PT Bank Negara Indonesia (Persero) Tbk or BNI recorded solid financial performance in the third quarter of 2024, boosted by increases in net interest income and non-interest income. BNI's net profit for the nine-month period ending September 2024 reached IDR16.3 trillion driven by recovering operating income and well-maintained asset quality.
Unlike prior years, in 2024, BNI's Third Party Fund (DPK) growth was mostly came from retail savings growth, in keeping with the funding structure transformation program. This has an impact on improving BNI's Cost of Fund (CoF) as reflected in the Net Interest Margin (NIM) ratio in the third quarter of 2024. This growth was backed by the company's structured programs, including the digitalization of the latest mobile application, wondr by BNI, and the transformation of the branch network that centered on sales culture
BNI continues to show consistency in supporting national economic growth by optimizing available expansion opportunities. BNI sees significant and sustainable business growth opportunities in line with the government's vision of increasing GDP, poverty alleviation and various sectoral programs including infrastructure, energy and food security, SME empowerment, industrial downstreaming including agriculture and fisheries, and housing programs.
Optimism towards the new government's priority economic policies, accompanied by a smooth transition process, is expected to be a catalyst for credit growth in the banking sector in the future.
BNI President Director Royke Tumilaar stated that BNI's solid performance in the third quarter of 2024 reflects the company's ability to face both domestic and global economic challenges.
"The business transformation that we have consistently carried out has strengthened BNI's fundamentals, allowing us to capture opportunities to accelerate growth," said Royke at the BNI Q3-2024 Performance Exposure Press Conference in Jakarta, Friday (25/10/2024).
BNI recorded a performance recovery, especially in Q3-2024. Operating income before reserves or PPOP in Q3-2024 reached IDR8.8 trillion or almost touched its highest position in Q3 last year of IDR8.9 trillion.
This solid PPOP achievement came from an increase in the Net Interest Margin (NIM) and non-interest income. The company's NIM rose 40 bps quarterly to 4.4% supported by improvements in credit yields and a decrease in the cost of funds. Meanwhile, fee income growth was driven by loan recovery income, trade finance and payment transactions through the wondr by BNI application which continued to increase.
Credit distribution rose 9.5% YoY to IDR735 trillion supported by the low-risk segment. Blue chip corporate credit, both from the private sector and state-owned enterprises and government institutions, consumer credit, and contributions from subsidiaries were the largest sources of growth.
"Our transformation focus this year has been to improve the structure of third-party funds and we hope that the diversification of these funding sources will be even better in the future," said Royke.
Digital Banking Solutions
BNI Deputy President Director Putrama Wahju Setyawan explained that BNI's positive performance was inseparable from the digital banking transformation carried out by the company this year. Most recently, BNI introduced New BNIdirect on October 9, 2024, after previously on July 5, 2024 BNI launched its latest digital banking application, wondr by BNI.
BNI provides BNIdirect to meet the needs of wholesale banking segment services that facilitate business transactions of customers and business debtors digitally. The latest single sign on feature for BNIdirect allows customers to access various business segment banking services through one integrated platform.
At the end of Q3-2024, the transaction value through BNIdirect increased by 15.3% YoY to IDR5,743 trillion, with the number of transactions increasing by 28.6% YoY to 878 million transactions. "This strengthening of digital banking makes BNI's service operations more efficient and effective," said Putrama.
As for the retail segment, the latest mobile banking application wondr by BNI experienced significant growth. The number of users of BNI Mobile Banking and wondr by BNI services increased by 14.8% YoY to 17.9 million users. Digital banking transactions also grew significantly, reaching 1.04 billion transactions or up 40.9%, with transaction values increasing by 26.2% YoY to IDR1,104 trillion.
This shows that BNI's digital banking solution can effectively address a wide range of consumer needs. "Despite the fact that it has only been in operation less than three months, wondr by BNI has shown interesting growth. As many as 70% of BNI savings customers are contributed by customers using wondr by BNI. Active users who make transactions on this platform reach 50%," explained Putrama.
Both digital services also support BNI's other flagship product, Xpora. This product is a solution that offers digital services to export-oriented SMEs who want to increase their business capacity and expand their market.
The total credit for export customers until September 2024 reached IDR31 trillion from IDR19.1 trillion in December 2021 with a CAGR of 19.2%. The total number of customers served reached 44,000 SMEs. "The manufacturing and trade sectors from fisheries, wood production, textiles and handicrafts dominate the business at Xpora," said Putrama.
Intermediation Performance
BNI Finance Director Novita Widya Anggraini explained that BNI's intermediation performance grew positively and balanced, in line with the increasingly improving national economic recovery. BNI's business growth engine is in prime condition to expand while maintaining asset quality.
This is reflected in credit distribution which grew 9.5% YoY to IDR735 trillion until September 2024. This growth was driven by the corporate segment which recorded an increase of 15.1% YoY to IDR409.2 trillion.
Furthermore, the overall consumer segment recorded a growth of 14.6% YoY to IDR137 trillion, with personal credit (payroll) and Home Ownership Credit (KPR) as the main drivers. This year, the medium and small segments remain focused on improving credit underwriting so that these two segments will be ready to diversify BNI's credit growth next year.
BNI subsidiaries, such as BNI Finance, have become new growth engines. One example is BNI's engagement with BNI Finance in joint financing to increase consumer segment credit, especially for Motor Vehicle Credit (KKB) products.
This collaboration has resulted in excellent growth, with KKB distribution reaching IDR 1 trillion as of September 2024, an increase compared to the 2023 period. This is in line with BNI's strategy to strengthen synergy among BNI Group members.
As a result of credit acceleration in the low-risk segment, BNI's asset quality continues to improve, as indicated by the Non-Performing Loan (NPL) ratio which was successfully maintained at 2% in Q3-2024. Loan at Risk (LaR) improved to 11.8%, so that the Cost of Credit (CoC) could be maintained at 1%. Provision expenses also fell by 19.7% YoY to IDR5.4 trillion.
BNI's healthy credit distribution was also supported by the growth of CASA funds (current accounts and savings). As of September 2024, BNI's CASA was able to grow 5.5% YoY, mainly supported by savings which were able to grow solidly by 7.4% YoY.
BNI ESG Achievements
BNI Risk Management Director David Pirzada emphasized that as a state-owned bank that is the primary driver of Sustainable Finance implementation in Indonesia, BNI is committed to continuing to internalize sustainability principles in every step.
David explained that sustainability has become the core of BNI's business. As part of this commitment, BNI has set a Net Zero Emission (NZE) target for operational activities in 2028 and for financing in 2060. To achieve this goal, BNI will promote various initiatives, both in the operational and financing fields.
"This commitment is reflected in responsible financing for sustainable business activities, including a green portfolio that reaches IDR 188 trillion, or around 26% of BNI's total credit portfolio," David explained.
Until September 2024, BNI's green credit distribution has covered various sectors, including New Renewable Energy (EBT) such as hydroelectric power plants, solar power, and biogas, with total financing reached IDR10.2 trillion. In addition, financing for the air pollution control sector was IDR3.4 trillion, as well as natural resource management and sustainable land use was IDR31.9 trillion.
To strengthen climate change risk management, BNI has also reported the Climate Risk Stress Test (CRST) to OJK which covers six main sectors, namely natural resources, electricity, transportation and warehousing, construction, agriculture and manufacturing, and mortgage. These sectors covered 50% of BNI's total loan portfolio.
As part of its efforts to stimulate the energy transition, BNI continued to assist debtors in carrying out transition initiatives by providing Sustainability Linked Loans of IDR 5.5 trillion as of September 2024. BNI also supported the implementation of the Indonesian Sustainable Finance Taxonomy (TKBI) in order to help Indonesia meets its Net Zero pledge.