This article first appeared on GuruFocus .
Release Date: August 05, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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PT Bank Negara Indonesia (Persero) Tbk ( PTBRY ) achieved its highest core profit (PPOP) in five years, reaching 18.5 trillion rupiah, up 14.5% year-on-year, driven by strong growth in net interest income and record fee income.
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The company's loan book grew 24% year-on-year, with 85% of growth coming from its core segments (large corporate, enterprise, and government-linked programs), and private sector loan growth outpaced related-party growth.
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Asset quality is stable and improving, with the loan at risk ratio improving from 11% to 8.1% and the NPL ratio holding steady at 1.9%, while new NPL formation declined 26% year-on-year.
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The bank maintains a strong liquidity position with an LDR of 87.7% (below the industry average of 91.7%), LCR at 129.8%, and NSFR at 132.3%, providing a buffer against industry-wide funding pressures.
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Digital engagement is accelerating, with the mobile app 'Warner' growing 76% in users (over half new to the bank) and BNI Direct seeing 50% growth in transactional current account balances, indicating a strengthening core funding franchise.
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The bank's transformation initiative (BRIF) is now running nationwide, empowering branches to operate like small businesses and focus on growing low-cost funds (CASA), which grew 11.2% year-on-year.
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Management is proactively building a stronger loan loss reserve buffer (3.8%, 20 basis points higher than peers) by frontloading provisioning, positioning the bank for more sustainable long-term growth.
Negative Points
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Net profit growth was only 6.6% year-on-year, significantly lower than PPOP growth of 14.5%, due to a deliberate 42.1% increase in provisioning charges, which weighs on short-term profitability.
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Net interest margin (NIM) declined year-on-year from 3.8% to 3.6%, and the full-year NIM guidance was revised down to 3.3%-3.5% from 3.5%-3.8%, reflecting rising cost of funds and expected withdrawal of Ministry of Finance SAL placements.
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Cost of third-party funds increased in the second quarter to 2.63% from 2.49% in the first quarter, driven by intensifying industry-wide deposit competition and higher SRB yields/volumes.
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The bank experienced a 4.1% quarter-on-quarter decline in current account balances, as it deliberately let go of non-transactional, price-sensitive deposits, which could pressure funding costs in the near term.
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Asset quality in the consumer segment is deteriorating, with NPL, special mentioned loans, and loan at risk ratios trending upward, requiring a more cautious stance and limiting growth in that segment.
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Total loan growth of 24.4% year-on-year is well above the full-year guidance of 8-10%, and management plans to moderate the pace in the second half, which could slow revenue momentum.
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The second half of 2026 is expected to be more challenging due to higher-for-longer US rates, central bank actions to stabilize exchange rates, and rising industry loan-to-deposit ratios, all of which are pushing cost of funds higher.
Q & A Highlights
Q: Can you elaborate on the rationale behind the significant increase in provisioning, which resulted in net profit growth (6.6%) lagging behind core profit (PPOP) growth (14.5%)? A: (President Director) We deliberately chose to raise provisioning to build a stronger buffer for asset quality, even though it means lower short-term profit growth. Our credit cost is now 1.1%, higher than last year but still within guidance. We believe this is the right way to achieve sustainable, long-term growth.
Q: Why is the full-year Net Interest Margin (NIM) guidance being revised down to 3.3%-3.5% from the previous 3.5%-3.8%? A: (Finance and Strategy Director) The revision assumes the full withdrawal of the Ministry of Finance's SAL placements this year, which will raise our cost of funds in the second half. This is a known one-off adjustment. Once it plays out, we begin next year with a more diversified deposit base and a less volatile funding cost trajectory.
Q: Can you explain the 4.1% quarter-on-quarter decline in current accounts and the overall strategy for managing deposits in a competitive environment? A: (Finance and Strategy Director) We deliberately chose to let go of some non-transactional current accounts that are price-sensitive and move easily for higher yields. Our focus is on transactional current accounts tied to real business activity. Through BNI Direct, our transactional current account balance grew 50% year-on-year, indicating the underlying quality of our franchise is getting stronger.
Q: What is driving the strong loan growth of 24.4% year-on-year, and how will this pace be managed going forward? A: (Finance and Strategy Director) The growth was driven by our core segments, including SOE-related corporate loans and private sector loans. We are being transparent that this is above our full-year guidance of 8-10% by design. In the second half, we will moderate the pace, being more selective and aligning loan growth more closely with the growth of our third-party funds.
Q: Can you provide more detail on the asset quality trends, particularly regarding new NPL formation and the consumer segment? A: (Risk Management Director) Asset quality is resilient. Our loan at risk ratio improved to 8.1% from 11% a year ago, and new NPL formation is down 26% year-on-year. However, we still have work to do in the consumer segment where NPL and special mention loans are trending upward. We are also taking a cautious stance on the small segment, reflected in its modest loan growth of 4.9%.
Q: How is BNI managing the rising cost of funds and intense deposit competition across the industry? A: (Finance and Strategy Director) Our liquidity position remains solid with an LDR of 87.7%, below the industry average. We are managing funding costs by directing growth towards stickier transactional deposits and moderating loan expansion. Our cost of third-party funds did rise to 2.63% in Q2 from 2.49% in Q1, consistent with industry-wide trends.
Q: What is the progress on the branch transformation (BRIF) and digital engagement initiatives? A: (President Director) BRIF, which empowers each branch to run like its own small business with its own profit and loss, is now running nationwide. Our mobile app, Warner, grew 76% in users, with more than half being new to BNI. BNI Direct, our platform for business clients, grew 21% in users, leading to a 50% growth in average balance for current accounts from those users.
Q: Can you break down the loan growth by segment and clarify the contribution from related parties versus private sector? A: (President Director) Of the 190 trillion rupiah loan growth, about 85% came from our core segments. Private sector loans (enterprise and large corporate) grew by 86 trillion rupiah, which is actually bigger than the growth to related parties like SOEs and government programs, which was around 76 trillion rupiah. We are capturing the full relationship with wholesale clients, as seen in strong third-party fund and fee income growth from this segment.
Q: What is the outlook for credit costs and the coverage ratios? A: (Risk Management Director) Credit cost guidance remains unchanged at 1% to 1.2%. Our LAR coverage stood at 47% and NPL coverage at 198%, both considered sufficient, particularly when benchmarked against our pre-pandemic coverage ratios. The rate of new NPL formation is down 44% year-on-year, supporting our view that our credit cost is conservative.
Q: How do you view the stability of loan yields given the shift in mix towards wholesale segments? A: (Finance and Strategy Director) Our blended loan yield has held steady at 6.9% in both the first and second quarters. This supports that our loan yield is stabilizing even as our loan mix shifts toward wholesale segments. We view this as a modest cushion should cost of fund pressure become more pronounced in the second half.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
