High Interest Rates, BNI Interest Revenue Growth Is Hampered

JAKARTA - In the midst of high interest rates, PT Bank Negara Indonesia Tbk (BBNI) managed to record a positive performance, namely an increase in net profit throughout 2023 to IDR 20.9 trillion, an increase of around 14.2 percent on an annual basis or year on year (yoy). However, with the high interest effect, BNI's ability to increase net interest income was also cut.

Throughout 2023, BNI recorded a net interest income of IDR 41.27 trillion or corrected 0.1 percent on an annual basis (YoY). This was affected by the rising interest expense of up to 51.4 percent (YoY) to IDR 20.1 trillion.

If on a quarterly basis, net interest income is actually corrected more than 3.8 percent. In the third quarter of 2023, BNI's net interest income reached IDR 10.53 trillion while in the final quarter of 2023 it was IDR 10.14 trillion.

BNI Finance Director Novita Widya Anggraini said that the trend of increasing the benchmark interest rate has affected the cost of interest funds (CoF), which are indeed experiencing an increasing trend and this phenomenon is happening evenly in the banking industry.

"However, in the midst of these conditions, CoF can be maintained in the range of 2.2 percent, structurally it is still lower than before the pandemic was above 3 percent," said Novita in a press conference, quoted on Sunday, January 28.

Novita said that in the midst of various external challenges in 2023, especially related to increasing geopolitical risks, high inflation and global interest rates, especially in the United States, and the economic slowdown in China, her party has taken strategic steps to maintain solid performance and provide optimal returns for shareholders.

Nevertheless, the decline in BNI's Net Interest Margin (NIM) is one of BNI's unavoidable profitability ratios. Where, the company recorded NIM 4.6 percent from the previous year 4.8 percent.

Novita explained that non-interest or non-interest income income could continue to provide a positive boost in profitability throughout 2023. The full one-year non-interest income achievement was IDR 21.47 trillion or grew 6.6 percent (yoy).

Novita said that this achievement was driven by transaction needs from the business banking and consumer segments which could be answered by various digital channels so that they contributed consistent income to BNI.

"Thus, BNI's net profit in the 2023 financial year was recorded at IDR 20.9 trillion, or grew 14.2 percent (yoy)," he said.

Investment Analyst Lead Stockbit Rahmanto Tyas Raharja revealed that BNI's net profit achievement was slightly below the consensus expectations, but credit growth was in line with management guidance.

"We see NII falling due to a 51.4 percent increase in interest expense YoY due to an increase in cost of funds to the level of 2.2 percent compared to 2022 1.5 percent, thus closing interest income by 12.5 percent (YoY). This makes Net Interest Margin (NIM) decrease to 4.6 percent compared to 2022 4.8 percent," he explained in his research, quoted on Sunday, January 28.

Rahmanto said that in the future, seeing that the potential for lowering interest rates in 2024 could be a positive sentiment to reduce interest expense.

However, he reminded that currently BNI's liquidity position is relatively tight as reflected in the ratio of BNI LDR at 85.8 percent, up from the position at the end of 2022 at the level of 84.2 percent making the potential for credit growth in 2024 more limited

BBNI management itself targets credit growth of 9 percent 11 percent by 2024, lower than the banking industry credit growth target by 2024 which is targeted to grow by 10 percent 12 percent by Bank Indonesia," he said.