PT Bank Rakyat Indonesia (Persero) Tbk

Bank Rakyat Indonesia reported 9M24 net profit of IDR45.1 trillion, up 2% year on year. Pre-provision operating profit was IDR87.5 trillion, up 15.9% quarter on quarter and 10.2% year on year. Loan growth was 8.2%, with consolidated loans at IDR133.4 trillion. NIM was 7.7% for 9M24 and 7.83% in Q3, CASA ratio was 64.2%, cost-to-income ratio was 41.3% for 9M24, gross NPL was 2.9%, and net cost of credit was 1.59% year to date and 0.93% in Q3. Management left 2024 guidance unchanged: NIM target of 7.6% to 8%, cost-to-income ratio of 41% to 42%, and cautious commentary that full-year cost of credit could be above 3% if assumptions worsen. They also said loan growth could land at the low end of guidance, while Q4 should benefit from corporate base effects.

CEO Sunarso emphasized a stable Indonesian macro backdrop, citing projected 2024 GDP growth of 4.9% to 5.1%, easing food inflation, and potential support from a larger fiscal deficit. He framed BRI as well positioned for a falling-rate environment because of its liability-sensitive balance sheet and strong CASA, saying this should help profitability and funding costs. Strategically, he highlighted higher recoveries, improving asset quality, and a willingness to slow micro growth to protect credit quality, while noting that capital is elevated enough to support a higher dividend payout if approved.

CFO Vivi walked through a balance sheet that became more efficient, with loans to earning assets rising to 74% from 73% a year ago and earning assets reaching 93.3% of total assets from 91%. She said deposits grew 5.6% year on year, CASA rose 6.5%, and the loan-to-deposit ratio increased to 89.2% quarter on quarter, while leverage moved to 6x from 5.9x. On profitability, she cited net interest income up 4.5% year on year, non-interest income up 29.8%, PPOP up 10.2%, and cost-to-income at 41.3%; she also noted total CAR of 26.8% and reiterated confidence in an 85% or higher payout ratio. On guidance, she said deposit funding costs were already trending down and that 2025 credit cost could be lower if Kupedes vintages and recovery trends hold.

Analysts pressed management on whether credit costs could come down in 2025, whether loan growth had bottomed, and what was driving the spike in subsidiary credit costs, especially at PNM. Management said the cost of funds had likely bottomed, with marginal deposit costs falling from 3.69% in June to 3.52% in September, and explained that PNM’s provision spike reflected a cleanup of older group lending exposures; they said PNM’s full-year credit cost should be around 7% and lower in 2025. On Kupedes, management said any 2025 credit-cost improvement depends on continued vintage performance and a 30% to 35% fill rate on restructured 2023 loans, while growth would only re-accelerate if asset quality, officer capability, and underwriting/scoring improvements continue. A question about higher special mention loans in medium was answered as an administrative misclassification affecting five customers, which management said would be corrected by month-end.