SEABANK A Blowout First Half, Then a 10% Drop in Full-Year Profit

The Second Half Nobody Was Watching For

The H1 2023 post on this blog told a story of a bank that had finally figured out how to underwrite: net income up 482.9% year-on-year, a net interest margin (NIM^») north of 19%, and the only real worry being a loan-to-deposit ratio (LDR^») that had fallen to 60.88% because the bank wasn't lending out its own cheap deposits fast enough. Read the full-year 2023 filing on its own and a completely different headline appears: full-year net income of Rp241,473 million actually came in 10.3% below full-year 2022's Rp269,220 million - a year that, on a half-year view, looked like it was accelerating in exactly the opposite direction.

The reconciliation is arithmetic, not mysterious. Full-year 2023 net income (Rp241.5 billion) minus the H1 2023 figure already reported (Rp34.8 billion) leaves roughly Rp206.7 billion earned in the second half of 2023 - a full 21.5% below the roughly Rp263.2 billion the second half of 2022 delivered. SeaBank spent the first six months of 2023 comping against an unusually weak first half of 2022 (net income of just Rp5.97 billion), which is exactly the kind of base effect that inflates a YoY percentage without saying anything about the trend underneath it. By the time the calendar caught up to a full year, the comparison flipped: 2023's second half had to clear a much higher 2022 bar, and it didn't. The lending business SeaBank had built by December 2023 - much bigger loan book, much heavier provisioning - clearly generates real net interest income; it just isn't yet generating a full year of growth once measured against a full year, rather than a favorable half.

The Prescription

SeaBank's own three-way segment breakdown this year makes its actual strategy explicit for the first time: Joint Financing and Loan Channeling now accounts for essentially the entire loan book (Rp17,562 billion, +12.85% YoY), while the once-core Conventional Loan business (direct commercial and consumer credit) has been left to shrink on purpose - down 67.9% to just Rp104 billion, or 0.58% of total loans, because "credit distribution is currently focused on digital loans through joint financing and channeling schemes" (the bank's own words, not an inference). That's the right call for a digital-only lender with no branch network to underwrite direct credit well: joint financing lets SeaBank supply capital and take the credit-quality upside of the group's fintech and cooperative partners' underwriting, without carrying the operational cost of a commercial-lending unit that was already 12x smaller than the loan book overall. The move that compounds from here is deepening that same joint-financing/channeling pipeline with more partners, not trying to revive a conventional-lending arm that's already been strategically starved to under 1% of the book.

What it should stop doing: treating a strong first half as proof the provisioning problem flagged in the June 2023 post has been solved. Impairment losses grew 60.7% year-on-year for the full year (Rp2,771,350 million to Rp4,451,908 million) against net interest income growth of "only" 53.1% - the same gap direction as H1, just less extreme once averaged across the full twelve months. A bank whose provisioning line consistently outgrows its income line, in every period measured so far, isn't demonstrating a one-off conservative quarter; it's disclosing a structural cost of the high-yield book it's chosen to run.

Key Financial Metrics

FY 2023 vs. FY 2022 (P&L, twelve months ended December 31), and Dec 2023 vs. Dec 2022 (balance sheet) - bank-only ("Individual")

FX: IDR 15,425 = USD 1 (December 29, 2023 close, applied throughout for consistency).

Metric	FY 2023 (IDR)	FY 2023 (USD)	FY 2022 (IDR)	YoY
Net Interest Income	Rp5,783,901M	~$375.0M	Rp3,778,454M	✅ +53.1%
Non-interest operating income (expense), net	Rp(5,494,930)M	~-$356.3M	Rp(3,716,227)M	⚠️ cost widened 47.9%
Operating Income	Rp288,971M	~$18.73M	Rp62,227M	✅ +364.4%
Net Income	Rp241,473M	~$15.65M	Rp269,220M	⚠️ -10.3%

Balance sheet metric	Dec 2023 (IDR)	Dec 2023 (USD)	Dec 2022 (IDR)	Change
Total Assets	Rp28,230,927M	~$1.830B	Rp28,269,760M	➖ -0.1%
Loans (Kredit yang diberikan)	Rp17,889,027M	~$1.160B	Rp15,893,317M	✅ +12.6%
Total Deposits (Giro + Tabungan + Deposito)	Rp20,818,298M	~$1.350B	Rp21,580,057M	⚠️ -3.5%
Total Liabilities	Rp22,251,244M	~$1.443B	Rp22,554,296M	➖ -1.3%
Total Equity	Rp5,979,683M	~$387.7M	Rp5,715,464M	✅ +4.6%

Operating Income is the bank's own disclosed "Laba (Rugi) Operasional" line. This is the bare OJK quarterly-publication format, with no accompanying cash flow statement, same as every quarter covered so far. Unlike the June 2023 filing, this quarter's deposit total is a directly disclosed figure - Giro, Tabungan, and Deposito are each reported individually and sum cleanly - not a derived estimate.

Net interest income grew 53% and operating income grew 364%, and net income still fell - the entire operating-income gain, and then some, was absorbed by a heavier tax bill and by impairment charges that grew faster than the income they're meant to protect.

Key Operational Metrics

Funding & Liquidity

• Loan-to-deposit ratio (LDR^»): 85.93% (Dec 2023), up sharply from 73.65% (Dec 2022) - the loan book grew 12.6% while deposits fell 3.5%, so the bank went from sitting on excess deposits in June 2023 (60.88% LDR) to lending out nearly everything it holds by year-end. CASA^» ratio improved to 60.90% of total deposits (from 56.78%) even as the deposit base itself shrank - a genuinely better funding mix on a smaller pool of money, not a larger one.

Credit Quality

• NPL^» ratio - gross: 1.77% (Dec 2023), down from 2.03% (Dec 2022).
• NPL ratio - net: 0.16% (Dec 2023), up slightly from 0.13% (Dec 2022).
• CKPN (loan-loss reserve) to earning assets: 9.05% (Dec 2023), up sharply from 5.77% (Dec 2022) - the bank is reserving nearly 51x its own net NPL ratio, an even more conservative buffer than the 7.39%/50x ratio disclosed for June 2023.
• CAR^» / KPMM: 34.93% (Dec 2023), down from 39.67% (Dec 2022) but still nearly 4x the 9% regulatory minimum for this risk profile.

Profitability & Efficiency

• NIM^»: 18.39% (FY 2023), essentially flat from 18.61% (FY 2022) - still an extraordinarily high margin for a bank, but the first period in this blog's coverage where NIM didn't expand.
• ROA: 0.98% (Dec 2023), up from 0.29% (Dec 2022).
• ROE: 4.60% (Dec 2023), down from 8.93% (Dec 2022) - a lower return on a slightly larger equity base, consistent with net income actually falling this year.
• BOPO^»: 96.13% (Dec 2023), improved from 98.75% (Dec 2022) - real progress on the near-break-even level flagged in the June 2023 post, though still leaving very little room below 100%.
• Cost-to-Income Ratio^» (CIR): 23.78% (Dec 2023), improved from 28.49% (Dec 2022).

Three Businesses, One Loan Book

This is the first SeaBank filing in this blog's coverage that discloses a segment breakdown, and it reframes everything above: SeaBank runs three business lines - Conventional Loan, Joint Financing and Loan Channeling, and Funding - and by the bank's own account, only one of the two lending segments is where the growth strategy actually lives.

Conventional Loan (direct commercial and consumer credit, including channeling for KPR/KMG/pension/Hajj-travel/employee loans) contributed just 0.58% of total loans in 2023 - Rp104 billion, down 67.9% from Rp324 billion in 2022. SeaBank states plainly that this decline is deliberate: credit distribution is now "focused on digital loans through joint financing and channeling schemes," not on this legacy line.

Joint Financing and Loan Channeling - lending done in partnership with multifinance companies, peer-to-peer lenders, and cooperatives - is now effectively the entire loan book: Rp17,562 billion, up 12.85% YoY from Rp15,562 billion, split between Rp15,988 billion of joint financing (+2.78%) and a small but explosively growing Rp1,574 billion channeling book (from just Rp7 billion a year earlier). This is the business the "Prescription" above is actually about.

Funding collected Rp20,818 billion of Third-Party Funds (deposits) in 2023, down 3.53% from Rp21,580 billion in 2022 - a shrinking pool, but one where the mix improved (CASA ratio to 60.90% from 56.78%, per the operational metrics above) because savings-account balances (Tabungan) grew 7.30% to Rp8,611 billion even as time deposits fell 12.74%.

Comparing the three: Funding is contracting in absolute size but improving in cost structure; Conventional Loan is being deliberately wound down; Joint Financing and Channeling is the only segment actually growing the balance sheet, and it's now carrying essentially 100% of the lending business by itself. A reader trying to understand where SeaBank's economics actually come from should watch that one segment, not the consolidated loan-book number - it no longer meaningfully separates from it.

Beyond the Usual

Related-party interest expense more than tripled its share of total interest costs

Interest expense paid to related parties (parent, sister companies, and affiliates under Sea Limited's ultimate ownership) rose from Rp76,253 million (7.26% of total interest expense) in 2022 to Rp283,923 million (21.83% of total interest expense) in 2023 - a 272% increase in absolute terms, and now more than a fifth of every rupiah SeaBank pays out in interest. Related-party deposits themselves actually fell slightly as a share of total liabilities (17.01%, down from 18.54%), so this isn't driven by related parties parking dramatically more money at the bank - it's a shift in what SeaBank is paying for that money, worth watching for whether future filings show related-party funding costing the bank more than comparable third-party deposits would.

Professional fees paid to related parties nearly tripled, now a third of all G&A spending

Professional fees paid to related parties rose from Rp142,920 million to Rp367,298 million year-on-year - now 31.97% of the bank's entire general and administrative expense base, up from 20.38% in 2022. Combined with the related-party interest-expense jump above, SeaBank's cost base is becoming more, not less, dependent on transactions with entities under the same ultimate ownership as the bank itself - a pattern that isn't improper on its own (Indonesian banking regulation requires exactly this kind of related-party disclosure precisely so it can be watched), but one where the direction of travel over two consecutive filings is now worth tracking rather than a one-off data point.

Airpay International Indonesia's "other assets" balance with the bank grew 2.5x

Amounts owed to SeaBank by PT Airpay International Indonesia (an associate entity of Sea Limited under the same ultimate ownership, and the entity behind ShopeePay in Indonesia) rose from Rp178,227 million to Rp445,491 million within the "other assets" line - the single largest related-party balance on either side of the balance sheet this year. The filing doesn't itemize what specifically drives this receivable (transaction settlement float from ShopeePay integration is the most likely explanation given Airpay's role, but that's inference, not disclosure), and it isn't flagged as impaired or overdue anywhere in the notes.

A defined-benefit post-employment obligation grew 57% in one year

The present value of SeaBank's defined-benefit pension obligation rose from Rp9,545 million to Rp14,995 million in 2023, driven mostly by a jump in current service cost (Rp5,739 million to Rp7,306 million) rather than a change in actuarial assumptions. This sits alongside a separate defined-contribution plan (through Dana Pensiun Lembaga Keuangan at Bank Negara Indonesia) that cost the bank Rp3,800 million in contributions for the year - a modest, dual-structure retirement benefit that's unremarkable for an Indonesian bank of this size, but worth noting since it wasn't previously disclosed at this level of detail in the June 2023 filing.

Almost no commitments or contingencies exist outside of one new unused credit line

The commitments schedule shows exactly one non-zero line for 2023: Rp151,345 million of undrawn, uncommitted loan/financing facilities (the filing's own "Committed" sub-line for this item is zero), against zero in 2022. Every other commitment, contingency, and derivative line in the filing - guarantees, letters of credit, spot/forward positions - remains flat at zero or dash across both years, consistent with the "genuinely simple balance sheet" finding from the June 2023 post.

Target Valuation Range

No numeric valuation range is computable for SeaBank Indonesia - there is no independently traded equity or debt for this entity to value.

SeaBank Indonesia has no public shareholders, no listed stock, and no bond issuance of any kind: Sea Limited (through PT Danadipa Artha Indonesia, 85%) and PT Koin Investama Nusantara (15%) remain its only two shareholders, unchanged from the June 2023 filing, and neither has ever floated any portion of the bank. Sea Limited itself trades on the NYSE (ticker SE), but that price reflects the entire Sea Group - gaming, e-commerce, and digital financial services together - not this one subsidiary bank's standalone economics, so no peer-multiple or DCF exercise is attempted here; doing so would misrepresent both entities.

A full-year net income decline, arriving right after a headline-grabbing first half, is exactly the kind of number that only shows up when a reader checks the whole year instead of stopping at the half already reported - and it's the clearest evidence yet that SeaBank's real story is a lending business still working out its provisioning costs, not the smooth growth curve the H1 2023 numbers alone suggested.

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