BBRI Two Loan Categories Spent a Year Swapping Places as the Worst - Then the Gap Between Them Nearly Vanished

A Gap That Took a Year to Widen Closed in One Quarter

The FY2018 post closed out a year in which Corporate Non-SoE and Medium spent all four quarters swapping identities as BRI's worst-performing loan-mix category, and the gap between whichever one was worse kept widening even as both individually improved - reaching 1.30 percentage points by December 2018 (Medium at 6.78% NPL, Corporate Non-SoE at 5.48%). This quarter breaks that pattern decisively: Medium's NPL fell from 6.78% to 5.82%, while Corporate Non-SoE barely moved (5.48% → 5.45%), leaving a gap of just 0.37 points - the narrowest this series has recorded since the Q1 2018 re-segmentation first defined Medium and Corporate Non-SoE on their current size thresholds, five quarters ago. Medium is still nominally BRI's worst category, so the two haven't swapped rank this quarter, but the magnitude of separation that grew all through 2018 essentially evaporated in three months.

This is a genuinely different shape of quarter from the ones this series has covered before. Every prior post found one category's improvement offset by the other's deterioration, or a widening spread even when both improved. This quarter, the category that had been getting worse for a year (Medium) improved sharply while the one that had stabilized (Corporate Non-SoE) simply held its ground - the first quarter in this series where the gap moved cleanly in one direction without a countervailing story attached to it.

The Prescription

BRI should now ask why Medium's NPL improved this sharply in one quarter - a 96-basis-point drop after a year of near-continuous deterioration is worth understanding structurally, not just banking as good news. If it's a genuine credit-quality turnaround (write-offs of the worst Medium accounts, tighter underwriting on the re-segmented Rp25bn-200bn book), that's worth disclosing explicitly in the next annual report so a reader isn't left guessing whether it's real or a one-quarter blip like the H1 2018 "fix" for Corporate Non-SoE that reversed by Q3. BRI has now had two different loan categories each produce one clean quarter of improvement that either held (Corporate Non-SoE, barely) or is still unproven (Medium, this quarter) - a bank that wants credit to be believed should show the mechanism, not just the number.

What BRI should stop doing: treating a single quarter's NPL print, in either direction, as validation of a segment strategy. This series has now watched Corporate Non-SoE "fix itself" in H1 2018 only to backslide by Q3, and now Medium post its best quarterly move in the whole series with zero explanation offered in either the presentation or the filed statement. A bank re-segmenting loan categories twice in three years and routinely producing one-quarter swings of 50-100 basis points shouldn't publish a bare percentage and let the reader infer stability that isn't there yet.

Key Financial Metrics

Q1 2019 vs. Q1 2018 (P&L, consolidated), and March 2019 vs. December 2018 (balance sheet, consolidated)

FX: 1 USD = Rp14,240, the exchange rate this filing itself discloses for March 31, 2019.

Metric	Q1 2019 (IDR)	Q1 2019 (USD)	Q1 2018 (IDR)	YoY
Interest, Sharia and Premium Income, net ("Net Revenue" equivalent)	Rp19,625,759M	~$1,378M	Rp18,873,956M	✅ +3.98%
Other Operating Income	Rp5,585,028M	~$392M	Rp5,003,229M	✅ +11.63%
Total Other Operating Expenses	Rp15,049,718M	~$1,057M	Rp14,725,971M	⚠️ +2.20%
Operating Income	Rp10,161,069M	~$714M	Rp9,151,214M	✅ +11.04%
Net Income (attributable to owners)	Rp8,164,252M	~$573M	Rp7,402,096M	✅ +10.30%
Total Comprehensive Income (attributable to owners)	Rp9,613,018M	~$675M	Rp6,215,331M	✅ +54.68%¹
EPS (basic, quarterly, attributable to owners)	Rp66.79	~$0.0047	Rp60.47	✅ +10.45%

¹ The same bond-portfolio mark-to-market swing this series tracked all through 2018 - a Rp1,896,711M gain on available-for-sale securities and Government Recapitalization Bonds this quarter (before tax) against a Rp1,476,446M loss a year earlier, as Indonesian bond yields eased through Q1 2019 after the FY2018 post's year-end recovery from the 2018 emerging-market selloff. Net revenue growth (+3.98%) is meaningfully slower than FY2018's full-year +7.10% - see Key Operational Metrics below for the margin compression behind it.

Balance sheet metric	Mar 2019 (IDR)	Mar 2019 (USD)	Dec 2018 (IDR)	QoQ
Total Assets	Rp1,279,861B	~$89.88B	Rp1,296,898B	⚠️ -1.31%
Loans (gross, incl. sharia financing and finance lease)	Rp855,467B	~$60.08B	Rp843,598B	✅ +1.41%
Total Deposits (Demand + Savings + Time + Sharia)	Rp936,027B	~$65.74B	Rp944,269B	⚠️ -0.87%
Total Liabilities	Rp1,084,949B	~$76.19B	Rp1,111,623B	⚠️ -2.40%
Total Equity (incl. non-controlling interest)	Rp194,911B	~$13.69B	Rp185,275B	✅ +5.20%
Total Cash and Cash Equivalents (per cash flow statement)	Rp199,232B	~$13.99B	Rp215,757B	⚠️ -7.66%

Total assets and deposits both shrank quarter-over-quarter - unremarkable on its own (Q1 is seasonally the softest quarter for Indonesian bank deposit balances, as year-end corporate/government cash typically drains out through January), but it directly explains the cash line's reversal. The FY2018 post flagged cash swinging from three straight quarterly declines to its sharpest-ever single-quarter increase (+54.3%) in Q4 2018. This quarter cash fell again - Rp199,232B at March 2019, down 7.66% from December's Rp215,757B - continuing the whipsaw pattern rather than settling into either a clean uptrend or downtrend. Year-over-year, cash is still up 13.53% against Rp175,477B at Q1 2018, so the multi-quarter trend remains positive even as the quarter-to-quarter reading keeps reversing direction.

Net income grew a steady 10.3% - the headline any reader would expect from BRI by now - but the loan-mix NPL gap that widened all through 2018 essentially closed this quarter, and total assets and deposits both shrank for the first time in this series' quarter-over-quarter balance sheet reads (see A Gap That Took a Year to Widen Closed in One Quarter above).

Key Operational Metrics

Bank-only, per BRI's own investor presentation, unless stated

• CASA^»: 57.85% (Bank, Mar 2019) vs 61.84% (Bank, Dec 2018) and 57.61% (Bank, Mar 2018) - down sharply from year-end (typical Q1 seasonality as demand deposits drain post-year-end), essentially flat year-over-year.
• Loan-to-deposit ratio (LDR)^»: 91.43% (Bank, Mar 2019) vs 89.57% (Bank, Dec 2018) and 92.26% (Bank, Mar 2018) - up from year-end as deposits fell faster than loans, but still inside management's 90%±2% target band and below the year-ago reading.
• Net Interest Margin (NIM)^»: 6.89% (Bank, Mar 2019) vs 7.45% (Bank, Dec 2018) and 7.49% (Bank, Mar 2018) - the lowest quarterly reading in this entire series, extending the multi-year compression tracked since 2015 rather than pausing it.
• ROA^» (before tax): 3.35% (Bank, Mar 2019) vs 3.68% (Bank, Dec 2018) and 3.35% (Bank, Mar 2018) - flat year-over-year, down from the full-year reading (expected: FY figures compound the strongest quarters).
• ROE^» (Tier 1): 18.81% (Bank, Mar 2019) vs 20.49% (Bank, Dec 2018) and 18.70% (Bank, Mar 2018) - up marginally year-over-year.
• CAR^» (Total, Bank): 21.68% (Mar 2019) vs 21.21% (Dec 2018) and 20.74% (Mar 2018) - up for a third straight quarter, continuing the capital rebuild flagged since 9M 2018. Tier 1 CAR: 20.64% (Mar 2019) vs 19.76% (Mar 2018).
• NPL ratio - gross (Bank): 2.31% (Mar 2019) vs 2.14% (Dec 2018) and 2.39% (Mar 2018) - worse than year-end (a recurring Q1 seasonal pattern this series has now seen twice: 1Q'18 was also worse than Dec'17), but improved year-over-year.
• NPL ratio - net (Bank): 1.05% (Mar 2019) vs 0.92% (Bank, Dec 2018) and 1.16% (Bank, Mar 2018) - same seasonal pattern.
• BOPO^» (Opex/Opr. Income, bank-only): 70.21% (Bank, Mar 2019) vs 68.48% (Bank, Dec 2018) and 70.43% (Bank, Mar 2018) - essentially flat year-over-year, worse than the full-year reading (same seasonal effect as ROA above).
• Loan-mix NPL by category (re-segmented basis, Bank): Micro 1.29%, Consumer 1.24%, Small Commercial 3.49%, Medium 5.82%, Corporate Non-SoE 5.45%, SoE 1.05% (Mar 2019) vs Micro 1.01%, Consumer 1.03%, Small Commercial 3.14%, Medium 6.78%, Corporate Non-SoE 5.48%, SoE 1.05% (Dec 2018) - every category except SoE (unchanged) moved worse quarter-over-quarter except Medium, which improved sharply. See above for why Medium's improvement is this quarter's real story.
• Special Mention loans (re-segmented basis, Bank, total): 4.49% (Mar 2019) vs 3.62% (Dec 2018) and 4.96% (Mar 2018) - worse quarter-over-quarter (the same Q1 seasonal pattern as NPL above) but improved year-over-year.
• NPL Coverage Ratio (Bank): 194.72% (Mar 2019) vs 182.23% (Mar 2018) - up year-over-year, comfortably above BRI's own 170% internal threshold.
• Restructured loans as % of total loans (Bank): 6.1% (Mar 2019) vs 5.8% (Mar 2018) - up slightly year-over-year, a small deterioration worth watching but not yet at 2018's more volatile swings.
• Write-off recovery rate (Bank): 54.3% of the quarter's own gross write-offs recovered, vs 39.8% a year ago - the strongest quarterly recovery rate in this series, above BRI's own 50% internal target.
• Fee & other operating income growth (Bank): +7.7% YoY (Rp5,210B vs Rp4,840B), with trade finance and international-business-related fees up 63.1% YoY and BRILink agent-network fee income up 187.8% YoY, raising BRILink's share of e-banking-related fee income from 8.5% to 20.4% in a single year.
• Geographic segment data: not disclosed in either source document this quarter - see Beyond the Usual below for what that means for the open Timor Leste question.
• Segment income (Micro/Retail/Corporate/Others/Subsidiaries): not disclosed this quarter either - unlike the FY2018 filing, this quarter's interim documents carry no segment income breakdown at all (see Beyond the Usual).

Business Lines: Loan Growth and Credit Quality

Segment-level income isn't available this quarter (see above), but loan outstanding and NPL by business line are disclosed in the presentation, giving a partial read on where BRI's growth and credit quality are actually coming from.

Micro loans grew 10.5% YoY to Rp284.1 trillion, still the largest and fastest-structurally-growing book, with micro borrowers up 6.3% YoY to 10.2 million. Micro's NPL improved to 1.29% from 1.35% a year ago - the segment BRI's corporate plan is explicitly betting on (targeting ~40% of the loan book by 2022, against a Mar 2019 composition of 34.9%, up from 31.3% in 2014) continues to be both the biggest and one of the cleanest books.

Small Commercial loans grew 12.9% YoY to Rp166.3 trillion with NPL essentially flat at 3.49% (vs 3.88% a year ago, an improvement). Medium loans grew just 1.2% YoY to Rp18.8 trillion - the slowest-growing book by far - while its NPL, as covered above, swung from being BRI's clear worst category to nearly converging with Corporate Non-SoE. A book growing at 1.2% a year while still carrying the highest delinquency rate of any segment is not yet the "leading SME bank" the corporate plan targets.

Consumer loans grew 9.6% YoY to Rp133.4 trillion, three-quarters of it salary-based lending (74.0% of the consumer book), with NPL flat at 1.24%. The steadiest, most boring book in the portfolio - which for a consumer lending segment is the right kind of boring.

SoE and Corporate loans combined grew modestly - SoE loans essentially flat YoY (Rp90.8 trillion vs Rp90.97 trillion) while Corporate grew to Rp106.7 trillion from Rp106.6 trillion, both effectively stalled. SoE's NPL doubled year-over-year in percentage terms, from 0.51% to 1.05% (still the cleanest book in absolute terms, but the direction is worth watching given SoE is meant to be BRI's lowest-risk lending relationship).

Subsidiaries contributed Rp341.61 billion to group profit/fee income this quarter, up modestly from Rp334.87 billion a year ago, with total subsidiary assets now Rp63.53 trillion - a small, steady contribution rather than a fast-growing one this quarter, in contrast to FY2018's 24.4% full-year segment income growth (though that figure isn't directly comparable since it was measured on segment income, not the asset/contribution figures disclosed this quarter).

Beyond the Usual

This quarter's source filing has no real footnotes to mine

This quarter's regulatory financial statement (the OJK-format published balance sheet, income statement, and supporting schedules) is a much thinner document than [the FY2018 audited annual report](/analysis/bbri/2018-12/) that preceded it - 12 pages against a full footnoted annual filing, with only a handful of general notes (accounting-standards references, the March 2019 exchange rate, two subsidiary acquisitions already disclosed at FY2018) and none of the off-balance-sheet, related-party, commitments, or segment-reporting detail an annual filing carries. This is standard for an interim quarter rather than a red flag on its own - a bank isn't expected to publish full footnoted financial statements every quarter, only at fiscal year-end - but it does mean no new information is available this quarter on [the Timor Leste balance-sheet mystery](/analysis/bbri/2018-12/#timor-leste-s-balance-sheet-partially-recovered-but-the-swing-is-still-unexplained-in-any-filing) first flagged at 9M 2018 and still unexplained at FY2018. Geographic segment data isn't disclosed in an interim quarter's documents at all in this series so far, so this question will have to wait for BRI's next annual filing (covering FY2019) to have any chance of resolution.

The mark-to-market swing that hurt FY2018 fully reversed in Q1

BRI booked a Rp1,896,711M gain on available-for-sale securities and Government Recapitalization Bonds this quarter (before tax), compared to a Rp1,476,446M loss in the same quarter a year ago - a swing of over Rp3.3 trillion in the opposite direction on the same line item this series has now tracked flip from loss to gain to loss to gain across five consecutive quarters, tracking the direction of Indonesian government bond yields more than anything specific to BRI's own portfolio management.

BRI's own presentation now shows industry-wide comparisons for the first time in this series

This quarter's investor presentation, unlike every prior quarter this series has reviewed, opens with a "BRI vs Industry" market-share and ratio-comparison section (assets, loans, deposits, and net-profit market share since 2014, plus NIM/ROA/BOPO/NPL/LDR/CAR against industry averages for the current quarter) sourced to OJK and internal data. On the current-quarter comparison: BRI's NIM (6.89%) sits well above the industry average (5.12%), its NPL (2.31%) is better than the industry's (2.67%), but its CAR (21.68%) is below the industry's (23.32%) - a genuinely useful addition to this series' own trailing-quarter tracking, though it's presentation material rather than a filed disclosure, so it isn't independently verifiable the way the financial statement figures are.

Target Valuation Range

P/E ~13.79x, P/B ~2.37x - still cheaper than BBCA on every multiple this quarter, but both of BRI's own multiples kept expanding for a third straight quarter as the stock outran its own earnings growth again.

BRI's share price closed at Rp3,736 on March 29, 2019 - up 12.3% from the FY2018 post's Rp3,327 close, and up 14.1% year-over-year against Rp3,273 at the same point in Q1 2018¹. No stock split has occurred since BRI's 5-for-1 split in November 2017, so no further adjustment is needed for the prices quoted here or in the FY2018 post.

¹ The Rp3,273 comparison uses BRI's own closing price for March 30, 2018 (the last trading day of that quarter), consistent with the methodology used throughout this series.

Trailing-twelve-month EPS is approximately Rp271.0 (FY2018's Rp264.66 basic EPS, minus Q1 2018's Rp60.47, plus this quarter's Rp66.79), giving a P/E^» of ~13.79x against the Rp3,736 close.

Shares outstanding remain 123,345,810,000 issued, of which 1,108,590,000 sit in treasury (122,237,220,000 outstanding) - unchanged from every prior post in this series.

Market cap → book value	Q1 2019
Share price (period-end)	Rp3,736
Shares outstanding	122,237,220,000
Market capitalization	~Rp456,678B
Total equity attributable to owners (book value)	Rp192,571B
P/B	~2.37x

Peer-multiple sanity check	FY2018	Q1 2019	Change
P/E»	~12.57x (full-year)	~13.79x (TTM)	⚠️ up - the stock outran its own earnings growth again
P/B»	~2.22x	~2.37x	⚠️ up

A same-period peer read is available: BBCA's Q1 2019 post reported bank-only NIM of 6.19% against BRI's 6.89%, ROE of 15.36% against BRI's 18.81% (Tier 1), and gross NPL of 1.47% against BRI's 2.31% - the same higher-margin/higher-return/higher-delinquency trade-off this series has tracked in every prior comparison. BCA's Q1 2019 P/E of ~28.0x (annualized-quarterly basis) against BRI's ~13.79x (TTM basis) puts the gap at roughly 2.03x - wider than FY2018's ~1.97x gap, reversing that quarter's brief narrowing, though the two P/E figures use different EPS bases (BCA's annualized single quarter vs BRI's genuine trailing-twelve-month) so the gap's exact size should be read as directional rather than precise.

A full DCF still isn't included here for the same reason every prior post in this series has given: a loan-mix table whose worst-performing category just swung by nearly 100 basis points in one direction, with no disclosed explanation, isn't a stable base for multi-year credit-quality assumptions - even when, as this quarter, the swing is favorable rather than adverse. The peer-multiple read above, alongside Beyond the Usual, remains the honest valuation lens for this quarter - and on that lens, BRI stays meaningfully cheaper than BCA on every multiple even as both banks' own multiples kept expanding.

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