A First Profit, Arriving With Its First Bad Loans
Two quarters after coming within Rp3 billion of an operating breakeven, Bank Jago actually crossed the line. Q3 2021 alone produced net profit after tax of approximately Rp14 billion - the bank's first-ever profitable quarter since its 2020 relaunch - on the back of a loan book that grew 68% in three months (Rp2.17 trillion to Rp3.73 trillion) and net interest income that grew 69% quarter over quarter (Rp106 billion to Rp178 billion). Cost-to-income» fell below 100% for the first time (82% for Q3 standalone, versus 129% for the whole of 1H21), meaning the bank finally spent less running itself than it earned in operating income, for one quarter at least.
The nine-month period as a whole is still a net loss - Rp32.6 billion for 9M 2021, versus Rp105.7 billion a year earlier - so this is a genuine inflection, not yet a durable state. And it arrived in the same quarter this backfill's repeated caveat about the bank's "zero NPL" ratio finally caught up with the numbers: gross non-performing loans» went from precisely 0.00% at every prior reporting date to 0.59% at 30 September 2021 - the first defaults this loan book has ever recorded, appearing just as growth accelerated rather than slowed. The 1H2021 post flagged "special mention" loans growing faster than the book itself as "the first real crack in that otherwise pristine picture, worth tracking against next quarter's collectibility mix" - that crack has now produced actual substandard, doubtful, and loss-classified loans, not just a watchlist category.
Nearly all of the loan growth continues to come from partnership and ecosystem lending rather than the bank's own direct retail underwriting - that channel now makes up Rp3.28 trillion of Rp3.73 trillion in gross loans (88.1%), up from 70.0% in June and 57.7% at the end of 2020. The bank also launched a Sharia banking proposition ("Jago Syariah") this quarter and continued deepening its Gojek-ecosystem integrations (a Bibit mutual-fund partnership went live in July, a GoPay integration soft-launched in September) - genuinely new product surface area, but not yet a second, independently-underwritten lending engine distinct from the partnership channel driving the numbers above.
The Prescription
The right move now is to keep pushing exactly what's working: partnership and ecosystem lending is 88% of the book and growing, funding costs are falling (3.3% cost of funds at quarter-end, down from 4.5% a year ago) as CASA» share of deposits improves, and the bank just proved - for one quarter - that this model can generate an actual operating profit rather than just a shrinking loss. That's real evidence the underlying unit economics can work, not just a story about future scale.
What it should stop doing: growing the loan book 68% in a single quarter in the same quarter its first-ever defaults showed up. Loan growth has now outpaced deposit growth, funding growth, and everything else about this business in every quarter this backfill has covered - and the one quarter that finally produced real non-performing loans is the one where that growth rate was fastest yet. Nothing in the disclosed numbers says the ecosystem-partner underwriting is deteriorating, but a bank that has just watched its "zero NPL" number break for the first time has earned itself a reason to tap the brakes on pace, not press further into it, until it's clear whether 0.59% is a seasoning blip or the start of a real trend (see Beyond the Usual).
Key Financial Metrics
9M 2021 vs. 9M 2020 vs. FY 2020 - PT Bank Jago Tbk, consolidated
FX: IDR 14,328.6 = USD 1 (September 30, 2021 close); IDR 14,879.0 = USD 1 (September 30, 2020 close, used for 9M20 conversions); IDR 13,833.0 = USD 1 (December 31, 2020 close, used for FY20 balance-sheet conversions).
| Metric | 9M 2021 (IDR) | 9M 2021 (USD) | 9M 2020 (IDR) | FY 2020 (IDR) | YoY (9M) |
|---|---|---|---|---|---|
| Net Interest Income ("Net Revenue" equivalent) | Rp317,546M | ~$22.16M | Rp42,896M | Rp64,644M | ✅ +640.3% |
| Other operating income | Rp27,809M | ~$1.94M | Rp15,827M | Rp25,126M | ✅ +75.7% |
| Provision for impairment losses | -Rp41,739M | -~$2.91M | -Rp20,935M | -Rp38,132M | ⚠️ Nearly doubled, roughly tracking the loan book's growth |
| Operating expenses (G&A, personnel, other; ex. impairment provision) | -Rp334,547M | -~$23.35M | -Rp141,391M | -Rp237,369M | ⚠️ +136.6% |
| Operating income/(loss) | -Rp30,931M | -~$2.16M | -Rp103,603M | -Rp185,731M | ✅ Loss narrowed 70.1% |
| Net loss for the period | -Rp32,605M | -~$2.28M | -Rp105,713M | -Rp189,567M | ✅ Loss narrowed 69.2% |
| Loss per share (full amount) | -Rp2.49 | -~$0.0002 | -Rp87.66 | -Rp22.49 | ✅ -97.2% (mostly mechanical - weighted avg. shares grew sharply) |
| Net cash used in operating activities | -Rp3,158,528M | -~$220.44M | -Rp364,641M | -Rp327,182M | ⚠️ Far larger cash use - capital deployment, not a burn (see note below) |
| Total cash and cash equivalents (period-end) | Rp2,478,563M | ~$172.97M | n/a | Rp447,506M | ✅ +453.9% vs Dec 2020; ⚠️ -17.6% vs Jun 2021 |
Q3 2021 standalone (not shown as a separate column above, but the more meaningful read given the 9-month total is still a loss): net interest income of Rp178 billion, operating income of approximately Rp13 billion, and net profit of approximately Rp14 billion - the bank's first profitable quarter, derived by netting this table's 9M figures against the 1H21 cumulative figures already reported, and cross-checked against the company's own presentation, which shows the same Rp14 billion Q3 net profit.
The operating cash-flow line looks alarming in isolation but is the same story as the last two quarters: a bank still redeploying capital into loans and securities, not a going-concern signal. Total cash and equivalents actually fell from June to September - not because the bank is running low on liquidity (Total Assets and Equity both kept growing), but because more of the balance sheet moved into securities (net securities holdings grew from Rp137.6 billion at year-end to Rp1.76 trillion at quarter-end) and reverse repos (Rp2.29 trillion) rather than sitting in cash-equivalent placements. Operating income/loss (above) is the equivalent measure for a bank.
| Balance sheet metric | Sep 2021 (IDR) | Sep 2021 (USD) | Dec 2020 (IDR) | YoY |
|---|---|---|---|---|
| Total Assets | Rp10,978,255M | ~$766.16M | Rp2,179,873M | ✅ +403.7% |
| Loans (net) | Rp3,562,272M | ~$248.63M | Rp826,203M | ✅ +331.2% |
| Third-Party Funds (deposits) | Rp2,543,338M | ~$177.51M | Rp803,946M | ✅ +216.4% |
| Total Liabilities | Rp2,845,504M | ~$198.60M | Rp947,540M | ⚠️ +200.3% |
| Total Equity | Rp8,132,751M | ~$567.53M | Rp1,232,333M | ✅ +559.9% |
The headline this quarter isn't the balance sheet growth - that's been true every quarter since the transformation started. It's that operating income and net income both turned positive for a standalone quarter for the first time, in the same three months the loan book's first real defaults showed up. Both things are true, and neither cancels the other out.
Key Operational Metrics
- CASA ratio»: 38.7% (Sep 2021) vs. 30.2% (Jun 2021) vs. 27.2% (Dec 2020) - improving every quarter, though still well below BCA's ~77% in its Q1 2016 quarter.
- Loan-to-Deposit Ratio»: 146.6% (Sep 2021) vs. 125% (Jun 2021) vs. 111.07% (Dec 2020) - still well above 100% and rising, meaning the loan book keeps growing faster than deposits, funded by the bank's still-enormous excess capital rather than deposit growth alone.
- NIM» (blended): 6.1% (9M 2021 cumulative) vs. 5.0% (1H 2021) vs. 4.7% (FY 2020) - and 7.3% for Q3 standalone, the highest single-quarter figure yet as more of the balance sheet actually sits in loans rather than treasury assets.
- NIM (loans only): 13.6% (9M 2021) vs. Q3 standalone of 16.3% (the company's own presentation normalizes this to 13.9% ex-legacy-Artos portfolio at a 90% loan-to-deposit ratio) - a genuinely strong loan yield once the ecosystem-lending book is isolated from both the legacy branch portfolio and excess liquidity sitting in reverse repos.
- NPL»: 0.59% gross / 0.14% net (Sep 2021) vs. 0.00%/0.00% (Jun 2021, Dec 2020) - the first non-zero NPL reading in this bank's post-transformation history (see Beyond the Usual).
- CAR»: 224.2% (Sep 2021) vs. 332.8% (Jun 2021) vs. 91.4% (Dec 2020) - falling as capital keeps getting deployed into risk-weighted loans, but still more than 22x OJK's 10% minimum.
- ROE»: -0.7% (9M 2021 cumulative, annualized) vs. -1.7% (1H 2021) vs. -18.0% (FY 2020) - and a positive +0.7% for Q3 standalone, annualized; ROA»: -0.5% (9M 2021) vs. +0.5% for Q3 standalone.
- Cost-to-Income (BOPO)»: 102% (9M 2021 cumulative) vs. 129% (1H 2021) vs. 357% (FY 2020) - and 82% for Q3 standalone, the first quarter this ratio has dropped below 100%.
- Cost of Funds (end of period): 3.3% (Sep 2021) vs. 3.7% (Jun 2021) vs. 4.5% (FY 2020) - falling every quarter as the CASA share of deposits improves.
- Loan mix: partnership and ecosystem lending is now Rp3.28 trillion of Rp3.73 trillion gross loans (88.1%), up from 70.0% in June and 57.7% at year-end 2020; financial-institution lending fell to Rp300 billion from Rp500 billion in June (see Beyond the Usual for why); the legacy Bank Artos portfolio continues shrinking (Rp144 billion, down from Rp908 billion at the 2019 acquisition).
- Headcount: 301 employees at 30 September 2021, up from 244 at 30 June 2021 - reversing the prior quarter's flat-to-shrinking headcount, coinciding with the Sharia banking launch.
- Branch network: one non-operational head office, two branches, two sub-branches (down from three in December 2020), and - new this quarter - one Sharia branch; the cash office closed during the year.
- Not available as a clean quarter-end figure: app installs, registered users, and KYC-verified customer counts continue to be disclosed as of the presentation's publication date rather than a clean 30 September cutoff (the company cites roughly 580,000 KYC-verified customers, a 5x increase, and approximately 1.5 million total Jago customers including lending customers, both "as of September 2021" per the investor presentation rather than the audited financial statements).
Beyond the Usual
The bank's first-ever non-performing loans appeared this quarter
Gross NPL went from 0.00% at every prior reporting date - across a loan book that grew from Rp285 billion at the end of 2019 to Rp3.73 trillion now - to 0.59% at 30 September 2021 (0.14% net). By collectibility, Rp13.0 billion of loans are now "substandard," Rp0.4 billion "doubtful," and Rp8.6 billion classified as "loss" - a combined Rp22.0 billion that simply didn't exist in any of the previous three reporting periods covered by this backfill. This isn't a crisis-scale number against a Rp3.73 trillion book, and a loan book growing this fast will always show some early-stage defaults eventually - but it's the exact outcome the 1H2021 post warned "special mention" loans outgrowing the book itself was a leading indicator for. The clean "zero NPL" number this bank has repeated in every prior report was, as flagged from the very first post, a function of the loan book being too young to have seasoned - and now it has.
The bank's first related-party loans were fully repaid
The Rp250 billion in related-party loans to PT BFI Finance Indonesia Tbk and PT Trimegah Sekuritas Indonesia Tbk - flagged as the bank's first-ever related-party lending relationship last quarter - had fallen to exactly zero by 30 September 2021, per the bank's own related-party note. There's no disclosure of why the loans were repaid (maturity, early repayment, or otherwise), but the balance that drew scrutiny six months ago is gone from the loan book entirely this quarter.
The Gojek-entity current-account concentration eased, but the broader related-party funding base widened
PT Aplikasi Karya Anak Bangsa's share of the bank's total current accounts fell from 90.8% in June to 46.8% in September (Rp155.4 billion of a Rp332.4 billion current-account base) - a real improvement in single-depositor concentration, driven mostly by third-party current accounts finally growing (Rp82.3 billion, up from roughly Rp25.6 billion in June). Two more related parties now carry disclosed balances of their own: PT Amaan Sejahtera Indonesia (Rp89.6 billion) and PT Metamorfosis Ekosistem Indonesia, the bank's own controlling shareholder (Rp3.4 billion) - neither appeared in either prior report. The bank's related-party note also names four entirely new related parties this quarter for the first time - PT Atome Finance Indonesia, PT Gofin Karya Anak Bangsa, PT Rekan Usaha Mikro Anda, and PT Infoflow Solutions, all "companies with the same ownership as the shareholders" - though their current-account balances, if any, sit inside the note's own "other business group, each below Rp10 million" catch-all rather than being individually disclosed. Combined, related parties still hold 75.2% of every current-account rupiah in the bank; the concentration risk hasn't gone away, it's just spread across more names within the same ownership group rather than sitting almost entirely with one Gojek entity.
Fee income is starting to look like a real business, not just recycled bad-debt recoveries
The FY2020 annual report showed 92.6% of "other operating income" was recovery income from loans the old Bank Artos had already written off - not a genuine new revenue line. That share has fallen to 68.1% this period (Rp18.9 billion of Rp27.8 billion in 9M 2021), while loan administration income - a fee the bank actually earns on the ecosystem-lending business it's now built - grew more than 22-fold, from Rp0.3 billion to Rp6.1 billion over the same nine months. It's still a small number in absolute terms, but it's the first real evidence that some of "other operating income" growth is coming from the business Bank Jago says it's building, not just from collecting on debts the prior bank had already given up on.
A quarter of positive taxable income, even with an accounting loss
The bank's cumulative tax-loss carryforward actually shrank this period - from Rp259.4 billion at year-end 2020 to Rp220.3 billion at 30 September 2021 - because the nine-month period generated Rp39.1 billion of taxable income under the bank's preliminary tax computation, even while it posted a Rp32.6 billion accounting loss for the same period. No deferred tax asset is recognized against the remaining balance, for the same disclosed reason as before (doubt over sufficient future taxable income), and the earliest surviving tranche - Rp1.6 billion from fiscal year 2016 - still expires at the end of this year, three months after this reporting date.
The audited segment split flipped which branch is "profitable"
Both prior posts noted that Bank Jago's only audited segment breakdown is geographic (Bandung/West Java vs. DKI Jakarta), a holdover from the old Bank Artos branch structure, rather than the partnership/ecosystem-lending categories the bank actually describes its business by. This quarter that geographic split shows the smaller Bandung segment posting a Rp63.3 billion segment profit while the much larger DKI Jakarta segment - home to the digital-banking build-out - posted a Rp94.2 billion segment loss. Read literally, the audited segment note would suggest the legacy branch network is what's carrying the bank; in reality this is an artifact of where costs and interest income get geographically booked, not a sign the ecosystem-lending strategy is unprofitable - but it's exactly the kind of distortion a segment note based on branch geography rather than business line will keep producing every quarter.
Target Valuation Range
Market cap Rp209.2 trillion (~$14.60 billion), ~25.7x P/B (P/E not meaningful - net loss). Bottom line: still not a value stock, and the first real profit doesn't change that. At roughly 25.7x book value for a bank whose nine-month period is still a net loss, the market has re-rated the shares further on the strength of one profitable quarter - not because this quarter's numbers alone justify a premium nearly eight times BCA's own book multiple, but because the quarter is genuine evidence the model can eventually work.
Bank Jago's shares closed at approximately Rp15,100 on 30 September 2021, up modestly from Rp13,625 three months earlier - a calmer quarter than the ones before it, though the shares actually spiked to roughly Rp17,950 in July before pulling back nearly 16% into the September close. Measured from the pre-acquisition low of roughly Rp21 in July 2019, the stock is up approximately 719x in a little over two years. No stock split has occurred since - the bank publicly denied split rumors circulating around this same quarter - so all of these are actual nominal prices quoted on the IDX at the time, not split-adjusted figures. At 13,856,250,000 shares outstanding (unchanged since the March 2021 raise), that implies a market capitalization of approximately Rp209.2 trillion (~$14.60 billion).
| Market cap → book value | Q3 2021 |
|---|---|
| Share price (period-end) | Rp15,100 |
| Shares outstanding | 13,856,250,000 |
| Market capitalization | Rp209.2 trillion (~$14.60 billion) |
| Total equity (book value) | Rp8,132,751M |
| Book value per share | Rp586.86 |
| Peer-multiple sanity check | Q2 2021 | Q3 2021 | Change |
|---|---|---|---|
| P/B | 23.3x | 25.7x | up |
| P/E | not meaningful | not meaningful | - |
P/B»: ~25.7x, using book value» per share of Rp586.86 (Rp8,132,751M total equity ÷ 13,856,250,000 shares) - up from ~23.3x three months ago, since the share price rose 10.8% this quarter while book value per share barely moved (equity grew only 0.2%). Still nearly eight times BCA's ~3.25x book multiple in its Q1 2016 quarter. P/E»: not meaningful on a 9-month basis - the bank posted a net loss for the period, even though Q3 standalone was profitable. A full DCF still isn't appropriate here, for the same reason it wasn't in either prior quarter: one profitable quarter, arriving after a full loss-making year in 2020 and two more loss-making quarters through mid-2021, doesn't establish a multi-year earnings trajectory - and it arrived in the same quarter the loan book produced its first defaults, which is exactly the kind of data point a DCF's terminal assumptions can't yet responsibly absorb either direction. The honest read stays the peer-multiple one: a ~25.7x book multiple on a bank that's still net-loss-making over nine months is priced almost entirely on the story continuing to develop in the direction of this one good quarter, not on anything the numbers themselves yet prove out over a full year.
PT Bank Jago Tbk's unaudited interim financial statements for the nine-month period ended 30 September 2021 (with 31 December 2020 and 30 September 2020 comparatives), and the company's "9M 2021 Results Update" investor presentation, both dated October 2021.