A Recovery Story With No Way to Check the Sequel
This is BRI's H1 2017 report (period ended June 30, 2017), and it's the mirror image of what the Q1 2017 post had to work with. That quarter's filing was the full 241-page audited-format interim statement, with the same Note 41 segment breakdown and loan-mix NPL table that showed Corporate Non-SoE» gross NPL reversing from 5.61% to 3.69% in a single quarter, ending a five-quarter streak of deterioration. This quarter's filing is the short 15-page OJK regulatory publication - the same short form the Q1 2016 post and the 9M 2016 post had to work around, and the document itself says so directly: a footnote states the figures are "not a complete presentation of the Consolidated Financial Statements." There is no segment note, no loan-mix NPL table, no related-party transaction list, no purchase-commitment schedule. Whatever drove Corporate Non-SoE's reversal last quarter - and whether it held into Q2 - is simply not something this filing can answer, in either direction.
That's a genuinely bad time for the disclosure to thin out. Last quarter's post flagged the reversal as needing "a specific explanation... rather than being banked at face value as 'problem solved.'" This quarter doesn't provide that explanation, and it doesn't provide the data to check whether the number kept improving, held flat, or slid back. The one number this quarter's filing can speak to is the aggregate bank-wide NPL ratio, and it's drifted up for three straight quarters now - 2.03% (Dec'16) → 2.16% (Mar'17) → 2.23% (Jun'17) - though it's still below June 2016's 2.31%. That's consistent with either a Corporate Non-SoE book that's quietly deteriorating again or with normal seasonal loan-book growth outrunning a genuinely improved corporate book; this filing can't distinguish between them.
The one thread that did resolve cleanly this quarter: the three board members the Q1 2017 post flagged as still awaiting OJK fit-and-proper approval - President Commissioner Andrinof A. Chaniago, Commissioner Nicolaus Teguh Budi Harjanto, and Director Indra Utoyo - are now all confirmed, effective July 19, 2017 (see Beyond the Usual below). Suprajarto remains President Director. Consolidated net income attributable to owners grew 10.2% year-over-year for the half (Rp13,422,688M vs Rp12,175,539M) - a healthier YoY pace than Q1's 6.4% - while loan-loss provisioning kept outrunning revenue, growing 44.5% (Rp10,680,691M vs Rp7,391,058M) against net revenue growth of 12.9%, essentially the same 3-to-1 gap the Q1 2017 post found for the quarter alone.
The Prescription
BRI should standardize its interim disclosure to include the full segment and loan-mix note every quarter, not just some of them. Three of the nine quarters this series has now covered - Q1 2016, Q3 2016, and this one - have landed as the short-form publication with none of that detail, and the pattern of which quarters get the full filing versus the short one isn't predictable from the calendar (H1 2016 got a full segment note; H1 2017 didn't). That inconsistency has now cost a reader the ability to verify the single most interesting number in the entire series - Corporate Non-SoE's five-quarter reversal - in back-to-back quarters: first because the Q1 2017 filing itself never explained why the number moved, and now because the Q2 2017 filing doesn't disclose the number at all.
What BRI should stop doing: treating the short-form regulatory publication as an adequate quarterly disclosure when the bank has clearly demonstrated - in the very same fiscal year - that it's capable of publishing the full audited-format statement on an interim basis. This isn't a resource constraint; it's a choice, and it's one that directly degrades what an outside reader can actually verify about the bank's credit quality between annual reports.
Key Financial Metrics
H1 2017 vs. H1 2016 (P&L, consolidated, cumulative six months), and Jun 2017 vs. Dec 2016 (balance sheet, consolidated)
FX: IDR 13,327.50 = USD 1 (the rate the filed statement itself discloses for June 30, 2017).
| Metric | H1 2017 (IDR) | H1 2017 (USD) | H1 2016 (IDR) | YoY |
|---|---|---|---|---|
| Net Interest, Sharia and Premium Income, net ("Net Revenue" equivalent) | Rp36,478,271M | ~$2,737M | Rp32,297,984M | ✅ +12.9% |
| Operating Income (Income from Operations) | Rp16,175,522M | ~$1,214M | Rp15,531,972M | ⚠️ +4.1% |
| Net Income (attributable to owners) | Rp13,422,688M | ~$1,007M | Rp12,175,539M | ✅ +10.2% |
| Total Comprehensive Income (attributable to owners) | Rp14,318,417M | ~$1,074M | Rp28,269,895M | ⚠️ -49.4%¹ |
| EPS (basic, H1 cumulative, consolidated) | Rp549.04 | ~$0.0412 | Rp498.02 | ✅ +10.2% |
¹ Not a deterioration - H1 2016's comprehensive income included a one-off Rp13,824,692M gain from BRI's land-and-buildings revaluation booked that quarter (see the H1 2016 post); this quarter's figure has no equivalent one-off and is the more representative number of the two.
| Balance sheet metric | Jun 2017 (IDR) | Jun 2017 (USD) | Dec 2016 (IDR) | QoQ |
|---|---|---|---|---|
| Total Assets | Rp1,027,337,529M | ~$77.08B | Rp1,003,644,426M | ✅ +2.4% |
| Loans (gross, incl. sharia financing and finance lease) | Rp687,286,429M | ~$51.57B | Rp662,811,340M | ✅ +3.7% |
| Total Deposits (Demand + Savings + Time) | Rp744,114,144M | ~$55.83B | Rp732,558,804M | ✅ +1.6% |
| Total Equity (attributable to owners) | Rp150,261,451M | ~$11.28B | Rp146,421,342M | ✅ +2.6% |
| Total Cash and Cash Equivalents (per cash flow statement) | Rp185,963,183M | ~$13.95B | Rp188,954,879M | ➖ -1.6% |
This filing's P&L doesn't break "other operating income" and "other operating expense" into the clean subtotal lines the full audited-format Q1 2017 filing carried - only itemized components - so those two rows are omitted here rather than approximated.
Derived Q2-standalone figures (H1 2017 minus the already-published Q1 2017 cumulative): net revenue of roughly Rp18,505,300M (+3.0% over Q1's Rp17,972,971M) and net income attributable to owners of roughly Rp6,776,988M (+2.0% over Q1's Rp6,645,700M) - a modest sequential improvement in both, without the sharp swings either the credit-quality or capital-ratio lines showed.
Net income grew faster year-over-year than Q1 did (10.2% vs 6.4%), and Tier 1 capital rebuilt itself after Q1's dividend-driven dip - but the filing that could confirm whether last quarter's loan-book turnaround actually held is simply not part of this release.
Key Operational Metrics
- CASA» (computed): this filing doesn't disclose a CASA ratio directly; computed from the individual balance sheet as (demand + savings) ÷ total deposits, it's approximately 57.6% (Bank, Jun 2017) vs approximately 60.6% (Bank, Dec 2016) on the same basis - not directly comparable to the ~56-57% figures the Q1 2017 post cited, which may use a different underlying convention this filing doesn't disclose; treat this pair as internally consistent with each other, not with prior quarters' CASA figures.
- Loan-to-deposit ratio (LDR)»: 89.76% (Bank, Jun 2017) vs 93.15% (Bank, Mar 2017) and 87.77% (Bank, Dec 2016) - back inside management's ~90% target band after Q1's seasonal overshoot, as deposit growth (+1.6% QoQ, bank total deposits) outpaced loan growth this quarter for the first time this series has recorded in a second quarter.
- Net Interest Margin (NIM)»: 8.12% (Bank, Jun 2017) vs 8.08% (Bank, Mar 2017) and 8.26% (Bank, Jun 2016) - flat to slightly up sequentially, still below year-ago.
- ROA» (before tax): 3.31% (Bank, Jun 2017) vs 3.34% (Bank, Mar 2017) and 3.68% (Bank, Jun 2016) - essentially flat QoQ, continuing the gradual YoY decline this series has tracked since 2015.
- ROE»: 19.12% (Bank, Jun 2017) vs 18.77% (Bank, Mar 2017) and 25.24% (Bank, Jun 2016) - a small sequential improvement, still well below year-ago for the same mechanical reason Q1 2017 gave: 2016's revaluation and reclassification enlarged the Tier 1 capital base this ratio divides by.
- CAR» (Total, Bank): 21.67% (Jun 2017) vs 20.86% (Mar 2017) and 22.10% (Jun 2016) - a genuine quarter-on-quarter recovery, the first since the dividend-driven decline Q1 2017 flagged; see Beyond the Usual below for the mechanics.
- NPL ratio - gross: 2.23% (Bank, Jun 2017) vs 2.16% (Bank, Mar 2017) and 2.31% (Bank, Jun 2016) - a third straight quarterly increase from Dec 2016's 2.03%, though still below year-ago.
- NPL ratio - net: 1.16% (Bank, Jun 2017) vs 1.22% (Bank, Mar 2017) - down slightly QoQ despite gross NPL rising, implying a somewhat higher provisioning cushion against the bad-debt stock.
- Cost-to-income (BOPO»): 72.55% (Bank, Jun 2017) vs 71.37% (Bank, Jun 2016), as disclosed directly by this filing's own regulatory ratio table - up year-over-year.
- Loan-mix NPL by category (Corporate Non-SoE, Medium, etc.): not available this quarter - see A Recovery Story With No Way to Check the Sequel above.
- Segment income (Micro/Retail/Corporate/Other/Subsidiaries): not available this quarter - this filing carries no segment note at all, unlike the Q1 2017 full audited filing.
- Related-party asset exposure, purchase commitments, litigation allowance: none of these are disclosed in this short-form filing - see Beyond the Usual below.
Beyond the Usual
This quarter's filing is the short-form OJK regulatory publication, not the full audited-format interim statement - it has essentially no footnotes to mine (no segment note, no related-party transaction list, no purchase-commitment schedule, no litigation allowance). What's below is what the document actually discloses, not a forced set of findings.
Tier 1 capital rebuilt itself the quarter after the dividend-driven decline
Bank-only Tier 1 capital grew from Rp133,636,739M at March 31, 2017 to Rp139,488,790M at June 30, 2017 - a 4.4% increase, reversing the 2.2% decline the Q1 2017 post flagged as a genuine capital-ratio decline (not a revaluation artifact) after the FY2016 dividend payout landed in Q1. With no comparable dividend event this quarter and risk-weighted assets growing just 0.3% quarter-on-quarter (Rp672,175,728M to Rp674,399,827M, bank-only) - a fraction of Q1's 7.8% RWA growth - bank-only Tier 1 CAR rose from 19.88% to 20.68% and Total CAR from 20.86% to 21.67%. This is the "stabilize or keep drifting down" question the Q1 2017 post left open, and this quarter it stabilized and reversed, on retained earnings rather than any one-off.
Three board appointments cleared regulatory approval
President Commissioner Andrinof A. Chaniago, Commissioner Nicolaus Teguh Budi Harjanto, and Director Indra Utoyo - all named mid-transition in the Q1 2017 post as still awaiting OJK fit-and-proper approval - were formally approved effective July 19, 2017 (OJK letters KEP-139/D.03/2017, KEP-140/D.03/2017, and KEP-141/D.03/2017 respectively), per this filing's own management roster. President Director Suprajarto and Vice President Director Sunarso round out a board that's now fully confirmed rather than provisional.
This quarter's headline comprehensive-income drop is a base effect, not a deterioration
Total comprehensive income attributable to owners fell 49.4% year-over-year (Rp14,318,417M vs Rp28,269,895M) - a number that would read as alarming in isolation. It isn't: H1 2016's figure included the one-off Rp13,824,692M land-and-buildings revaluation gain the H1 2016 post covered in depth. Strip that one-off out of the H1 2016 base and comprehensive income this half is actually higher than a year ago. This is the same comparative-basis trap the FY2016 post and Q1 2017 post both had to account for when reading ROE off an enlarged capital base - the 2016 revaluation keeps showing up as a distortion in whatever ratio or year-over-year comparison touches it.
Target Valuation Range
~2.26x P/B (~12.35x P/E) - fairly valued to modestly expensive, with both P/E and P/B expanding again from the Q1 2017 post as the share price outran earnings and book-value growth for a second straight quarter.
The Stock Kept Outrunning the Business
BRI's share price (converted to the nominal terms actually quoted at the time, adjusting for the November 2017 1:5 stock split, since price data pulled today for this period reflects that split retroactively) closed around Rp13,863 on June 30, 2017 - up 17.5% from the roughly Rp11,795 close the Q1 2017 post reported for March 31, 2017, up 30.6% from December 30, 2016's Rp10,613, and up 41.2% year-over-year from June 30, 2016's roughly Rp9,818. That YoY move clears this series' own ~30-40% threshold for a dedicated look, and it's worth naming plainly: the share price grew roughly four times faster than net income did over the same twelve months (41.2% vs 10.2%). None of the fundamentals this post covers - a capital ratio recovering from a dividend dip, an NPL ratio drifting slowly up, a loan-book story that's gone temporarily undocumented - explain a move that size; this looks like broader market re-rating of Indonesian bank equities in mid-2017, not something specific to BRI's own quarter. Shares outstanding remain 24,669,162,000 issued, of which 221,718,000 sit in treasury (24,447,444,000 outstanding) - unchanged from every prior quarter this series has covered.
| Market cap → enterprise value | Q2 2017 |
|---|---|
| Share price (period-end) | Rp13,863 |
| Shares outstanding | 24,447,444,000 |
| Market capitalization | Rp338,915B (~$25.43B) |
| Total liabilities¹ | Rp877,076B |
| Less: cash and equivalents | Rp185,963B |
| Enterprise value | Rp1,030,028B (~$77.29B) |
¹ Not itemized separately in this quarter's filing - derived as Total Assets (Rp1,027,338B) less Total Equity (Rp150,261B).
| Valuation multiple | Q1 2017 | Q2 2017 | Change |
|---|---|---|---|
| P/E (TTM) | ~10.8x | ~12.35x | ⚠️ up |
| P/B | ~2.01x | ~2.26x | ⚠️ up |
- P/E: ~12.35x, using a trailing-twelve-month EPS of approximately Rp1,122.53 (FY2016's Rp1,071.51 full-year EPS, minus H1 2016's Rp498.02, plus this half's Rp549.04) - up from the Q1 2017 post's ~10.8x.
- P/B: ~2.26x, using book value per share of ~Rp6,146 (Rp150,261,451M total equity attributable to owners ÷ 24,447,444,000 shares outstanding) - up from the Q1 2017 post's ~2.01x, on a combination of the price rise and equity actually growing this quarter (unlike Q1, when the dividend shrank it).
Both multiples have now expanded for two straight quarters. A same-period peer read is available for the first time in this series: BBCA's H1 2017 post reported ROE of 18.30% (Jun 2017) against BRI's 19.12%, NIM of 6.26% against BRI's 8.12%, and gross NPL of 1.47% against BRI's 2.23% - BRI is running a higher-margin, higher-return, but also higher-delinquency book than BCA, and BRI's P/E (~12.35x) sits below the multiple a reader would expect BCA's cleaner asset quality to command, which is roughly the trade-off an MSME-focused lender versus a corporate/consumer-focused one would be expected to show. Neither bank's current multiple looks obviously mispriced against the other on this single comparison.
A full DCF still isn't included here for the same reason Q1 2017 gave: this quarter adds no segment or loan-mix data to resolve the open question about Corporate Non-SoE's credit quality, so committing to multi-year loan-growth and margin assumptions would be premature. The peer-multiple read above, alongside Beyond the Usual, is the honest valuation lens for this quarter.
PT Bank Rakyat Indonesia (Persero) Tbk's consolidated interim financial information as of June 30, 2017 and for the six-month period then ended (with comparative December 31, 2016 balance sheet and June 30, 2016 income statement figures), per the Financial Services Authority's regulatory publication requirements.