PT Bank Rakyat Indonesia (Persero) Tbk (BKRKF): Navigating Challenges and Opportunities in 2024

As we delve into the earnings call highlights of PT Bank Rakyat Indonesia (Persero) Tbk (BKRKF) for the full year of 2024, we find a bank that has weathered various challenges and emerged with a robust financial performance. Let's explore the key aspects of BKRKF's journey in 2024 and the strategies they've employed to maintain profitability and growth.



A Strong Financial Performance

BKRKF reported a 15.9% quarter-on-quarter growth in pre-provision operating profit, reaching IDR87.5 trillion. The bank's net interest margin remained strong at 7.8% for the quarter, aligning with their guidance. Return on equity increased by 20 basis points from Q3 2023, indicating improved profitability. The bank's cost-to-income ratio decreased to 42.4% quarter-on-quarter, showing improved operational efficiency. Net profit for the first nine months of 2024 increased by 2% to IDR45.1 trillion, supported by strong recovery income.

Managing Micro, Small, and Medium Enterprise (MSME) Lending

BKRKF's focus on MSME lending has had both positive and negative impacts on its overall loan portfolio growth and credit costs in 2024. While microloan growth decreased to 46.4% of total loans, reflecting tighter scoring standards and a focus on collections, the bank's corporate portfolio growth slowed to 16.9% year-on-year, impacting overall loan growth. To mitigate risks associated with this segment, BKRKF is implementing stricter criteria for KUR borrowers to graduate to cupidase loans, focusing on repayment capacity and preventing loan switching among family members. The bank aims to manage the MSME portfolio prudently, allowing customers with willingness to pay to restructure and front-loading provisions in 2025, expecting a spike in the first quarter.

Maintaining Strong Metrics Amidst Elevated Cost of Credit

To maintain its strong net interest margin and return on equity while managing the elevated cost of credit, BKRKF has been working on improving operational efficiency, focusing on corporate and medium segments, and managing microloan growth. The bank is also undergoing a cleanup process for restructured loans and reviewing macroeconomic assumptions to support its overall provisions strategy. By implementing these strategies, BKRKF aims to maintain its strong financial performance and navigate the challenges it faces in the MSME lending segment.

Supporting Corporate Loan Growth in 2025

BKRKF plans to support corporate loan growth in 2025 by focusing on top market leaders with strong ecosystems, improving account planning and customer profitability analysis, and enhancing relationship management capabilities. These factors are expected to support the bank's corporate loan growth in 2025, as mentioned in the earnings call transcript.

In conclusion, BKRKF's earnings call highlights for the full year of 2024 showcase a bank that has successfully navigated various challenges and maintained a strong financial performance. By focusing on operational efficiency, managing MSME lending risks, and implementing strategies to support corporate loan growth, BKRKF is well-positioned to continue its success in 2025 and beyond.