Tightening monetary policy with the Fed’s trend of increasing interest rates forced Bank Indonesia (BI) to continue raising the BI 7-Day Reverse Repo Rate (BI7DRR) interest rate to 6% at the end of 2023. This triggered a tightening of liquidity, as seen in the higher loans to deposits (LDR) ratio. In November 2023, the banking industry recorded loan growth of 9.7% YoY, a slight slowdown from 11.3% YoY in November 2022. On the other side, Third Party Funds grew by a modest 3.0% YoY, also a slowdown from 8.9% YoY in November 2022. Loan quality improved, as seen in the system gross non-performing loan (NPL) that stood at 2.36% in November 2023, from 2.65% in November 2022. The Board of Commissioners sees that global economic conditions in 2024 will still be full of challenges, but there is hope for improvement. International trade volume is expected to grow and rebound with support coming from the group of developing countries in Asia. Meanwhile, in developed countries, inflationary pressure is expected to continue to subside after passing its peak in 2023, although the inflation rate could remain quite high. This is expected to happen together with normalization in commodity prices that were impacted by post-pandemic supply disruption and the geopolitical crisis. However, the US economy is projected to continue in a slowing trend as a result of the impact from tightening monetary policy and the lagging effect of inflation. While, the European economy will improve although at a slow growth rate. China’s reopening policy still has the potential to result in global inflationary pressure, and for this reason, global monetary policies are expected to remain tight with increasingly limited fiscal space. In contrast, the Board of Commissioners’ view is that Indonesia’s economic recovery will continue. Household consumption growth performance in 2023 was relatively well maintained. Considering that household consumption is a large contributor to GDP, it is hoped that it can support national economic growth amidst the weakening global trend. In addition, the democratic party or general elections in 2024 are expected to accelerate a recovery in MSME (Micro, Small and Medium Enterprises) businesses. Through strong national economic fundamentals, together with the support of Government policies in maintaining effective economic activities, the Board of Commissioners is optimistic that the national economy, banking industry, including BRI will continue to show healthy and strong growth. Frequency and Method of Providing Advice to the Board of Directors In accordance with the mandate in the Company’s Articles of Association, the Board of Commissioners duties include supervising the Company’s management and provide advice to the Board of Directors. To optimize its supervisory duties and responsibilities, one of the methods used by the Board of Commissioners includes holding joint meetings with the Board of Directors (Radirkom), and Internal Board of Commissioners Meetings (Rakom) both regularly and incidentally. The advice conveyed in the meetings is further stated in letters from the Board of Commissioners to the Board of Directors the related to the topics discussed. Providing advice to the Company’s Board of Directors can also be provided through meetings of committees under the Board of Commissioners, and work visits to gain information in the field to monitor the Company’s strategies. The Board of Commissioners also conveys opinions, advice and responses to the Board of Directors’ proposals in letters to the Board of Directors, letters of approval or decision letters in accordance with their authority. During 2023, the Board of Commissioners conducted 17 Radirkom and 7 Rakom, which included discussions on several critical issues in the Company, submitting approvals and confirming several decisions in the Board of Commissioners’ decision letters. Approvals carried out included the Company’s Budget Work Plan and other strategic plans contained in the Company’s Business Plan, approval of corporate actions carried out by the Company in accordance with the authority of the Board of Commissioners, approval for providing funds to related parties, approval of the Sustainable Financial Action Plan, approval of the reviews of the Risk Appetite Statement, Recovery Plan, Resolution Plan and other approvals under the authority of the Board of Commissioners as regulated in the Articles of Association and applicable regulations. View on the Board of Directors’ Performance BRI recorded strong financial performance in 2023, despite the global economic challenges and uncertainty. Based on OJK (Financial Services Authority) data in November 2023, commercial bank loan growth grew 9.7% YoY. This shows that market demand was still strong thanks to increasing economic activity. Thanks to these conditions, increased optimism in MSMEs was also reflected in the BRI MSME Index for December 2023, which also increased compared to the previous quarter. The Board of Commissioners view is that BRI has succeeded in achieving a solid and encouraging performance that can be seen in the realization of performance targets. PT Bank Rakyat Indonesia (Persero) Tbk. 2023 Annual Report 62
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