A Credit-Cost Reversal, Not Yet a Growth Recovery
Q1 2026's post closed on a company deliberately trading reported profit for provisioning discipline, with Cost of Credit at a backlog-record 5.7% and bookings falling year-over-year for the first time outside a pandemic or cyberattack period. The second quarter answers what that discipline actually bought: Cost of Credit fell to 3.0% for Q2 alone, down sharply from Q1's 5.7% and even below Q2 2025's own 4.9%, and profit before tax jumped 34.3% quarter-over-quarter to Rp586bn, pushing H1 net income up 8.7% year-over-year to Rp828,909M on Total Income of Rp3,424,600M (+3.7% YoY). This reads as exactly the trade-off management described last quarter playing out on schedule - tighter underwriting in Q1 showing up as a cleaner book by Q2.
What the credit-cost recovery didn't fix is growth: new bookings fell both 1.8% year-over-year and 6.5% quarter-over-quarter to Rp5,169bn for Q2 alone, the softest single quarter this backlog has recorded outside 2024's deliberate slowdown, and managed receivables slipped 0.9% quarter-over-quarter. The company's own presentation frames this candidly as "muted growth" amid "ongoing macro risks and soft consumer sentiments" - a business choosing to originate less rather than chase volume into a softer credit environment, the same posture flagged last quarter, just now showing up in the results rather than just the language. See Key Financial Metrics for the full YoY/QoQ picture and Three Segments, One Widening Gap for where the growth and profit stories genuinely diverge by product line.
The Prescription
BFI should keep leaning into the Q2 credit-cost recovery and use it to make an explicit, numbers-first case that this quarter's provisioning discipline is now paying off - not just describe it in a bullet list titled "Asset Quality." The Q1-to-Q2 swing in Cost of Credit (5.7% to 3.0%, a 276bp improvement in a single quarter) is one of the sharpest sequential recoveries this backlog has tracked, and it deserves to be the headline of the company's own investor communication rather than one line among several in a "Key Ratios" table. A reader piecing this together from percentages scattered across three separate slides shouldn't have to do the company's own job of connecting cause (Q1's tighter underwriting) to effect (Q2's cleaner book).
What BFI should stop doing: describing Others' persistent underperformance as if each quarter's decline were a fresh, standalone event rather than naming the multi-quarter pattern directly. This is now the fourth consecutive period (9M 2025, FY2025, Q1 2026, and now H1 2026) in which this backlog has had to reconstruct Others' deterioration itself from segment tables the company discloses without commentary. A segment that's fallen from 21.9% margin to 11.8% margin year-over-year, and whose profit before tax is now less than a third of what it was two years ago, warrants the company's own explicit acknowledgment - not silence in the presentation and a bare number in the audited notes.
Key Financial Metrics
Six months ended 30 June 2026 vs. six months ended 30 June 2025
FX: Rp17,935 = USD 1 (30 June 2026 close, the period-end date), following the convention used throughout this backlog.
| Metric | H1 2026 (IDR) | H1 2026 (USD) | H1 2025 (IDR) | YoY |
|---|---|---|---|---|
| Total Income ("Net Revenue" equivalent) | Rp3,424,600M | ~$190.9M | Rp3,301,847M | ✅ +3.7% |
| Profit Before Tax ("Operating Income" equivalent) | Rp1,022,685M | ~$57.0M | Rp940,976M | ✅ +8.7% |
| Net Income | Rp828,909M | ~$46.2M | Rp762,224M | ✅ +8.7% |
| Total Cash and Cash Equivalents | Rp1,392,586M | ~$77.6M | Rp1,254,149M | ✅ +11.0% |
Profit before tax remains the closest operating-income equivalent for this lender, as established throughout this backlog. Net income grew 8.7% year-over-year, matching Total Income's growth almost exactly at the PBT line even though the two diverge earlier in the statement - Total Income grew only 3.7% while PBT grew 8.7%, meaning expenses grew slower than revenue for the half, a reversal of Q1 2026 alone's pattern where the entire income-to-profit gap ran the other way. Basic earnings per share rose to Rp56 for H1 2026 from Rp51 a year earlier (+9.8%, slightly ahead of net income's own growth rate because the 290,000,000-share buyback completed in Q1 2026 - see Beyond the Usual below - shrank the share count the comparative period didn't have). Operating cash flow swung dramatically higher, to a Rp1,173,632M inflow from H1 2025's Rp112,152M, as collections on the existing book outpaced new-financing cash outlays by a far wider margin than a year ago - consistent with the bookings slowdown described above freeing up more cash than it costs in foregone growth. Total cash rose 11.0% year-over-year to Rp1,392,586M, the first year-over-year increase in total cash this backlog has recorded in several periods.
New financing bookings fell 1.8% year-over-year to Rp10,698bn for the half, and 6.5% quarter-over-quarter to Rp5,169bn for Q2 alone (from Q1's Rp5,529bn) - a continuation, not a reversal, of Q1 2026's own year-over-year booking decline, the first this backlog had seen outside a pandemic or cyberattack-affected period. Managed receivables (including off-balance-sheet joint financing) held roughly flat at Rp26,547bn, up 3.6% year-over-year but down 0.9% quarter-over-quarter from Q1's Rp26,795bn - the first quarter-over-quarter contraction in this figure this backlog has tracked in some time, consistent with a company still originating less than it's collecting.
| Balance sheet metric | 30 Jun 2026 (IDR) | 30 Jun 2026 (USD) | 30 Jun 2025 (IDR) | YoY |
|---|---|---|---|---|
| Total Assets | Rp25,060,166M | ~$1,397.6M | Rp25,336,990M | ⚠️ -1.1% |
| Financing Receivables (net) | Rp22,071,143M | ~$1,230.9M | Rp22,452,588M | ⚠️ -1.7% |
| Total Liabilities | Rp14,114,905M | ~$787.1M | Rp14,820,634M | ✅ -4.8% |
| Fund Borrowings (net) | Rp11,870,369M | ~$662.0M | Rp10,477,761M | ⚠️ +13.3% |
| Securities Issued (bonds, net) | Rp1,083,094M | ~$60.4M | Rp3,322,114M | ✅ -67.4% |
| Total Equity | Rp10,945,261M | ~$610.4M | Rp10,516,468M | ✅ +4.1% |
Debt-to-equity» (fund borrowings plus bonds, over equity, following this backlog's convention) came in at roughly 1.18x for H1 2026, down from H1 2025's 1.31x and Q1 2026's own 1.20x - a genuine continuation of the de-leveraging this backlog has tracked, even as the funding mix shifted sharply from bonds toward bank borrowings (fund borrowings up 13.3% year-over-year while bonds fell 67.4%, as a large tranche was repaid and only modestly replaced with new issuance - see Beyond the Usual below for the new bank facilities signed this half). Including the off-balance-sheet joint-financing balance, the company's own "proforma debt" figure of Rp16,255bn is up slightly from Q1's Rp16,198bn (+0.4%), as continued growth in the Bank Jago joint-financing book offset the on-balance-sheet bond paydown. The related-party PT United Tractors Tbk facility - flagged since Q1 2020 - saw its drawn balance rise for the first time in this backlog's tracking, to Rp173,733M from Q1 2026's Rp171,543M (see Beyond the Usual below).
Key Operational Metrics
- New financing originations: Rp10,698bn for H1 2026 (excluding Pinjam Modal channeling), down 1.8% year-over-year from H1 2025's Rp10,895bn; Q2 alone at Rp5,169bn, down 6.5% quarter-over-quarter from Q1's Rp5,529bn.
- Managed receivables (including off-balance-sheet joint financing, per the deck): Rp26,547bn at period-end, up 3.6% year-over-year but down 0.9% quarter-over-quarter from Q1's Rp26,795bn.
- Non-Performing Financing (NPF) (company's own disclosed figure», gross basis): 1.55% for H1 2026, down 8 basis points year-over-year from H1 2025's 1.63%, and down 3 basis points quarter-over-quarter from Q1's 1.57% - well below the industry's own 3.06% (per OJK data cited by the company). NPF coverage eased to 2.6x, down from Q1's 2.7x but up from H1 2025's 2.4x.
- Cost of Credit (CoC): 4.4% for H1 2026 cumulative (down 29 basis points year-over-year from H1 2025's 4.7%), but the real move is Q2 alone at 3.0%, down 276 basis points quarter-over-quarter from Q1's 5.7% - the sharpest single-quarter improvement in this ratio this backlog has recorded, fully reversing Q1's own record deterioration within one quarter.
- Net Interest Spread: 11.9% for H1 2026, up 26bps year-over-year from H1 2025's 11.6%, though down 13bps quarter-over-quarter from Q1's own 11.9%-plus reading.
- Cost to Income: 43.0% for H1 2026, up 22bps year-over-year from H1 2025's 42.8%, and up 177bps quarter-over-quarter from Q1's 42.2% as operating expenses grew faster than net revenue in Q2 alone (+3.3% QoQ opex versus -0.9% QoQ net revenue).
- Return on average assets (after tax): 6.6% for H1 2026, up 48bps year-over-year from H1 2025's 6.1%; Q2 alone at 7.4%, up 174bps quarter-over-quarter from Q1's 5.7%.
- Return on average equity (after tax): 15.1% for H1 2026, up 57bps year-over-year from H1 2025's 14.5%; Q2 alone at 17.1%, up 402bps quarter-over-quarter from Q1's 13.0%.
- Earnings per share: Rp56 basic for H1 2026, up from Rp51 a year earlier (see Key Financial Metrics above).
The pattern here is a genuine quarter-over-quarter recovery layered on top of a milder year-over-year improvement: every profitability ratio (ROAA, ROAE, Cost of Credit) improved sharply from Q1 to Q2, while cost-to-income actually worsened quarter-over-quarter as expenses didn't fall as fast as revenue did in the softer-bookings quarter. NPF stayed essentially flat across the half (1.57% to 1.55%) even as Cost of Credit swung dramatically - meaning the credit-cost improvement traces to lower provisioning and write-off activity on a roughly steady delinquency base, not to fewer loans actually going bad.
Three Segments, One Widening Gap
The company reports Cars, Motorcycles, and Others on the same basis as every prior period in this backlog.
Cars - still the largest segment: Rp2,234,199M of income for H1 2026 (65.2% of total, down slightly from H1 2025's 68.1%), essentially flat year-over-year (-0.7%) - but profit before tax grew 15.1% YoY to Rp733,024M from Rp637,089M, with margin expanding to 32.8% from 28.3%. Reconstructing Q2 alone (H1 minus Q1's own Rp292,334M) shows Cars' Q2 profit before tax at Rp440,690M, up 41.3% year-over-year from Q2 2025's estimated Rp311,940M - a sharp acceleration from Q1's own 10.1% YoY decline, and the segment now carrying the largest share of the consolidated profit recovery.
Motorcycles - Rp577,385M of income (16.9% of total, up from H1 2025's 15.2%), up 15.3% year-over-year, with profit before tax growing 18.7% YoY to Rp217,392M from Rp183,145M - margin held essentially flat at 37.7% versus 36.6%. Q2-alone profit before tax reconstructs to Rp120,805M, up an estimated 39.2% year-over-year from Q2 2025's Rp86,778M, tracking Cars' own acceleration closely.
Others (heavy equipment/machinery, property, and Sharia financing) - Rp613,016M of income (17.9% of total, up from H1 2025's 16.7%), up 11.0% year-over-year - but profit before tax fell 40.1% YoY to Rp72,269M from Rp120,742M, with margin compressing sharply to 11.8% from 21.9%. Q2-alone profit before tax reconstructs to just Rp24,636M, down an estimated 42.6% year-over-year from Q2 2025's Rp42,903M, and down further from Q1 2026's own Rp47,633M - the fourth consecutive period this backlog has flagged standalone deterioration specifically in this segment, following 9M 2025, FY2025, and Q1 2026.
This half genuinely splits from Q1 2026's pattern of all three segments moving together: Cars and Motorcycles both swung from year-over-year decline (Q1 alone) to strong year-over-year growth (Q2 alone, +41.3% and +39.2% respectively), while Others kept deteriorating on every basis - year-over-year, quarter-over-quarter, and as a share of consolidated profit (now just 8.7% of H1 PBT, down from H1 2025's 12.8%). The consolidated profit recovery this quarter is a two-segment story, not a company-wide one - Others' continued decline is being fully offset, not resolved.
Beyond the Usual
The restructured-loan balance stays missing for a ninth straight filing
H1 2024 removed the restructured-loan balance from the financing-receivables note, and neither 9M 2024, FY2024, Q1 2025, H1 2025, 9M 2025, FY2025, nor Q1 2026 restored it. This half's financing-receivables note again runs granular detail by purpose, contract type, credit-risk staging, and aging bucket, without a single restructured-loan line. The gap has now held for nine consecutive filings - through the exact two-quarter window in which Cost of Credit first spiked and then nearly halved, which is precisely when a reader would most want to see whether either move traces to previously restructured accounts or reflects the broader book.
The United Tractors related-party facility grew for the first time since this backlog began tracking it
Every prior period this backlog has tracked - back to Q1 2020 - showed the related-party PT United Tractors Tbk facility's drawn balance either flat or amortizing down on its scheduled repayment path. This half's own funding note shows the balance rising instead, to Rp173,733M from Q1 2026's Rp171,543M, against an unchanged Rp1,250,000M facility limit maturing 12 June 2029. The increase is small in absolute terms and consistent with normal drawdown activity under an existing, disclosed facility - not a new arrangement or a change in terms - but it's still the first reversal of a multi-year paydown pattern this backlog has tracked for over five years, worth watching in the next filing to see whether it's a one-off top-up or the start of renewed reliance on this related-party line.
Funding mix shifted sharply from bonds to bank borrowings, with three new or renewed bank facilities signed this half
The fund-borrowings note discloses new or renewed bank facilities signed during H1 2026, including a Rp700,000M line with PT Bank UOB Indonesia (23 February 2026, maturing 31 March 2027), a Rp500,000M facility with PT Bank Permata Tbk (11 May 2026, maturing 11 May 2030), and a Rp300,000M facility with PT Bank OCBC NISP Tbk (1 April 2026, maturing 8 March 2027) - alongside a Rp250,000M renewal with PT Bank Victoria International Tbk (9 June 2026). Over the same period, securities issued (bonds) fell 67.4% year-over-year to just Rp1,083,094M as a large tranche matured without a comparable replacement issuance. Taken together, this reads as a genuine funding-mix shift toward bilateral bank lines and away from the public bond market, rather than a reduction in overall funding capacity - fund borrowings grew 13.3% year-over-year over the same period.
Cash dividends of Rp1,036bn were paid during the half, funded from FY2025's profit
The equity statement records a Rp516,229M cash dividend paid during H1 2026 (the final tranche of FY2025's total Rp70/share dividend, following an interim tranche paid in Q4 2025) - together with the interim tranche, the company's own press release puts the combined FY2025 dividend at Rp1,036bn, equivalent to 65.5% of FY2025's net profit. The Annual and Extraordinary General Meeting held 20 May 2026 also approved a Management and Employee Stock Option Program (MESOP) of up to 290,000,000 shares - the same share count as the treasury pool retired via the buyback completed in Q1 2026 - though no options had been granted as of period-end.
Target Valuation Range
Market cap ~Rp10,840,797M (~$604.4M) at ~6.58x TTM P/E and ~0.99x P/B - the stock is roughly fairly priced against a genuinely improving quarter - an 8.7% profit increase built on a sharp Cost of Credit recovery, with shares still trading just below book value even as the underlying business showed real sequential improvement.
Using 14,749,383,620 shares outstanding net of treasury (unchanged from Q1 2026, since the treasury balance held flat this half - see Beyond the Usual above) and the Rp735 closing price:
| Market cap buildup | H1 2026 |
|---|---|
| Share price (period-end) | Rp735 |
| Shares outstanding | 14,749,383,620 |
| Market capitalization | Rp10,840,797M (~$604.4M) |
| Book value (total equity) | Rp10,945,261M |
| Peer-multiple sanity check | Q1 2026 | H1 2026 | Change |
|---|---|---|---|
| P/E (TTM) | ~6.84x | ~6.58x | down slightly - stronger trailing earnings outpacing the modest price gain |
| P/B | ~0.96x | ~0.99x | up marginally - price rose faster than book value grew |
Market cap is up 3.5% from Q1 2026's implied ~Rp10,472,062M, tracking the quarter's own 3.5% share-price gain with the share count unchanged. TTM P/E uses TTM net income of Rp1,648,175M (FY2025's Rp1,581,490M, less H1 2025's Rp762,224M, plus H1 2026's Rp828,909M). The stock has now traded below its own book value for a third consecutive quarter-end, continuing the pattern this backlog first flagged at FY2025's year-end close. Over the trailing two years (July 2024 through June 2026), the stock ranged from Rp690 (May 2026's low) to Rp1,040 (September 2024's high) - a 50.7% swing, similar in magnitude to Q1 2026's own trailing-two-year range as the extreme high from late 2024 remains inside the window. The path since March: Rp710 (Mar) → Rp800 (Apr, a brief rally) → Rp690 (May, a fresh two-year low) → Rp735 (Jun, a partial recovery) - a genuinely choppy quarter that ended modestly higher, consistent with a market still working through the same credit-cost uncertainty this post has tracked rather than moving decisively in either direction. At ~6.58x trailing earnings and ~0.99x book against a 17.1% Q2-alone ROAE (annualized), the market's modest 3.5% price recovery this quarter looks like a reasonable, if unenthusiastic, response to a genuine credit-cost improvement that hasn't yet been matched by a genuine return to booking growth.
PT BFI Finance Indonesia Tbk's unaudited consolidated financial statements for the six-month period ended 30 June 2026 (with comparative figures for 30 June 2025), together with the company's 1H26 investor presentation dated 27 July 2026 and media release dated 24 July 2026.