With this, allow us to present the Company’s management report for the 2022 financial year. In this report we would convey BRI’s performance during 2022, business prospects and the implementation of good corporate governance. BRI Performance 2023 In general, in 2023 the Company produced good performance both from an operational and financial perspective. The Company implemented various effective strategies, including selective financing growth and a focus on quality, mastering the fund ecosystem as an effort to maintain sustainable savings growth, as well as optimizing synergies with BRI Group subsidiary companies. In this section of the performance report, we also provided a review of economic conditions at the global, national and banking industry levels in Indonesia. Economic performance becomes an important factor that can influence a company’s performance. Economic Analysis After the contraction in economic growth in 2020 due to the Covid-19 pandemic, the global economy faced challenges that could not be easy to quickly return and recover to pre-pandemic conditions. Until the end of 2023, there were at least four challenges facing the economic aspects, namely (1) high global inflation trends, driven by inflation due to supply chain disruption, high commodity prices, and El-Nino bringing an impact on food prices, (2) uncertain geopolitical conditions, (3) tightening global monetary policy, and (4) China’s economic growth which was lower than expected. However, amidst a series of shocks over the last four years since the Covid-19 pandemic, the global economy has proven to still be quite resilient, especially developing countries. Most developing countries, including Indonesia,were quite adaptive and agile in dealing with inflationary pressures and tight monetary policy. Global economic growth in 2024 was predicted to be slower than in 2023. This had been marked by a persistent downward trend in leading economic indicators (LEI) in various major countries in the world, especially the United States (US), China and the European Union. There were at least three main challenges to be watched out for in the future, in line with the rate of dynamic and fluctuating global economic growth. First, the global inflation trend was still historically quite high. Second, geopolitical conditions were still uncertain, which could trigger further disruption in the supply chain of primary necessities and energy commodities and have an impact on increasing global inflation. Third, China’s economic recovery was lower than previously estimated due to slowing industrial activity and consumer demand. The combination of these various challenges still had an aftermath on the global economy in 2024. Meanwhile, on the domestic side, the Indonesian economy throughout 2023 remained strong, although growth was relatively slower than the previous year. The Indonesian economy in 2023 still recorded growth of 5.05%, supported by strong domestic consumption and accelerated investment, along with the continuation of various national strategic projects postpandemic. Remaining solid national economic growth was also supported by a controlled inflation rate, so that people’s purchasing power could be maintained. Domestic inflation was recorded to decline in 2023 by 2.61%, from the previous year of around 5.51%. From the financial market, the Rupiah exchange rate against the US Dollar remains maintained and recorded an appreciation of 1.1% throughout 2023. The Rupiah’s performance was relatively better compared to several peer country currencies such as the Philippine Peso, Indian Rupee and Malaysian Ringgit. The continued strength of the national economic condition was also reflected in the robust performance of the banking industry in 2023. In general, banking intermediation was still quite good, although relatively slow compared to 2022. On a year-on-year basis, banking loans grew 9.7% in November 2023, lower than the same period in 2022 of 11.3%. However, loan growth had been on an upward trend since July 2023. Meanwhile, in terms of funding, banking industry liquidity was relatively limited and tended to tighten. On a year-on-year basis, Third Party Funds (TPF) grew 3.0% in November 2023, from 8.9% in the same period in 2022. Meanwhile, in terms of resilience, banking resilience remained well maintained, reflected in strong capital and low credit risk. The Capital Adequacy Ratio (CAR) was recorded at a high level of 27.86% in November 2023. Credit risk also remained under control, reflected in the low non-performing loan (NPL) ratio of 2.36% (gross) in November 2023. With various economic and industrial conditions, as well as possible challenges that will be faced in 2024, BRI has set a financing growth target of 11-12% year on year. Of course, BRI will continue to focus on the MSME segment to achieve its aspirations of becoming The Most Valuable Banking Group in Southeast Asia and Champion of Financial Inclusion by 2025. With the national economic structure dominated by MSMEs, providing loans to MSME players is expected to create a high multiplier effect, so that it can have a significant positive impact on the Indonesian economy. PT Bank Rakyat Indonesia (Persero) Tbk. 2023 Annual Report 48
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