence where the source of credit growth came from low-risk segments, namely blue chip corporations, both private and state-owned, and consumer credit, as well as subsidiaries.
Corporate loans grew 18.7% YoY to IDR403.1 trillion from blue chip corporations, both private and state-owned. The consumer segment grew 15.1% YoY to IDR132.7 trillion, contributed mainly by the growth of personal loans and mortgage loans.
Strengthening the role of subsidiaries has also been more robust. Synergy between BNI Group was one of the main strategies to support sustainable performance. Some of the synergies that have been carried out were joint financing cooperation between BNI and BNI Finance through motor vehicle credit products (KKB), as well as hibank as BNI's future growth engine in the SME segment by utilizing the BNI Group ecosystem.
High credit growth was achieved amidst the relaxation of reserve requirements provided by BI through the Macroprudential Liquidity Policy (KLM) incentive. This GWM relaxation provided additional liquidity that was optimized to support lending as well as being used to improve BNI's deposits structure, by reducing the portion of institutional funds in current accounts and deposits, and replacing them with retail or individual deposits that were more efficient in terms of interest.
“The results could be seen from our total deposits in the first semester of 2024 which recorded a growth of 1% YoY, supported by savings growth of 4.3% YoY and current accounts of 1.1% YoY. Meanwhile, deposits corrected by 2.6% YoY. This pushed the CASA to deposits ratio up to 70.7% compared to 69.6% a year earlier. These efforts resulted in CoF efficiency, so that CoF in the second quarter of 2024 was 2.72%, an improvement of 7 bps compared to the previous quarter,” Novita explained.
Accelerated business expansion and CoF efficiency in the second quarter of 2024 resulted in Net Interest Income (NII) which increased by 3.1% from the previous quarter. Top line performance was also supported by good Fee Based Income (FBI) growth of 11.9% YoY, driven by fee growth from banking activities and digital transactions.
As a result of credit acceleration in the low-risk segment, asset quality continued to improve as seen from the decline in the Non Performing Loan (NPL) ratio and Loan at Risk (LaR) ratio. The NPL ratio as of June 2024 was recorded at 2%, an improvement compared to June last year at 2.5%. Meanwhile, LaR which included NPLs, loans in collectability 2, and current collectibility loans that were being restructured was recorded at 12.3%, an improvement compared to June last year of 16.1%.
“Although asset quality indicators showed strong improvement, we continued to balance it with provisioning at an adequate level to anticipate future uncertainty risks. The ratio of CKPN expense to total loans or credit cost until the first semester of 2024 was 1%, a decrease of 40 bps compared to the credit cost formed in the first semester of last year of 1.4%,” Novita explained.
The Loss Spare Reduction Value (CKPN) established was very adequate to cover the need for additional provisioning for debtors that are still under special attention. The adequacy of these provisions was reflected in the provisioning ratios for NPLs and LaR as of June 2024, which were at adequate levels of 298% and 48%, respectively.
“On a consolidated basis, BNI was able to book a net profit for the first semester of 2024 of IDR 10.7 trillion, growing 3.8% YoY. This achievement was relatively inline with market expectations. We were committed to maintaining the positive momentum of performance and achieving this year's business targets, among others by looking at the good loan demand, especially in the corporate segment, as well as the potential for improving liquidity conditions in the second semester of 2024 from more expansive monetary and fiscal policies, both global and domestic,” said Novita.
Consumer Segment as Business Growth Pillar
In the meantime, BNI Retail Banking Director Corina Leyla Karnalies explained, through the transformation agenda, BNI has sharpened its business focus and improved business processes that allow the consumer segment to become the second growth pillar after corporations. The consumer segment has grown by an average of 12% per year since 2020, higher than the average bankwide credit growth which has grown by an average of 8% per year since 2020.
As for the first semester of 2024, the consumer segment was able to grow 15.1% YoY, driven by payroll loans and mortgage loans, which grew 17% YoY and 12.6% YoY respectively. “We currently have a fairly strong position in the industry, where for key products such as mortgages, personal loans, and credit cards, BNI is Top-3 and Top-4 in the industry. We have aspirations to further strengthen our position in this segment, as well as make our consumer service products one of the people's top choices,” said Corina.
One of the keys to strong business growth in the consumer segment is optimizing business from the corporate customer ecosystem, while also deepening business through partnerships with top developers in Indonesia. The achievement, among other things, was represented in a 1.5x rise in ticket size of BNI KPR loans or the average KPR value per debtor from IDR558 million in 2020 to IDR782 million in June 2024. This increase indicated a shift to a higher segment of BNI KPR customers with better credit capacity and repayment capacity.
The shift in customer profile also occurred in payroll loans, which are loans given to customers whose salary accounts are with BNI. Almost all payroll loan customers totaling 335 thousand are fixed income earners from government institutions, as well as employees from private companies who are corporate segment customers.
“Going forward, we will continue to strengthen our consumer business proposition as a lifetime banking partner, one of which we did by organizing BNI Expo, a thematic exhibition that took place on August 2-4, 2024 at ICE BSD, Tangerang. This event attracted a lot of public interest with the number of visitors reaching more than 71 thousand people during the three days of implementation,” Corina explained.
This event was held by presenting 22 top developers, 24 top automotive brands, 14 travel agents, five airlines, and more than 70 retailers, accompanied by various promos of BNI's consumer and small segment financing products, superior financial solutions from subsidiaries, and BNI's convenient digital services.
“BNI Expo 2024 successfully played an important role in driving market growth by recording total transactions of more than IDR1.5 trillion. In the future, we will continue to present events like this because it will further strengthen BNI's position in retail banking,” said Corina.
Corina further said, related to digital banking performance, the company can consistently improve capabilities, and continue to be innovative in developing digital financial solutions that suit customer needs. One of them is the launch of wondr by BNI.
Compared to other applications, wondr by BNI offers a unique value proposition with three financial dimensions, namely Insights, Transactions, and Growth. These three financial dimensions will help users to do better financial planning, by understanding the pattern of income and expenses in a certain period, as well as planning and realizing their future financial goals by choosing what investment products are most suitable to achieve these goals.
“Of course, the development of wondr by BNI will not stop here. This app will continue to evolve into a super app with more new features to come, as well as a growing value proposition, offering financial solutions for families and the SME ecosystem,” added Corina.
Furthermore, BNI Mobile Banking is also still being activated in the context of transition. Its performance was quite good with the number of transactions in the first semester of 2024 growing 49% YoY to reach 688 million transactions, as well as the transaction value during the first six months which reached IDR707 trillion, growing by 30.1% YoY.
From the wholesale banking segment, the number of BNIDirect users reached more than 157 thousand users, growing 7.9% YoY. This drove the growth of cash management transaction volume to IDR3,798 trillion, growing 17.6% YoY. While the number of transactions reached 582 million times, growing 35.3% YoY.
Corina added, BNI has an extensive and growing network of BNI Agen46 Laku Pandai Agents. As of June 2024, the number of agents has reached 205,379, an increase of 18.2% YoY. This network has reached more than 6,000 sub-regencies and 35,000 villages throughout Indonesia. During the first semester of 2024, BNI Agen46 recorded a total of 42.88 million transactions with a value of IDR23.89 trillion.
"We still have other digital transformation agendas underway. The Company continues to be committed to providing the best banking experience for all customers, both retail and corporate customers," Corina concluded.