BRI Optimistic That Credit Growth Space Is Still Large Amid Global Economic Challenges

President Director of Bank BRI Sunarso. (Photo: Doc. ANTARA)

JAKARTA PT Bank Rakyat Indonesia (Persero) Tbk or BRI is optimistic that the banking credit growth space will still be quite large until the end of 2023, even though it is overshadowed by current global economic challenges.

BRI President Director Sunarso revealed that there are still many business spaces that banks can work on to grow their business.

"The total potential of the credit market from all segments, including the micro segment in Indonesia, is actually still very large," he said in an official statement, Sunday, October 15.

Furthermore, he said this was reflected in the low total ratio of credit to Indonesia's Gross Domestic Product (GDP) compared to peer countries. Likewise with the loan ratio of Micro, Small & Medium Enterprises (MSMEs) to GDP.

In Indonesia, he said, the ratio of credit to total GDP reached 30.6 percent. Of the relatively low figures, MSME credit shares have only reached 7.2 percent of GDP.

In addition, he continued, based on the BRI Research Institute survey, financial inclusion based on account ownership is also still very low, namely at the level of 67.3 percent, and at the level of 70 percent for the use of financial products or services (excluding BPJS) or 84 percent for the use of financial products or services.

What does that mean? Actually, we still have enough space to increase credit, especially compared to the GDP. Likewise, credit to MSMEs is still very low. That is room for us to find a business on credit, "said Sunarso.

In rural areas, Sunarso continued, the financial inclusion rate is lower than urban ones.

He added that financial inclusion based on the use of products or services in rural areas was only 79.4 percent below urban areas which reached 88.2 percent.

Sunarso said BRI as a bank that reaches many rural areas, he continued, has a high concern to dig deeper into the potentials at the grassroots level that can be developed, especially in increasing financial inclusion through financial literacy. This is also what further strengthens the company in implementing the go smaller strategy by continuing to develop the MSME and ultra micro business segments.

"This is a business potential, so if it is detailed again, because BRI really has to go back to its kittah to deal with MSMEs. So to grow it, the strategy is only two, first the existing customers are classed up and looking for new sources of growth by going down which we say goes smaller. From medium to small. From small, down on micro. From micro, down again to ultra micro, "said Sunarso.

For your information, until the end of June 2023, the company managed to score impressive performance growth supported by solid growth in the micro and ultra micro segments through the BRI-led Ultra Micro Holding.

It was recorded that BRI recorded consolidated profit growth of 18.83 percent year-on-year (yoy) to Rp29.56 trillion, with an increase in assets of 9.21 percent to Rp1,805.15 trillion.

Sunarso also emphasized that the main factors supporting BRI's performance were micro credit and CASA growth which reached double digits, maintained asset quality, improving efficiency ratio, consistency in the proportion of commission-based income (fee-based income), and increasing solid performance of child companies that are members of the BRI Group ecosystem, including Ultra Micro Holding.

Until the end of the second quarter of 2023, BRI managed to disburse loans and financing worth IDR 1,202.13 trillion, of which IDR 577.94 trillion was financing for the micro segment which grew 11.41 percent.

This growth also increased the portion of microcredit in the company's portfolio to 48.08 percent and MSME loans to 84.48 percent of the company's total credit disbursed.