Key Drivers of BRI’s-PT Bank Rakyat Indonesia (Persero) Tbk or BRI is optimistic about the potential for future growth driven by three aspects. First, a clear new source of growth. Second, sufficient capital, and third, adequate liquidity.
BRI President Director Sunarso said, through Holding Ultra Micro (UMi). The Company ensures that new sources of growth will continue to grow. “The new source of growth is built through the formation of ultra-micro ecosystem synergies by including PT Pegadaian and PT Permodalan Nasional Madani (PNM) into the BRI Group.
Terms of Clarity Source of Growth
The first requirement is to have clarity on new sources of growth,” he said in the 2022 BBRI EMITALK discussion, Tuesday night (30/8).
Referring to data from BRI Group as the holding company for UMi as of June 2022, there are around 45 million potential ultra-micro customers that can be empowered. The 15 million of them have been able to access formal financing institutions.
Then the second growth requirement, continued Sunarso, is that BRI has sufficient capital. The CAR of the largest bank in the country per semester I-2022 is around 25%, up 20% on an annual basis. As is known, CAR or Capital Adequacy Ratio is the ratio of capital adequacy to accommodate the risk of loss that may be faced by banks.
According to Sunarso, the current CAR percentage makes BRI’s financial position safe. Thus, BRI has the flexibility to lower its CAR from the current 25% level to the optimal level in the 16%-18% range. “So in the next 2-3 years BRI does not need to increase capital. Instead, BRI needs to optimize capital by growing,” he said optimistically.
Then the third growth requirement is the availability of qualified liquidity. With sufficient liquidity, BRI was able to reduce the Cost of Fund (CoF) in the range of 1.7%. The CoF is the lowest, at least since 2019. In 2019, the figure was around 3.6%, in 2020 it was reduc to 3.2%, and in 2021 it was around 2.1%. Sunarso said this shows that BRI’s transformation is getting stronger, especially from its liability structure so that it can strengthen the availability of liquidity.
Dividend and Growth Projection
On the same occasion, BRI Finance Director Viviana Dyah Ayu projects that growth in the next 2-3 years will be at least in the 11%-12% range. Through this assumption, Viviana said, in the next 3-5 years BRI still has the opportunity to provide a higher dividend payout ratio compared to normal pre-pandemic conditions.
“This year, we have actually started a fairly high dividend payout ratio, which is approximately 85% of net profit in 2021. This means that each share receives approximately IDR 174,” he said.
With the current capital condition, growth in the range of 11-12% and also a commitment to provide optimal returns in the next 3-5 years, BRI still has the potential to provide dividends above 70%.
Similarly, Director of PT Indovesta Utama Mandiri Rivan Kurniawan, who is also an Indonesian Value Investor, said that BRI has this optimism. According to him, in the last two years, especially after the pandemic, BRI’s performance has been very solid. “And I see that the trend of BBRI’s performance also continues to improve after the pandemic,” he said.
According to him, there are several points of success for BRI. Namely in terms of loans and financing. Until the second quarter of 2022, according to him, BRI’s credit and financing grew by around 8.7% on an annual basis to Rp1,104.8 trillion from Rp1,015.9 trillion.
Then in terms of third party funds (DPK) it grew by around 3.7% on an annual basis to Rp1,137 trillion. In terms of profitability, BRI is also very strong. The net interest margin (NIM) in the second quarter of 2022 is around 8.24%, increasing on an annual basis from 7.41%.
“The increase in NIM was also driven by the focus on growth in the micro and ultramicro segments, as well as efficiency in interest costs. Net profit also grew strongly, reaching Rp. 24.9 trillion per semester I-2022, growing by around 98.4 percent on an annual basis,” he explain. The Return on Assets (RoA) also grew by 3% and the return on equity (RoE) also grew by 17.48 percent,” he continued.
Fee Based Income
Then another thing that was also highlight was Fee Based Income which increas by around 7.8% on an annual basis from Rp. 8.16 trillion to Rp. 8.79 trillion per quarter II-2022. According to him, this is inseparable from the e-channel segment and the deposit administration fee which is the biggest contributor. That is about 41% for e-channels and a deposit administration fee of around 26%.
In addition, the growth of non-e-channel and insurance related is also quite significant, which is about 53% growth and insurance related fees of around 46.9%.
BRI is also consider to be able to maintain credit quality which is much improv after the pandemic. Where in September 2020, loan at risk (LAR) had reached 29.8% during the pandemic. Over time, BRI’s LAR continued to decline, reaching 20.8% per quarter II-2022.
“In terms of reserves, loan at risk coverage has also consistently shown an increase from 21.8 percent in September 2020 to 42.4 percent in June 2022,” he said.
Finally, in terms of NPL coverage, which is currently very conservative at around 2.66%, it shows that BRI’s management is quite prudent and conservative in maintaining its NPL.