Bank Rakyat Indonesia (BBRI)
posted a net profit of IDR 12.6 trillion in the second quarter of 2025, marking a 9% year-on-year (YoY) and 8% quarter-on-quarter (QoQ) decline.
This result pushed the first half of 2025 (1H25) net profit to IDR 26.3 trillion, a 12% YoY decrease,
and notably fell short of market expectations, realizing only 45% of the 2025F consensus estimate compared to a 49% average annual realization over the past two years.

Navigating the Profit Dip: Provisions Take a Toll

The primary driver behind the 2Q25 annual net profit contraction was a substantial increase in provision expenses, which surged by 41% YoY.
This significant rise in provisions occurred despite a robust 8% YoY growth in Pre-Provision Operating Profit (PPOP) for the same quarter.
While PPOP for 1H25 still managed a modest 2% YoY increase, the escalating provision burden, up 26% YoY for the first half, ultimately compressed BBRI’s net profitability.

The Provisionary Pressure

Higher loan loss provisions often signal a more cautious stance on asset quality or a deterioration in specific loan portfolios.
For BBRI, a bank with a vast micro-lending footprint, managing this balance is crucial for sustainable growth.

Net Interest Income (NII) on an Upward Trajectory

As previously observed in BBRI’s earlier performance reports, Net Interest Income (NII) has shown an encouraging improvement trend.
In 2Q25, NII expanded by a healthy 8% YoY, propelling the 1H25 NII growth to 3% YoY.
This positive NII momentum was largely fueled by resilient growth in both credit and Current Account Savings Account (CASA) deposits.

Credit Growth and CASA Dynamics

By June 2025, credit growth accelerated to 6% YoY (up from 5% YoY in March 2025), reflecting a stronger lending environment.
Concurrently, CASA deposits soared by 11% YoY in June 2025, significantly outpacing the 7% YoY growth recorded in March 2025.
A stronger CASA base typically lowers a bank’s cost of funds, enhancing its net interest margin.
However, the improved NII was somewhat offset by a softening in Non-Interest Income (Non-II), which saw a 3% YoY decline in 2Q25, though still managing a 6% YoY growth for 1H25.
BBRI’s management attributed the 2Q25 Non-II dip to an accounting reclassification related to insurance premium revenue under IFRS 17, where income is now allocated across the insurance coverage period, rather than being recognized upfront upon premium payment.

Asset Quality: Micro Challenges Persist

While BBRI’s gross Non-Performing Loan (NPL) ratio remained stable at 3% in 2Q25 compared to 1Q25, a deeper dive into segmental performance reveals contrasting trends.

Segmental Disparity in NPLs

• The micro segment, a core pillar of BBRI’s business, experienced an uptick in NPLs, rising to 3.86% by June 2025 from 3.36% in March 2025.
  This deterioration continues to constrain micro segment credit growth, which remained subdued at 1.6% YoY by June 2025 (vs. 1.5% YoY in March 2025) amidst ongoing restructuring efforts within this portfolio.
• Conversely, the corporate segment demonstrated a healthy improvement in asset quality, with NPLs declining to 1.61% by June 2025 from 2.36% in March 2025.
  This positive trend supported an acceleration in corporate credit growth, which surged to 16% YoY by June 2025, up from 13% YoY in March 2025.

BBRI’s 2Q25 results present a mixed financial landscape. The bank showcases resilience in its core NII generation, driven by robust credit and CASA growth.
However, the profitability was significantly impacted by elevated provision expenses, particularly stemming from the micro segment’s lingering asset quality challenges.
Navigating these segmental disparities and continuing efforts to optimize loan portfolios will be key for BBRI to regain its net profit momentum in the latter half of the year.