In the 2023 fiscal year, BRI’s loan disbursements reached IDN1,266.4 trillion, an increase of 11.2% compared to IDN1,139.1 trillion the previous year. This loan growth was dominated by the micro segment, which reached IDN611.2 trillion, an increase of 10.9%. BRI microlending accounted for 48.3% of BRI’s total loans, the highest in the national banking industry. This further strengthens BRI’s commitment to become an Agent of Development and to continue to strengthen the MSME segment at the bottom of the business pyramid as the backbone of the Indonesian economy. Furthermore, BRI will continue to develop potential new sources of growth both through retail banking, the Ultra Micro segment and diversified growth in other segments. Based on asset quality, the gross non-performing loan (NPL) ratio was 2.95%, an increase from 2.67% from the previous year. The asset quality weakness was due to efforts to reduce the reliance on restructuring, especially from the micro and small segments. Loan loss reserves remained quite adequate with an NPL coverage ratio of 229.09%, with the cost of credit (CoC) improving to 2.38% in 2023 from 2.55% in 2022. On the loan risk management side, BRI still maintained a soft landing strategy whereby it downgraded loans that could not be restructured after a survey/assessment had been carried out based on actual business conditions. In 2023, total loans restructured due to Covid 19 decreased to 4.8% of total loans, from the previous 10.4% in 2022. The majority of this decrease came from payments from debtors in the small and corporate segments. The Board of Commissioners urges the Board of Directors to ensure that in their efforts to achieve loan growth, they must continue to pay attention to the principles of prudence and good risk mitigation. Meanwhile, on the liabilities side, BRI’s TPF (Third Party Funds) in 2023 stood at Rp1,358 trillion, an increase of 3.9% YoY where the growth in low cost funds (Current Account Saving Accounts/ CASA) was stagnant. The CASA composition decreased by 235 bps to reach 64.3% in 2023. Despite the decline, the CASA ratio was still well maintained above historical levels, which on average were below 60%. This resulted in an increase in CoF (Cost of Fund) to 3.00% in 2023, from 2.06% in 2022. The Board of Commissioners always urges the Board of Directors to focus on transforming BRI’s liabilities, by strengthening its ecosystembased business, penetrating mobile banking as a digital financial solution, and optimizing penetration of cash management services for customers, so they can excel in the competition for transaction banking services. Based on the efficiency level, BRI improved its CIR (Cost to Income Ratio) ratio at 41.89%, down from the previous 44.87% in 2022. This decrease was due to efficiency efforts, one of which was the use of digitalization in carrying out BRI business processes and utilization of banking agents. BRI’s operational income reached Rp45.6 trillion, an increase of 16.6% YoY. This was mainly due to Fee Income that reached Rp20.7 trillion, an increase of 10.3% YoY, and recovery income that reached Rp16.8 trillion, an increase of 35.0% YoY. The Board of Commissioners’ opinion is that the contribution of BRI Group’s Fee Based and Other Operational income can be further optimized through increasing synergy and collaboration between Subsidiary Companies and BRI as the parent company. In terms of profitability, BRI’s profitability ratio continued to improve. This can be seen from the ROA (Return on Asset) ratio that stood at 3.24% from the previous 3.01% in 2022. The ROE (Return on Equity) ratio also increased to 19.95%, an increase of 232bps from 17 .63% in 2022. In addition, BRI also increased its leverage ratio to 6.2 times from 6.1 times the previous year. Through these achievements, the Board of Commissioners’ view is that BRI maintains a sizable opportunity to optimize its capital by leveraging the businessas economic recovery continues. Overall during the 2023 fiscal year, BRI recorded a net profit of IDN60.4 trillion, an increase of 17.5% compared to the previous year’s IDN51.4 trillion. This net profit growth was driven by BRI’s profit achievement of IDN53.1 trillion, an increase of 11.1% compared to IDN47.8 trillion in 2022. While, the subsidiaries’ profit contribution increased from 10.2% to 12.1% in 2023. The Board of Commissioners realizes that the positive financial performance in 2023 was achieved thanks to improvements and consistency in the banks continued transformation. On the human capital side, BRI is undertaking a number of efforts with the main focus on increasing capabilities, productivity, BRI Group synergy as well as environmental, social and governance (ESG) and people analytics. Technological support is also reflected in achievements in the field of digital development as evidenced by 98.9% of total transactions carried out via digital channels. The focus of technology development carried out is divided into 3 (three) focus areas, namely Composable Resiliency, Composable Open Banking, Composable AI/ML, and Excellence Enablers. The Board of Commissioners always urges the Board of Directors to ensure that talent development is not only carried out within BRI but extends to its subsidiaries. Furthermore, alignment and integration of technology within the BRI Group should also be carried out. PT Bank Rakyat Indonesia (Persero) Tbk. 2023 Annual Report 63 Report of The Board of Directors and Board of Commissioners
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