PT Bank Negara Indonesia (Persero) Tbk or (BBNI) passed the first half of 2020, which was full of challenges due to Covid-19 Pandemic, the slowdown in Indonesia's and global economic performance simultaneously, with quite good achievements and exceeding previous estimates. Various performance indicators point to growth.
Total assets grew 4.4% year on year (YoY) from IDR 843.21 trillion in the first semester of 2019 to IDR 880.12 trillion. The rate of asset growth in the first semester was relatively the same as in 2019, which grew by 4.6% YoY. This growth is being carried out in line with BNI's very selective strategy in expanding amid the Covid-19 pandemic which has started to plague since early 2020.
The growth of these assets was mainly supported by third party funds (DPK), which grew well by 11.3% YoY, from Rp. 595.07 trillion in the first half of 2019 to Rp. 662.38 trillion in the first half of 2020. The growth in DPK was better than that of the growth of DPK in industry as of June 2020 which grew by 7.9% YoY.
The efforts to collect DPK are carried out by making low-cost funds (CASA) a top priority, which we mean to improve future costs of funds. As of the first semester of 2020, the cost of funds rose to 2.9%, an increase of 30 basis points (bps) compared to the same position last year of 3.2%. The improvement in the cost of funds led to a decrease in interest expense in the first semester by -5.6% YoY, so that in the midst of challenging business conditions due to this pandemic, BNI was able to keep the NIM at 4.5% level.
In addition, we also took cost discipline steps by making efficient use of operating expenses, where we were able to reduce the growth to -0.3% YoY. We made these savings mainly by controlling variable costs due to operational adjustments and business processes during the pandemic.
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Credit Keeps Growing
At a time when the economy contracted 5.23% YoY throughout the first semester of 2020 due to the impact of the Covid-19 pandemic, BNI continued to carry out its intermediary function well, with selective and measurable growth. This is shown by credit that grew by 5.0% YoY, from IDR 549.23 trillion in the first semester of 2019 to IDR 576.78 trillion in the first semester of 2020, or BNI has disbursed loans of IDR 27.5 trillion in the first semester of 2020.
This growth is in line with the government's program in the context of national economic recovery, so that credit expansion is supported by stimulus policies issued by the government, including Regulation of Minister of Finance (PMK) Number 70 regarding the placement of government funds in Commercial Banks, and Regulations of Minister of Finance Number 71 and 98 regarding Procedures of Government guarantees to business actors in the context of implementing the national economic recovery program.
Credit growth was contributed by Private Corporate Credit, which grew by 12.6% YoY, from Rp 174.3 trillion in the first semester of 2019 to Rp 196.32 trillion in the first semester of 2020. Followed by Loans to SOE Corporations which grew 6.1 % YoY, from Rp 111.04 trillion in the first semester of 2019 to Rp 117.8 trillion in the first semester of 2020.
Meanwhile, the Small and Consumer Loans also showed growth at 3.4% YoY and 3.9% YoY, respectively. Credit growth in the small segment mainly came from the distribution of People's Business Credit (KUR) and loans below Rp 10 billion, while consumer loans came from mortgages and payroll loans.
Selective and measurable credit growth coupled with a significant reduction in interest expenses resulted in net interest income growth of 1.0% YoY. Meanwhile, in terms of non-interest income, BNI recorded a growth of 3.2% YoY, so that up to the first semester, BNI managed to book a net profit of Rp 4.46 trillion.
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Credit Restructuring
In facing impact of the pandemic, BNI actively conducts credit restructuring for debtors who are performing well but whose businesses are affected by Covid-19. This step refers to Financial Services Authority (POJK) Regulation Number 11 of 2020 regarding National Economic Stimulus as a Countercyclical Policy Impact of the Spread of Corona Virus Disease 2019.
In its development, until the end of June 2020, BNI has agreed to provide credit restructuring to debtors affected by Covid-19 amounting to IDR 119.3 trillion, or 21.9% of total credit. We hope that this loan restructuring can ease the burden on debtors in passing the crisis due to Covid-19 pandemic. The hope is, when Covid-19 can be overcome, debtors' businesses can return to a better direction.
In line with the restructuring program, we chose to conservatively cultivate Allowance for Impairment Losses (CKPN). In this first semester, our coverage ratio has reached 214.1%, much bigger than coverage ratio in the position of the First Semester of 2019 which was 156.5%. The increase in allowance for losses is a form of anticipation of the risk of deteriorating asset quality in the future.
We will continue to monitor the developments of Covid-19 pandemic and its impact on the global and domestic economy. In our opinion, it is still difficult to predict when Covid-19 will end, considering that transmission is still happening and has not shown any signs of slowing down. WHO also warned that the pandemic is far from over, so people are urged to stick to health protocols.
For this reason, with these still uncertain conditions, we have outlined several strategic policies that are in line with the adaptation phase of new habits, namely: Ensuring that the company's operations are adaptive to the development of the situation so that it continues without compromising the health and safety of customers and employees; Growing business prudently and in line with the national economic recovery program; Maintaining healthy liquidity and promote sustainable CASA growth, while remaining focuses on the efforts to maintain asset quality.