ARTO H1 Net Income Jumped 40% - Because The Business That Built It Just Lost Money

The Engine Swapped Halves

Bank Jago's 1H 2023 investor presentation shows a clean, unbroken bar chart: quarterly pre-tax profit climbing from Rp13 billion (Q2 2022) to Rp30 billion (Q2 2023), "continued growth in quarterly profitability." Net income for the half rose 40.1% YoY, from Rp28,918 million to Rp40,516 million. On its face, this is the best-looking quarter this backfill has recorded in over a year - a real acceleration, not a "return to profitability" measured against a weak prior quarter the way Q1 2023's headline was.

What the chart doesn't show is which business actually produced that growth. The Sharia Business Unit - the division that earned 16.6x the whole bank's own net income in FY2022, then saw its own income collapse 67.1% YoY in Q1 2023 - reported Rp26,953 million in net income for the full six months. Q1 2023 alone had already accounted for Rp35.3 billion of Sharia net income; subtracting that from the half's Rp26,953 million total implies the Sharia unit posted a standalone net loss of approximately Rp8.3 billion in Q2 2023 - the first quarterly loss for that business anywhere in this backfill, arriving one quarter after its loan book shrank for the first time and two quarters after its income first collapsed. Backing the same math out on the conventional side: Q1 2023's implied conventional loss was roughly Rp17.8 billion; Q2 2023's implied conventional profit is roughly Rp31.4 billion - a swing large enough on its own to cover the Sharia loss and drive the whole bank's best quarter in this backfill. The 40% YoY net income growth investors are reading about didn't come from "the bank" broadly - it came from the conventional business finally working, in the same quarter its former profit engine broke down.

The Prescription

Bank Jago should keep pushing the two things that are genuinely compounding: partnership-and-ecosystem lending, which grew to Rp9.1 trillion (up from Rp8.2 trillion three months earlier and 99% of the ex-Sharia loan book), and current-account-and-savings (CASA) funding, which rebounded to 71% of customer deposits after Q1's first-ever decline - both signs the app-plus-partner distribution model is still scaling. What it should stop doing is publishing a segment note (Note 41, "Sharia Business Unit") that pairs this quarter's Sharia figures against 31 December 2022 instead of against 30 June 2022, the actual same-period comparison a reader needs to see the unit's income collapse continuing in real time. The FY2022 report disclosed the Sharia unit's own quarterly trajectory clearly enough for this backfill to track a 5.67x-to-2.02x narrowing over a year; this quarter's filed statements make a reader reconstruct the same story by subtracting one interim report from the next, rather than showing it directly. A business whose profit-generating unit just swung from Rp107 billion of annualized income to a quarterly loss in five quarters deserves a report structured to make that visible on its own, not one that requires cross-referencing three prior filings to see it.

Key Financial Metrics

H1 2023 vs. H1 2022 - PT Bank Jago Tbk, consolidated

FX: IDR 15,064.0 = USD 1 (June 29, 2023 close, nearest trading day to period-end); comparative-period figures are shown in Rupiah only, consistent with prior posts in this backfill.

Metric	H1 2023 (IDR)	H1 2023 (USD)	H1 2022 (IDR)	YoY
Net interest and Sharia income ("Net Revenue" equivalent)	Rp832,461M	~$55.26M	Rp641,083M	✅ +29.9%
Other operating income (fee, provision, other)	Rp92,363M	~$6.13M	Rp18,345M	✅ +403.5%, fee income scaling off a small base
Provision for impairment losses	-Rp262,007M	-~$17.39M	-Rp167,844M	⚠️ +56.1%, tracking loan book growth
Other operating expenses (personnel, G&A, other)	-Rp618,097M	-~$41.03M	-Rp456,268M	⚠️ +35.5%
Operating income	Rp44,720M	~$2.97M	Rp35,316M	✅ +26.6%
Income before income tax	Rp52,013M	~$3.45M	Rp37,290M	✅ +39.5%
Deferred tax expense	-Rp11,497M	-~$0.76M	-Rp8,372M	+37.3%, an expense both periods
Net income for the period	Rp40,516M	~$2.69M	Rp28,918M	✅ +40.1% - see above for which business actually drove it
Earnings per share (full amount, basic and diluted)	Rp2.92	~$0.0002	Rp2.09	✅ +39.7%

Operating income (above, the bank's own regulatory-format figure netting impairment losses against revenue) is the closest equivalent measure for a bank; Adjusted EBITDA and free cash flow aren't included, consistent with the rest of this backfill.

Balance sheet metric	Jun 2023 (IDR)	Jun 2023 (USD)	Dec 2022 (IDR)	Change since FY2022
Total Assets	Rp18,865,190M	~$1,252.28M	Rp16,965,295M	✅ +11.2%
Loans and Sharia financing (net)	Rp10,855,725M	~$720.66M	Rp9,157,817M	✅ +18.5%
Total Funding (current accounts, savings, time deposits)	Rp9,756,168M	~$647.68M	Rp7,748,326M	✅ +25.9%
Total Liabilities	Rp10,217,891M	~$678.24M	Rp8,175,479M	+25.0%, tracking balance sheet growth
Temporary Sharia (Syirkah) Funds	Rp337,200M	~$22.39M	Rp526,059M	⚠️ -35.9%, continuing the Sharia book's contraction
Total Equity	Rp8,310,099M	~$551.57M	Rp8,263,757M	+0.56%, still essentially flat

The number worth remembering isn't "net income up 40%" - it's that the Sharia unit which manufactured nearly all of this backfill's profit since Q1 2022 just posted its first standalone quarterly loss, and the conventional bank's own turnaround is what actually produced the headline growth.

Key Operational Metrics

Ratios below are sourced from PT Bank Jago Tbk's own "1H 2023 Results Update" investor presentation (July 2023) unless a filed-statement note is cited directly.

• CASA ratio^»: 71% (Jun 2023, per the July 2023 investor presentation) vs. 64% (Mar 2023, per the Q1 2023 post) vs. 69% (Dec 2022) - a full reversal of Q1's first-ever quarterly decline. Current accounts plus savings (CASA) grew to Rp7,204,845M, up 27.0% from Rp5,672,815M at Dec 2022, outpacing the 22.9% growth in time deposits over the same period.
• Loan-to-Deposit Ratio^»: 111% (H1 2023) vs. 117% (Mar 2023, per the Q1 2023 post) vs. 114% (FY2022) - continuing to ease as deposit growth (+25.9% since FY2022) outran loan growth (+18.5%).
• NIM^»: 10.5% (H1 2023) vs. 11.0% (Q1 2023 standalone) vs. 10.0% (Q2 2023 standalone) vs. 10.4% (FY2022) - the standalone-quarter NIM eased as the funding mix shifted toward costlier time deposits mid-quarter before CASA's rebound above.
• NPL^»: 1.20% gross / 0.19% net (Jun 2023, per the bank's own filed ratios) vs. 1.82%/0.55% (Dec 2022, per the FY2022 post) vs. 1.51%/0.33% (Mar 2023) - both ratios improved for a second straight quarter, now at the best level recorded in this backfill.
• CAR^»: 72.83% (Jun 2023, per the bank's own filed ratios) vs. 82.75% (Dec 2022) vs. 78.72% (Mar 2023) - still falling every quarter as capital gets deployed into risk-weighted loans, still more than 7x OJK's 10% minimum requirement.
• ROE^» / ROA^»: 1.1% / 0.6% (H1 2023) vs. 0.97%/0.51% (Mar 2023, per the Q1 2023 post) - both improved, tracking the net income growth above, though still far below what the ~5x book-value premium (see Target Valuation Range) would imply is sustainable.
• Cost-to-Income^»: 67% (H1 2023) vs. 67.12% (Mar 2023, per the Q1 2023 post) - holding at the best efficiency level in this backfill for a second straight quarter.
• Cost of Funds (end of period): 3.6% (Jun 2023) vs. 3.2% (Mar 2023) vs. 2.8% (Dec 2022) - still climbing as Bank Indonesia's tightening cycle keeps reaching deposit pricing.
• Related-party loan concentration: 3.65% of the conventional loan book (Jun 2023, Rp353,730M against Rp9,682,558M in loans, per the filed statements) vs. 4.19% (Mar 2023, per the Q1 2023 post) - continuing to decline, and this quarter's filed statements restore the borrower-level breakdown Q1 2023's post flagged as missing: PT BFI Finance Indonesia Tbk's loan fell to Rp253,730M (from Rp299,259M at Dec 2022) while PT Trimegah Sekuritas Indonesia Tbk's stayed unchanged at Rp100,000M.
• Undrawn loan commitments: Rp1,802,347M (Jun 2023) vs. Rp1,578,886M (Dec 2022, per the FY2022 post) - up 14.1%, reversing Q1 2023's first-ever quarterly decline (which had fallen to Rp1,043,857M).
• KYC-verified digital banking and lending customers: "8.3+ million," per the July 2023 investor presentation - not a clean 30 June balance-sheet-date figure, consistent with every prior quarter in this backfill.
• Headcount: 494 permanent employees (Jun 2023) vs. 446 (Dec 2022) - up 10.8%, and disclosed again this quarter after Q1 2023's statements omitted it entirely.
• Branch network: unchanged at 1 non-operational head office, 3 branch offices, and 2 sub-branch offices.

The Stock Breaks a Five-Quarter Losing Streak

Bank Jago's shares closed at approximately Rp3,180 on 27 June 2023 (the nearest trading day to period-end), up 31.4% from Rp2,420 three months earlier - the first quarterly gain anywhere in this backfill since Q1 2022, ending the run of five consecutive new backfill lows that ran from Q2 2022 through Q1 2023. No stock split has occurred at any point since the company's IPO, so Rp3,180 is the actual nominal price quoted on the IDX at the time. The stock is still down 65.2% YoY (from Rp9,150 at 30 June 2022) and 82.3% from its all-time backfill high of Rp17,950 in July 2021 - this is a bounce off a low base, not a recovery to prior levels.

The rebound lines up with the quarter's own numbers: net income growth, an improving cost-to-income ratio, and NPL at this backfill's best level all give the market something concrete to react to, even with the Sharia unit's reversal buried inside the consolidated total. Whether the rally holds depends on whether the conventional bank's Rp31.4 billion implied Q2 profit repeats next quarter or was itself a one-off - the same open question this backfill has carried since the Sharia unit first started masking the conventional business's own results in Q1 2022.

Beyond the Usual

Related-party time deposits jumped nearly 9x in a single half, even as related-party loans kept shrinking

Time deposits from related parties reached Rp556,996 million (21.83% of the entire time-deposit book) at 30 June 2023, up from Rp62,086 million (2.99%) at 31 December 2022 - a 797% increase in six months. The largest single component is Rp500,000 million from "companies with the same ownership as the shareholders" (the GoTo-family entities this backfill has tracked since 1H2021's first related-party disclosures), up from just Rp15,000 million at year-end. This moves in the opposite direction from related-party loan concentration, which fell to a new backfill-low 3.65% this quarter (see above) - the bank's related-party exposure isn't shrinking overall, it's shifting from lending to funding. Current accounts show the same pattern in reverse: related parties still supply 86.37% of the entire current-account book (Rp3,108,534M of Rp3,598,890M), down only modestly from 91.06% at Dec 2022, a concentration this high on the bank's single largest funding line that has been a persistent feature of this backfill rather than a new development this quarter.

A stock-option program launched this quarter, priced well below where shares now trade

Note 26 discloses the Bank's first Management Employee Stock Option Program ("MESOP") pre-listing this half, at an exercise price of Rp2,150 per share - a Rp4,806 million share-based payment reserve now sits in equity for the first time. The exercise price sits below the Rp2,420 close three months ago and well below the Rp3,180 close this quarter (see above), meaning the options were struck near this backfill's lowest recorded price. The implementation window opens 3 June 2024, so no options have been exercised yet.

Undrawn loan commitments rebounded after their first-ever quarterly decline

Unused loan and financing facilities rose to Rp1,802,347 million at 30 June 2023, up 14.1% from Rp1,578,886 million at year-end - reversing Q1 2023's first-ever sequential decline in this line. New commitment facilities being extended faster than they're drawn down is a plausible read, consistent with the loan book's continued growth, though the filed statements don't separately break out how much of the change is new facilities versus drawdowns.

Headcount grew faster than the branch network, for the first time this backfill's disclosures make visible

Permanent employees rose 10.8% (446 to 494) while the branch network stayed exactly flat at six locations (1 non-operational head office, 3 branches, 2 sub-branches) - consistent with a digital-first bank scaling its workforce (support, engineering, risk/compliance for a growing loan book) without adding physical footprint. This is the first quarter in this backfill that headcount was actually disclosed alongside a prior comparative figure; Q1 2023's statements omitted the line entirely.

Target Valuation Range

Market cap Rp44.06 trillion (~$2.93 billion), ~5.30x P/B, ~545x P/E. Bottom line: still overvalued on a book-multiple basis, and this quarter's price rally pushed the multiple back up rather than down - the market is now paying more for less certain earnings than it was three months ago.

Bank Jago's shares closed at approximately Rp3,180 on 27 June 2023, up 31.4% from Rp2,420 three months earlier (see above). At 13,856,250,000 shares outstanding (unchanged since the March 2021 rights issue), that implies a market capitalization of approximately Rp44.06 trillion (~$2.93 billion).

Market cap → book value	Q2 2023
Share price (period-end)	Rp3,180
Shares outstanding	13,856,250,000
Market capitalization	Rp44.06 trillion (~$2.93 billion)
Total equity (book value)	Rp8,310,099M
Book value per share	Rp599.68

Peer-multiple sanity check	Q1 2023	Q2 2023	Change
P/B	4.0x	5.30x	up
P/E	480x	545x	up

P/B^»: ~5.30x, using book value^» per share of Rp599.68 (Rp8,310,099M total equity ÷ 13,856,250,000 shares) - up from ~4.0x three months ago (this backfill's lowest recorded multiple), because the 31.4% price rally this quarter outran the 0.56% growth in book value by a wide margin. P/E^»: annualizing H1 2023 EPS of Rp2.92 (×2) gives Rp5.84, for an implied multiple of roughly 545x - still too thin an earnings base to support a real earnings multiple, and the multiple's improvement from Q1's ~480x reflects the price rising faster than the underlying earnings base, not the reverse. A full DCF still isn't appropriate, for the same reason every prior post in this backfill has given: the business now generating the bank's actual profit growth (the conventional lending business) has produced exactly one strong quarter after two years of losses, against a Sharia unit whose own quarterly result just went negative for the first time. The peer-multiple read stays the honest one - and unlike every prior quarter in this backfill, it moved the wrong way this time, getting more expensive rather than less, on a profit story that's genuinely improving but still resting on a single quarter's evidence.

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