Jakarta. State-owned bank BNI recently reported that it had booked Rp 15.8 trillion in net profit as of September 2023, marking a 15.1 percent year-on-year growth.

BNI’s president director Royke Tumilaar said that it attributed the high net income to the credit performance which witnessed growth in the third quarter. As of Sept. 30, 2023, the bank’s credits grew 7.8 percent year-on-year to Rp 671.4 trillion. This growth is largely attributable to the expansion in the low-risk segment, namely blue chip corporations, both private and state-owned, consumer credit, and subsidiary companies.

“As credit in the low-risk segment grows, the quality of the assets improves as seen in the declining non-performing loan [NPL] ratio and loan at risk [LaR] ratio,” Royke was quoted as saying in a recent press statement.

BNI’s NPL ratio stood at 2.3 percent as of September, marking an improvement from the 3.0 percent recorded in the same period last year. BNI’s LAR had also improved from 19.3 percent in Sep. 2022 to 14.4 percent the following year. Credit costs also improved from 2.0 percent in Sep. 2022 to 1.4 percent a year later. As of September 2023, BNI's third-party funds grew by 9.1 percent year-on-year to Rp 747.6 trillion.

"There is a trend of rising reference interest rates that affects the cost of funds [CoF], and this is happening across the banking industry. But we are glad our CoF stands at around 2 percent. Structure-wise, it is still lower than the pre-pandemic level of above 3 percent," Royke said.

BNI's digital channels also drove the bank's current account savings account (CASA). The bank's capital adequacy ratio (CAR) rose from 18.9 percent last year to 21.9 percent as of Sep. 2023, above the minimum capital of 13.8 percent.  This high CAR allows BNI to expand businesses and invest in BNI Group.

Solid Digital Transactions
BNI is seeking to make its BNI Mobile Banking a "one-stop financial solution"  for its retail consumers.

The bank also reported that BNI Mobile Banking users had jumped 20.9 percent year-on-year from 12.9 million to 15.6 million users as of Sep. 2023. Transactions also skyrocketed by 75.3 percent year-on-year to 738 million transactions. These are worth Rp 874 trillion, marking a whopping 53.6 percent year-on-year growth.

"BNI Mobile Banking shows that we are on the right track of shifting our transaction services to digital," BNI Vice President Director Adi Sulistyowati said.

BNIDirect -- the bank’s “total solution” for business banking consumers -- is also witnessing major growth. Cash Management BNI (BNIDirect) users jumped 24.9 percent year-on-year from 122,100 users to 152,600 users. Transaction volume also increased 17.2 percent year-on-year or equivalent to Rp 5,017 trillion. It also recorded 745 million transactions, up by 37.9 percent year-on-year. Adi Sulistyowati attributed the increase in transactions to features such as payment management, collection management, liquidity management, value chain management, and open banking solutions.

Credit Distribution
Novita Widya Anggarini, the finance director at BNI, said that credit distribution rose 3.2 percent quarter-on-quarter in the third quarter. This is equivalent to a 2.6 percent growth quarter-on-quarter.BNI reported a consolidated credit growth of 7.8 percent year-on-year as of September, although the bank said it remained prudent. They largely came from low-risk segments, namely blue chip corporations, both private and state-owned, and consumer credit. As well as two subsidiary companies, namely Hibank and BNI Finance. 

Blue chip private corporate segment credit grew 19.2 percent year-on-year to Rp 251.6 trillion, followed by the enterprise segment, which is the direct value chain of corporate customers,  rising 10.2 percent year-on-year to Rp 57.4 trillion. The consumer segment grew 12.7 percent to RP 119.5 trillion, contributed mainly by growth in personal loans and mortgages. Subsidiaries lodged a 94.3 percent year-on-year growth in combined credits.

“The high credit distribution by subsidiaries is thanks to Hibank, which focuses on cluster-based MSME financing, as well as BNI Finance, which focuses on financing car ownership in the consumer segment,” Novita said.

Asset quality that continues to improve means the company can reduce the allowance for impairment losses. This makes credit costs improve from 2.0 percent in September 2022 to 1.4 percent in September this year. The said allowance is enough to cover the need for additional reserves for debtors who are still under special attention. The adequacy of these reserves is reflected in the reserve ratios for NPL and LaR in September 2023, which are at adequate levels of 324.5 percent and 51.1 percent, respectively.

Third-party funds grew 9.1 percent year-on-year, surpassing credit growth. According to Novita, this is because BNI focuses on building robust liquidity amidst the recent increasing global economic risks. Novita added the bank also kept its net interest margin within its target.

Asset Quality and Sustainable Finance
As of Sep. 2023, the restructured loans in the government’s national economic recovery stood at Rp 33.2 trillion. This is equivalent to 5 percent of the total credits, according to David Pirzada, the director for risk management at BNI. 

According to David, BNI’s financing for sustainable businesses also amounted to Rp 178.9 trillion or about 27 percent of the bank’s total credit portfolio. The bank’s sustainable portfolio encompasses MSME financing (Rp 118.3 trillion), management of environmentally-friendly businesses and natural resources (Rp 21.5 trillion), renewable energy (Rp 10.1 trillion), and financing for pollution prevention (Rp 3.7 trillion). It also includes other forms of sustainable portfolio which amounted to Rp 25.3 trillion.

The bank has also partnered with other corporations for sustainability-linked loans. BNI reported that its sustainability-linked loans portfolio has reached Rp 4.7 trillion as of the third quarter of 2023.

"Of course, we also offer attractive pricing as an incentive for debtors to help businesses achieve ESGs, within an agreed timeframe. We want to ramp up such initiatives so we can be the bank with the best ESG practices in Indonesia,” David said. 

Stock Performance
Silvano Rumantir, the bank’s wholesale and international banking director, said BNI (IDX: BBNI) had effectively traded at a new price on Oct. 6 following the 1:2 stock split.  This stock split aimed to expand the investor base, thereby increasing the liquidity of the shares.

“We would like to express our gratitude to our shareholders and the public for trusting our strong fundamentals in the company’s performance as well as the bank’s transformation process. This has increasingly given a positive outlook for BNI’s future performance,” Silvano said.

According to Silvano, BBNI’s average daily trading volume or daily turnover amounted to Rp 271 billion as of Oct. 2023. This is 18 percent higher than the same period last year, which totaled Rp 230 billion. As of Oct. 27, BBNI closed at Rp 4,850 per share, making the bank’s market cap to Rp 181 trillion. Analysts said that BNI shares' fair value could stand at Rp 5,900 per share. Hence, BNI’s share price will likely continue to rise in line with the bank’s solid financial performance.