Coverage Retreated the Exact Quarter Restructuring Tripled
The Q1 2020 post closed on a bank building its heaviest-ever provisioning cushion - loan-loss coverage at a series-high 223.6% - just as Covid-19 restructuring exploded from Rp14.9 trillion to Rp101.2 trillion in the single month after March 31 closed. This quarter answers the obvious next question: did that cushion keep growing to meet the wave, or did it hold the line while the wave kept coming? Neither, exactly. Covid-19 restructuring kept climbing - to Rp171.9 trillion by June 30 (19.8% of total loans), and further to Rp183.7 trillion (21.3%) by the time BRI's own investor materials were finalized in late July - but bank-only loan-loss coverage eased, down from Q1's 223.6% peak to roughly 200% by June. BRI spent two straight quarters building the industry's most aggressive cushion, then let it come off right as the thing it was built for kept arriving.
The more revealing number sits one level below the headline NPL ratio. Bank-only gross NPL moved only modestly, from 2.35% (Jun 2019) to 2.98% (Jun 2020) - not alarming on its own. But BRI's own broader Loan at Risk» measure (NPL + Special Mention + Covid-restructured-but-still-"Current" loans, as a share of total loans) jumped from 10.4% a year earlier to 28.9% - nearly triple, and almost ten times the headline NPL figure. That gap exists because Indonesia's OJK lets Covid-19-restructured loans keep their pre-restructuring collectability classification rather than migrating to Special Mention or NPL - a legitimate, publicly disclosed regulatory relief measure, not something BRI invented, and the same mechanism BCA's own Q2 2020 post flagged the same quarter. Of BRI's restructured book, 87.6% stayed classified "Current" as of June 2020 (up from 46.3% a year earlier, when the restructured pool was tiny and pre-dated Covid-19). A reader relying on the 2.98% NPL ratio alone would miss that more than a quarter of BRI's loan book now carries some form of pandemic-era forbearance.
Corporate Non-SoE, the segment Q1's post already flagged for reversing its entire Q4 2019 "cleanup," kept getting worse - its bank-only NPL rose to 10.75%, the single worst reading this entire series has recorded for any loan category in any quarter, worse than the 9.14% (consolidated) at March, worse than the original 10.46% shock at Q3 2019 that started this whole thread. And it kept growing while doing it: Corporate Non-SoE loans grew 6.6% YoY (+Rp6.1 trillion) even as the segment's own asset quality kept deteriorating - the same pattern flagged at Q1 of a segment expanding and rotting at the same time.
The Prescription
BRI should stop treating the headline NPL ratio as the number that tells the real story and start giving equal visual weight, in its own investor materials, to the Loan at Risk figure that actually captures Covid-19's effect on the book. The presentation does disclose both - 2.98% NPL and 28.9% LAR sit on the same slide - so the information exists; it's the emphasis that's misleading, not the disclosure. A bank whose credit-relief-adjusted risk measure moved from 10.4% to 28.9% of its book in a single year shouldn't let a headline ratio ten points lower carry the conversation.
What BRI should keep doing, and didn't fully this quarter: the front-loaded provisioning discipline Q1's post praised. Coverage easing from 223.6% to ~200% right as the restructured pool nearly doubled again (Rp101.2tn to Rp171.9tn) reads as the opposite instinct at the worst possible moment - building the cushion before the wave arrived, then letting it come off as the wave kept growing, rather than growing the cushion in step with it.
Key Financial Metrics
H1 2020 vs. H1 2019 (P&L, consolidated, cumulative Jan-June), and June 2020 vs. December 2019 / June 2019 (balance sheet, consolidated)
FX: 1 USD = Rp14,255.00, the exchange rate this filing itself discloses for June 30, 2020 (vs Rp13,882.50 at Dec 2019 and Rp14,127.50 at Jun 2019).
| Metric | H1 2020 (IDR) | H1 2020 (USD) | H1 2019 (IDR) | YoY |
|---|---|---|---|---|
| Interest, Sharia and Premium Income, net ("Net Revenue" equivalent) | Rp37,085,938M | ~$2,602M | Rp40,042,630M | ⚠️ -7.38% |
| Operating Income | Rp15,517,667M | ~$1,089M | Rp19,905,902M | ⚠️ -22.05% |
| Net Income (attributable to owners) | Rp10,178,335M | ~$714M | Rp16,130,663M | ⚠️ -36.90% |
| Total Comprehensive Income (attributable to owners) | Rp10,428,206M | ~$732M | Rp21,598,977M | ⚠️ -51.71%¹ |
| EPS (basic, H1 cumulative, attributable to owners) | Rp83.02 | ~$0.0058 | Rp132.21 | ⚠️ -37.20% |
¹ Total comprehensive income fell far harder than net income because H1 2019's own comprehensive-income figure had been inflated by a large bond-mark-to-market gain that H1 2020 didn't repeat at the same scale - other comprehensive income was a much smaller contributor this half.
| Balance sheet metric | Jun 2020 (IDR) | Jun 2020 (USD) | Dec 2019 (IDR) | QoQ² | Jun 2019 (IDR) | YoY |
|---|---|---|---|---|---|---|
| Total Assets | Rp1,387,759B | ~$97,353M | Rp1,416,759B | ⚠️ -2.05% | Rp1,288,196B | ✅ +7.73% |
| Loans (gross) | Rp922,967B | ~$64,752M | Rp903,197B | ✅ +2.19% | Rp877,071B | ✅ +5.24% |
| Total Deposits | Rp1,072,501B | ~$75,241M | Rp1,021,197B | ✅ +5.02% | Rp945,054B | ✅ +13.49% |
| Total Equity (incl. non-controlling interest) | Rp187,835B | ~$13,178M | Rp208,784B | ⚠️ -10.03% | Rp190,841B | ⚠️ -1.58% |
| Total Cash and Cash Equivalents (bank-only, per cash flow statement)³ | Rp145,566B | ~$10,213M | Rp236,906B | ⚠️ -38.55% | Rp166,626B | ⚠️ -12.63% |
² QoQ compares against the prior full-year close (Dec 2019), the same convention used throughout this series for a mid-year quarter. ³ This period's filed cash flow statement discloses only the bank-only (individual) figures - no consolidated cash flow statement is included in this quarter's source document, unlike the balance sheet and income statement above.
Total assets contracted again on a QoQ basis even as loans and deposits both kept growing - the same non-loan-asset shrinkage flagged at Q1 continued into Q2. Cash fell a further 38.6% from December's already-depleted base, on top of Q1's own 33.0% drawdown - two consecutive quarters of the sharpest cash contraction this series has recorded, though the underlying driver (placements with Bank Indonesia being run down rather than a liquidity problem) hasn't changed.
Net income attributable to owners fell 36.9% YoY, but the real story is what's happening underneath the provisioning line: coverage eased from its Q1 peak exactly as Covid-19 restructuring and Loan at Risk both kept climbing. See above.
Key Operational Metrics
Bank-only, per BRI's own investor presentation and filed financial ratios, unless stated
- CASA»: 56.64% (Jun 2020) vs 59.01% (Dec 2019) and 58.72% (Jun 2019) - down on both counts, continuing the multi-year drift toward costlier deposits flagged since FY2019.
- Loan-to-Deposit Ratio (LDR)»: 85.78% (Jun 2020, filed ratio) vs 88.64% (Dec 2019) and 93.09% (Jun 2019) ✅ - down sharply YoY, deposit growth (+13.5% YoY) comfortably outpacing loan growth (+5.2% YoY).
- Net Interest Margin (NIM)»: 5.72% (Jun 2020, filed ratio) vs 6.98% (Dec 2019) and 7.02% (Jun 2019) ⚠️ - a new series low, a much sharper compression than Q1's own new-low reading of 6.66%.
- ROA» (before tax): 2.41% (Jun 2020, filed ratio) vs 3.50% (Dec 2019) and 3.31% (Jun 2019) ⚠️ - down sharply on both counts.
- ROE» (Tier 1, filed ratio): 12.62% (Jun 2020) vs 19.41% (Dec 2019) and 19.02% (Jun 2019) ⚠️ - down sharply, a genuine profitability decline this time, unlike Q1's mechanically inflated ROE (that quarter's ROE rose only because Tier 1 capital, its own denominator, had shrunk).
- CAR» (Total, bank-only, filed ratio): 19.83% (Jun 2020) vs 22.55% (Dec 2019) and 20.77% (Jun 2019) ⚠️ - down YoY, but up 160bp from Q1's crisis-low 18.23%, a partial rebuild. Tier 1 CAR: 18.81% (Jun 2020) vs 21.52% (Dec 2019) and 19.73% (Jun 2019) - up 161bp from Q1's 17.20%, though Tier 1 capital's own nominal value actually fell 2.4% YoY (Rp175,577B vs Rp179,942B) - the ratio recovered mainly because risk-weighted assets shrank, not because the capital base itself grew.
- NPL ratio - gross (bank-only, filed ratio): 2.98% (Jun 2020) vs 2.62% (Dec 2019) and 2.35% (Jun 2019) ⚠️ - worse on both counts, though the headline move understates the real picture - see Loan at Risk above. NPL ratio - net: 0.77% (Jun 2020) vs 1.04% (Dec 2019) and 1.12% (Jun 2019) ✅ - improved, a function of the (now-easing) coverage build, not better underlying credit quality.
- NPL Coverage Ratio (bank-only): ~200% (Jun 2020) vs 194.6% (Jun 2019) ✅ but down from Q1's series-high 223.6% ⚠️ - the retreat this post's opening section covers in detail.
- BOPO» (Opex/Opr. Income, bank-only): 77.49% (Jun 2020) vs 70.10% (FY2019) and 71.12% (Jun 2019) - the weakest efficiency reading in this series, worse again than Q1's already-weak 72.97%.
- Loan at Risk (bank-only): 28.9% of total loans (Jun 2020, Rp251.3 trillion) vs 10.4% (Jun 2019, Rp88.2 trillion) - see above for what's inside this number.
- Loan-mix NPL by category (bank-only): Micro 1.18%, Consumer 1.50%, Small Commercial 3.63%, Medium 6.79%, Corporate Non-SoE 10.75%, SoE 1.11%, Total 2.98% (Jun 2020) vs Micro 1.40%, Consumer 1.35%, Small Commercial 3.75%, Medium 5.61%, Corporate Non-SoE 4.83%, SoE 1.03%, Total 2.35% (Jun 2019). Corporate Non-SoE is again the outlier - every other category's move is modest by comparison to its near-doubling.
- Special Mention loans by category (bank-only): Micro 2.25%, Consumer 3.49%, Small Commercial 5.91%, Medium 7.04%, Corporate Non-SoE 7.29%, SoE 4.33%, Total 4.19% (Jun 2020) vs Micro 4.60%, Consumer 3.08%, Small Commercial 6.41%, Medium 6.57%, Corporate Non-SoE 10.66%, SoE 3.86%, Total 5.37% (Jun 2019). Corporate Non-SoE's Special Mention ratio actually fell (10.66% to 7.29%) even as its NPL more than doubled - loans that were one notch from default a year ago have now largely migrated into default itself, rather than the pipeline refilling behind them.
- Restructured loans (Covid-19, all segments): Rp171.9 trillion (19.8% of total loans) at Jun 30, 2020, per BRI's own investor presentation, up from Rp101.2 trillion (per Q1's disclosure) at Apr 30, 2020, and Rp183.7 trillion (21.3%) by Jul 31, 2020, per the same presentation's own later disclosure.
Business Lines: Loan Growth and Credit Quality
Micro loans grew 7.1% YoY (+Rp20.8 trillion), still the largest single contributor to loan growth, with NPL at 1.18% - down from Q1's 1.45% but still up from the pre-Covid 1.01% a year earlier at FY2018. Small Commercial grew 2.8% YoY (+Rp5.3 trillion), the slowest pace of any of BRI's larger books this quarter, with NPL improving slightly to 3.63% from Q1's 3.74%.
Medium loans grew just 3.0% YoY (+Rp0.6 trillion) - the weakest growth of any segment - with NPL worsening to 6.79% from 4.37% at March, a reversal after Q1 had shown Medium as the one loan-mix category moving the right direction on both fronts. Consumer grew 4.3% YoY (+Rp5.9 trillion) with NPL edging up to 1.50% from 1.43% at March, continuing the gradual retail-book deterioration Q1 first flagged.
Corporate Non-SoE grew 6.6% YoY (+Rp6.1 trillion) - the fastest growth after Micro - while its NPL climbed to 10.75%, the worst single-category reading this series has recorded (see above). SoE loans shrank 6.2% YoY (-Rp6.7 trillion), the only segment to contract, with NPL improving to 1.11% from 0.55% at March - still by far the cleanest book, but no longer improving the way it was earlier in the year. BRI's own quarterly filing this period again carries no segment-income footnote, continuing the gap flagged since Q1 2019 - so this post, like the last several, can't independently verify whether Corporate's profitability moved alongside its NPL deterioration.
Beyond the Usual
This quarter's source document is again BRI's standard OJK transparency-format quarterly report - no notes to the financial statements (no related-party, lease, or litigation footnotes this period), the same gap noted at Q1. The findings below draw on the investor presentation and the quarterly report's own summary schedules.
Nearly Nine in Ten Restructured Rupiah Stayed Classified "Current"
Of BRI's Covid-19-restructured loan book, 87.6% remained classified "Current" as of June 2020 (up from 46.3% a year earlier, when the pool barely existed), with only 5.5% in NPL and 6.9% in Special Mention. This isn't BRI concealing anything - Indonesia's OJK explicitly permits Covid-19-restructured loans to retain their pre-restructuring collectability classification as a regulatory relief measure, and BRI discloses both the narrow NPL ratio and the broader Loan at Risk figure in the same presentation, the same treatment [BCA's own Q2 2020 post](/analysis/bbca/2020-06/) flagged for the same quarter. But it means the headline 2.98% NPL ratio and even the 4.19% Special Mention ratio both undercount the loan book's real exposure - the 28.9% Loan at Risk figure (see above) is the number that actually reflects how much of BRI's book carries pandemic-era forbearance in some form.
Regulatory Relief Also Flattered the Capital Ratios This Quarter's Numbers Show Recovering
OJK's Covid-19 banking relaxations, disclosed in BRI's own presentation, include excluding Covid-19-restructured loans from the Loan at Risk calculation used in formal bank soundness assessment and removing the Capital Conservation Buffer from the minimum CAR requirement banks must hold. Both measures mechanically ease the same ratios this post reports as "recovering" - Tier 1 CAR's rebound from 17.20% to 18.81% and Total CAR's rebound from 18.23% to 19.83% partly reflect a lower regulatory bar, not purely a rebuilt capital base. Genuine capital strength and regulatory-relief-assisted capital strength look identical in the reported ratio; only the underlying Tier 1 capital figure (down 2.4% YoY in nominal terms, see above) shows the difference.
Write-Off Recovery Held Up Despite the Credit Stress Elsewhere
Bank-only write-off recovery income continued at a pace broadly consistent with pre-Covid quarters, per the filed income statement's "Correction on allowance for impairment" and recovery-income lines - a modest positive signal that BRI's collections effort on already-written-off loans hadn't yet been disrupted by the pandemic as of this quarter, even as new NPL formation (see Corporate Non-SoE, above) clearly had been.
Related-Party Exposure Remains Immaterial Against the Book
BRI's related-party loan and receivable exposure, per the filing's own "Quality of Assets" and related-party schedules, stayed a rounding error against the Rp922.97 trillion consolidated gross loan book this quarter - consistent with every prior quarter in this series. A clean footnote, not a finding beyond noting it was checked again.
Target Valuation Range
P/E ~13.05x, P/B ~2.00x - too early to call - BRI's headline ratios (NPL, coverage, Tier 1) all read better or flat this quarter, but each one is either partly a function of regulatory relief or a retreat from the exact defensive posture that made Q1 look prudent, and Corporate Non-SoE's credit quality is still getting worse, not stabilizing.
BRI's own investor presentation shows the share price closing at Rp3,030 on June 30, 2020 - essentially flat (+0.3%) from the Q1 2020 post's Rp3,020 close, a stall rather than a further decline or a real recovery. Over the trailing two years, the price traded as high as roughly Rp4,073 (July 2019) and as low as roughly Rp2,482 (April 2020, the depth of the Covid-19 market crash) - a peak-to-trough move of about 39% - before settling essentially unchanged from where Q1 left it. The market, in other words, stopped falling this quarter but hasn't started pricing in a recovery either.
H1 2020 EPS (consolidated, attributable to owners) is Rp83.02. Combining that with FY2019's Rp281.31 and subtracting H1 2019's own Rp132.21 gives a trailing-twelve-month EPS of approximately Rp232.12, giving a P/E» of ~13.05x against the Rp3,030 close - not directly comparable to Q1 2020's method (Q1 annualized a single quarter ×4; this quarter uses a genuine TTM figure, the more reliable basis once two quarters of the current year exist).
| Market cap → book value | H1 2020 |
|---|---|
| Share price (period-end) | Rp3,030 |
| Shares outstanding | ~122.59 billion (derived from this quarter's own EPS/net-income relationship) |
| Market capitalization | ~Rp371,448B |
| Total equity attributable to owners (book value) | Rp185,419B |
| P/B | ~2.00x |
| Peer-multiple sanity check | Q1 2020 | H1 2020 | Change |
|---|---|---|---|
| P/E» | ~11.34x (annualized) | ~13.05x (TTM) | ⚠️ up (methods not directly comparable - see above) |
| P/B» | ~2.09x | ~2.00x | ✅ down |
A same-period peer read is available: BBCA's Q2 2020 post reported an H1 2020-annualized P/E of ~28.7x against BRI's genuine TTM P/E of ~13.05x - a gap of roughly 2.20x, narrower than Q1 2020's ~2.28x gap. BCA's NIM (5.96%) sat above BRI's (5.72%) for the first time in several quarters covered by this series, and both banks now show the same Covid-19-restructuring-and-relief pattern in their loan books - the market's persistent premium for BCA looks less like a NIM/quality gap this quarter and more like a straightforward preference for the lower-delinquency, lower-restructuring-share bank of the two.
A full DCF still isn't included here, for the same reason every prior post in this series has given, reinforced by this quarter's own numbers: Corporate Non-SoE's NPL just posted the worst reading in this entire series, nearly a third of the loan book now sits inside a regulatory-relief-adjusted risk measure, and the capital-ratio "recovery" this post reports is itself partly a function of that same relief. None of that is a stable base for multi-year credit-quality assumptions yet. The peer-multiple read above, alongside Beyond the Usual, remains the honest valuation lens this quarter.
PT Bank Rakyat Indonesia (Persero) Tbk's published financial statements as of June 30, 2020 and for the six-month period then ended (unaudited, OJK transparency-format), together with its 1H 2020 investor presentation.